Legislature(1995 - 1996)

03/13/1996 03:50 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                   SENATE RESOURCES COMMITTEE                                  
                         March 13, 1996                                        
                           3:50 P.M.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Senator Drue Pearce, Vice Chairman                                            
 Senator Steve Frank                                                           
 Senator Rick Halford                                                          
 Senator Robin Taylor                                                          
 Senator Lyman Hoffman                                                         
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Loren Leman, Chairman                                                 
 Senator Georgianna Lincoln                                                    
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 283                                                           
 "An Act relating to filing, recording, and indexing of documents              
 with or by the Department of Natural Resources; repealing certain             
 filing requirements concerning property involving nonresident                 
 aliens; and providing for an effective date."                                 
                                                                               
 SENATE BILL NO. 198                                                           
 "An Act establishing the Homer Airport Critical Habitat Area."                
                                                                               
 SENATE BILL NO. 285                                                           
 "An Act relating to management of discrete salmon stocks and to a             
 salmon management assessment; and providing for an effective date."           
                                                                               
 SENATE BILL NO. 230                                                           
 "An Act providing that state land, water, and land and water may              
 not be classified so as to preclude or restrict traditional means             
 of access for traditional recreational uses."                                 
                                                                               
 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."                            
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 283 - See Resources minutes dated 3/8/96 and 3/11/96.                      
                                                                               
 SB 198 - See Resources minutes dated 2/21/96 and 3/1/96.                      
                                                                               
 SB 285 - No previous action to be considered.                                 
                                                                               
 SB 230 - See Resources minutes dated 2/12/96.                                 
                                                                               
 SB 112 - See Resources minutes dated 3/08/95 and 3/11/95.                     
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Senator John Torgerson                                                        
 State Capitol Bldg.                                                           
 Juneau, Alaska 99801-1182                                                     
  POSITION STATEMENT:   Sponsor of SB 198.                                     
                                                                               
 Geron Bruce, Special Assistant                                                
 Department of Fish and Game                                                   
 P.O. Box 25526                                                                
 Juneau, AK 99811-5526                                                         
  POSITION STATEMENT:   Commented on SB 198.                                   
                                                                               
 Bob Clasby, Director                                                          
 Division of Commercial Fisheries                                              
 Department of Fish and Game                                                   
 P.O. Box 25526                                                                
 Juneau, AK 99802-5526                                                         
  POSITION STATEMENT:   No position on SB 285.                                 
                                                                               
 Joe Makinko                                                                   
 7625 Spruce Cape Road                                                         
 Kodiak, AK 99615                                                              
 State Capitol Bldg.                                                           
 Juneau, Alaska 99801-1182                                                     
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Chris Berns                                                                   
 P.O. Box 26                                                                   
 Kodiak, AK 99615                                                              
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Bruce Schactler                                                               
 P.O. Box 2254                                                                 
 Kodiak, AK 99615                                                              
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Bob Penny                                                                     
 Cook Inlet Sportfishing Caucus                                                
 Kenai, AK                                                                     
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Robert Hall                                                                   
 Houston Chamber of Commerce                                                   
 P.O. Box 871906                                                               
 Wasilla, AK 99687                                                             
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Jude Hinzler                                                                  
 Bering Sea Fishing Association                                                
 725 Christen Dr.                                                              
 Anchorage, AK 99501                                                           
  POSITION STATEMENT:   Commented on SB 285.                                   
                                                                               
 Dean Paddock                                                                  
 Bristol Bay Driftnetter's Association                                         
 P.O. Box 21951                                                                
 Juneau, AK 99802                                                              
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Robin Samuelson                                                               
 P.O. Box 412                                                                  
 Dillingham, AK 99576                                                          
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Joe McGill                                                                    
 Bristol Bay Herring Marketing Coop                                            
 P.O. Box 1710                                                                 
 Dillingham, AK 99576                                                          
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 James Evenson                                                                 
 P.O. Box 324                                                                  
 Kenai, AK 99611                                                               
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Ben Ellis, Executive Director                                                 
 Kenai River Sport Fishing                                                     
 P.O. Box 1228                                                                 
 Soldotna, AK 99669                                                            
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Dale Bondurant                                                                
 HC1, Box 1197                                                                 
 Soldotna, AK 99669                                                            
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Dennis Randa                                                                  
 Trout Unlimited                                                               
 P.O. Box 3055                                                                 
 Soldotna, AK 99669                                                            
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Theo Matthews, Executive Director                                             
 United Cook Inlet Drift Association                                           
 P.O. Box 389                                                                  
 Kenai, AK 99611                                                               
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Karl Kircher, President                                                       
 Kenai Peninsula Fishermen's Association                                       
 Kasilof, AK 99610                                                             
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Mel Erickson, Vice President                                                  
 Kenai River Guides Association                                                
 P.O. Box 1127                                                                 
 Soldotna, AK 99669                                                            
  POSITION STATEMENT:   Supported SB 285.                                      
                                                                               
 Melanie Gunderson, President                                                  
 Peninsula Marketing Association                                               
 General Delivery                                                              
 Sand Point, AK 99661                                                          
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Gerald McCune                                                                 
 United Fishermen of Alaska                                                    
 211 Fourth Street, #112                                                       
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Opposed SB 285.                                        
                                                                               
 Jim Stratton, Director                                                        
 Division of Parks                                                             
 Department of Natural Resources                                               
 3601 C Street, Ste. 1200                                                      
 Anchorage, AK 99503-5921                                                      
  POSITION STATEMENT:   Commented on SB 230.                                   
                                                                               
 Leif Peterson                                                                 
 P.O. Box 168                                                                  
 Anchor Point, AK 99556                                                        
  POSITION STATEMENT:   Opposed SB 230.                                        
                                                                               
 Ingrid Peterson                                                               
 P.O. Box 168                                                                  
 Anchor Point, AK 99556                                                        
  POSITION STATEMENT:   Opposed SB 230.                                        
                                                                               
 Sarah Hannon                                                                  
 Alaska Environmental Lobby                                                    
 419 6th Ave.                                                                  
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Opposed Section 4 of SB 230.                           
                                                                               
 Ed Grasser                                                                    
 Alaska Outdoor Council                                                        
 Fairbanks, AK 99707                                                           
  POSITION STATEMENT:   Supported SB 230.                                      
                                                                               
 Jim Dodson, Board Member                                                      
 Alaska Airmen's Association                                                   
 1515 E. 13th                                                                  
 Anchorage, AK 99501                                                           
  POSITION STATEMENT:   Supported SB 230.                                      
                                                                               
 Cliff Eames                                                                   
 Alaska Center for the Environment                                             
 519 W 8th, #201                                                               
 Anchorage, AK 99501                                                           
  POSITION STATEMENT:   Opposed SB 230.                                        
                                                                               
 Ken Boyd,Director                                                             
 Division of Oil and Gas                                                       
 3601 C Street                                                                 
 Anchorage, AK 99503                                                           
  POSITION STATEMENT:   Commented on SB 112.                                   
                                                                               
 Paul Richards                                                                 
 Stewart Petroleum                                                             
 Anchorage, AK                                                                 
  POSITION STATEMENT:   Supported SB 112.                                      
                                                                               
 Patrick Coughlin, Deputy Director                                             
 Division of Oil and Gas                                                       
 Department of Natural Resources                                               
 3601 C Street, 1380                                                           
 Anchorage, AK 99503-1380                                                      
  POSITION STATEMENT:   Commented on SB 112.                                   
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 96-28, SIDE A                                                           
 Number 001                                                                    
                                                                               
         SB 283 DOCUMENT FILING, INDEXING, & RECORDING                        
                                                                              
  VICE CHAIRMAN PEARCE  called the Senate Resources Committee meeting          
 to order at 3:50 p.m. and announced  SB 283  to be up for                     
 consideration.                                                                
                                                                               
 SENATOR PEARCE asked Senator Taylor if his questions had been                 
 answered.  SENATOR TAYLOR replied yes and he didn't have any                  
 further questions.                                                            
                                                                               
 SENATOR TAYLOR moved SB 283 from committee with individual                    
 recommendations.  There were no objections and it was so ordered.             
                                                                               
 SENATOR PEARCE announced an at ease at 4:51 p.m. and called the               
 meeting back to order at 4:53.                                                
                                                                               
            SB 198 HOMER AIRPORT CRITICAL HAB. AREA                           
                                                                              
 SENATOR PEARCE announced SB 198 to be up for consideration.                   
                                                                               
 SENATOR FRANK moved to adopt the K version CS to SB 198.  There               
 were no objections and it was so ordered.                                     
                                                                               
 SENATOR TORGERSON, sponsor, explained that there were three                   
 changes.  One was a new purpose section for moose habitat and for             
 guaranteed public access, revisions of boundaries, and new language           
 in section 2 reflecting the stated purpose, inserting on page 6,              
 line 26.  The plan is to guarantee access and continued public                
 fishing, hunting, and trapping activities and opportunities in the            
 area.  He said these changes are a direct result of the public                
 hearing he and Senator Leman had in Homer.                                    
                                                                               
 SENATOR TAYLOR asked if this would comport with Senator Miller's              
 bill on no net loss.  SENATOR TORGERSON replied no.                           
                                                                               
 Number 100                                                                    
                                                                               
 SENATOR PEARCE asked what the FAA restrictions were in terms of               
 hunting.  SENATOR TORGERSON explained this was within the city                
 limits of Homer and discharge of firearms is prohibited, but bow              
 hunting is not.                                                               
                                                                               
 SENATOR TAYLOR asked why they can't manage the habitat for the                
 benefit of the moose today.  SENATOR TORGERSON answered he thought            
 it was because they don't have access to the airport given to them            
 by DOT or FAA.                                                                
 SENATOR FRANK asked about the critical habitat designation.  He               
 asked if they had to have the word critical in there.  SENATOR                
 TORGERSON replied that he wasn't sure.                                        
                                                                               
 GERON BRUCE, ADF&G, said there is a definition of critical habitat.           
 The basic idea is that these areas are managed for multiple use,              
 but by declaring them a critical habitat area, other activities in            
 that area must be compatible with the protection of fish and                  
 wildlife habitat and other human uses.  This does not exclude                 
 development.                                                                  
                                                                               
 SENATOR FRANK asked if the words critical habitat area are defined            
 in law and require a certain management regime.  MR. BRUCE replied            
 that the purposes for the habitat areas are defined in law and then           
 there is a regulatory framework that defines the general procedures           
 for how to get a permit to do things in a critical habitat area.              
 Some of the areas have specific management plans that have been               
 adopted.                                                                      
                                                                               
 Number 169                                                                    
                                                                               
 SENATOR TAYLOR asked why the purpose section talks about providing            
 an area for enhancing winter browse for the moose herd on the lower           
 Kenai.  MR. BRUCE said he didn't know for sure, but he thought that           
 was from input from people in Homer who are interested in doing               
 some volunteer work in that area to improve the browse for the                
 moose who spend their winters there.                                          
                                                                               
 SENATOR TAYLOR asked if there was something preventing the people             
 from enhancing the winter browse for moose in that area today.  MR.           
 BRUCE said no fish and game statute would prohibit that, but once             
 this is declared a critical habitat area, those kinds of activities           
 are encouraged and might result in some changes in cooperative                
 agreements.                                                                   
                                                                               
 SENATOR TAYLOR commented that he didn't want declaring it a                   
 critical habitat area to prevent them from enhancing the area                 
 because it would require a permit and a hearing.  He didn't want to           
 prevent them from doing what they are free to do right now.                   
                                                                               
 SENATOR TORGERSON said this was discussed and the feeling is that             
 permits are required now and access is required from DOT.  Once               
 they do that, though, they want continual use of that land and this           
 sets it aside for that purpose.  DOT might be more of a yearly                
 thing.                                                                        
                                                                               
 Number 200                                                                    
                                                                               
 SENATOR TAYLOR asked if DOT was going to invest funds in                      
 enhancement.  MR. BRUCE replied no that the local folks are                   
 interested in doing enhancement on a volunteer basis.                         
                                                                               
 Number 234                                                                    
                                                                               
 SENATOR HALFORD asked the reason for the outholdings.  SENATOR                
 TORGERSON explained that the two triangles are where the Aleutian             
 Tern nesting area is.  The residents wanted this area set aside               
 because this is kind of a rare species of tern.                               
                                                                               
 Number 256                                                                    
                                                                               
 SENATOR FRANK moved to pass CS for SB 198 (RES) with individual               
 recommendations along with the accompanying fiscal note.  There               
 were no objections and it was so ordered.                                     
                                                                               
        SB 285 DISCRETE SALMON STOCK MANAGMNT & ASSESSMT                      
                                                                              
 SENATOR HALFORD, sponsor, explained that the fish initiative is on            
 the ballot and there are continuous allocation battles that often             
 center in Cook Inlet.  It seems like it's been managed based on               
 someone trying to find moral high ground in allocation arguments              
 that are mostly economic between commercial fishing and commercial            
 fishing with a hook and a line and a tourist.                                 
                                                                               
 He said that over the past decade or so is that some of the minor             
 streams, particularly in the Upper Susitna Drainages, have lost               
 their basic stocks.  If you look at the overall escapement even by            
 major drainages, the goals have only been met in only three or four           
 out of the last 10 years.  He thought the arguments over allocation           
 have been detrimental to the constitutional obligation to maintain            
 sustained yield.                                                              
                                                                               
 He said he felt that if we are going to harvest mixed stocks, we              
 absolutely have to know where the stocks are going.  He thought it            
 was the obligation of those who advocate the harvest of mixed                 
 stocks to at some point participate in a real identification that             
 gets us to discrete stock management.                                         
                                                                               
 If there's any logical solution, any long term goal, it's to meet             
 our constitutional obligation for sustained yield by specific                 
 stock, by specific drainage, by every component of the run, etc.              
 We can't do that unless we are willing to spend the money and know            
 where the fish are going.  The bill sets out discrete stock                   
 management as the long term goal and applies a 15-year phase in by            
 species and by drainage to get from here to there.  He said that              
 unless we get to this kind of management, we'll continue to destroy           
 subspecies in some areas and will possibly use court cases on the             
 mandate of sustained yield going into a season shut down fisheries            
 that are unnecessary.                                                         
                                                                               
 Number 340                                                                    
                                                                               
 SENATOR HOFFMAN noted that three years ago they passed legislation            
 directing the Board to develop mixed stock policies.  He knew they            
 hadn't done that, but he asked what would be the difference between           
 mixed stocks and discrete stocks.  SENATOR HALFORD explained that             
 the legislation they passed three years ago was just putting into             
 statute what their own policy and regulations said and the Board              
 wasn't following it then.  He explained he didn't intend this to be           
 an attack on any side of the allocation battle.                               
                                                                               
 Number 353                                                                    
                                                                               
 SENATOR HOFFMAN asked if many sports fishermen benefit from this              
 and why does the burden fall on the commercial fisherman.  SENATOR            
 HALFORD answered that the majority of the mixed stock users are in            
 the commercial fisheries.  He didn't think any of the users would             
 necessarily object to the kind of surcharge it would take to get              
 the kind of management necessary to have truly discrete stock                 
 understanding.                                                                
                                                                               
 SENATOR TAYLOR asked how effective this would be if the subsistence           
 management protocols currently being developed by the federal                 
 departments of agriculture and interior are implemented this                  
 spring.  SENATOR HALFORD replied that somewhere along the line they           
 have to use some kind of biological data and information as a                 
 weapon in the first battle which is defense of the sustained yield            
 of the resource.                                                              
                                                                               
 Number 373                                                                    
                                                                               
 BOB CLASBY, Director, Commercial Fisheries, said the administration           
 had not developed a position on this bill.  It is complex and needs           
 clarification of some terms and issues.                                       
                                                                               
 On page 1, line 14 he asked if they are to target only those                  
 defined as discrete stocks in D (1) or are they being asked to                
 identify every possible sockeye salmon stock that might be found in           
 a mixed stock fishery.                                                        
                                                                               
 SENATOR HALFORD replied that it would be nice to have every segment           
 of every stock and every substock in every drainage, but there is             
 enough work to do with the 24.                                                
                                                                               
 MR. CLASBY said they want the division to determine the stock                 
 composition by river of origin of each existing mixed stock salmon            
 fishery.  He assumed the mixed stock salmon fisheries are those               
 that are listed in sections 1 - 3.                                            
                                                                               
 SENATOR HALFORD asked if he had any further refinements of the                
 lists they have missed on how the stocks actually break up, the               
 committee would like their recommendations on those as well.                  
                                                                               
 MR. CLASBY asked if the sponsor wants escapement objectives                   
 developed, would he want systems in place to annually measure                 
 those?  SENATOR HALFORD answered yes.                                         
                                                                               
 MR. CLASBY noted the second line of subparagraph 18 said the                  
 objectives were to be based on spawning and rearing habitat and               
 average production and he recommended instead of limiting                     
 themselves, that phrase be deleted and insert something like best             
 available information.  SENATOR HALFORD said he would like to leave           
 the language there, but add something that allows the expansion               
 beyond that.                                                                  
                                                                               
 Number 459                                                                    
                                                                               
 MR. CLASBY said he assumed the sponsor wants escapements accurately           
 measured.  There was also a question in paragraph C, computing the            
 cost.  It was the division's assumption that the cost of the                  
 projects that are conducted in the area would be born by that                 
 area's fisheries.  All the stocks that make up the composite would            
 have to be known so the cost would be spread over a number of                 
 fisheries.                                                                    
                                                                               
 SENATOR HALFORD said that sounded like it was too complicated and             
 he didn't intend it to be that complex.                                       
                                                                               
 Number 534                                                                    
                                                                               
 SENATOR TAYLOR asked if the division is now doing some discrete               
 stock inventory.  MR. CLASBY said they are definitely doing that -            
 particularly on sockeyes.                                                     
                                                                               
 SENATOR TAYLOR said he was concerned that a study like this would             
 show that there are non-Alaskan fish in our fisheries.  MR. CLASBY            
 agreed.                                                                       
                                                                               
 SENATOR TAYLOR asked if it was intended to have Canadians                     
 participate in this study.  SENATOR HALFORD said there was no                 
 intention to manage for the benefit of Canada, but if we're going             
 to win in the argument right now, having information about where              
 they really are going could be used.                                          
                                                                               
 TAPE 96-28, SIDE B                                                            
                                                                               
 SENATOR TAYLOR said it didn't do any good to study the heck out of            
 an area if it's locked up as a wilderness area.  He was concerned             
 that not only would we be able to use the information, but it might           
 be used against us.                                                           
                                                                               
 SENATOR HALFORD said the information could be used for escapement             
 and propagation.  He thought if we had enough data we would                   
 probably be able to get more timber and more fish, but it's blanket           
 rules because you don't have data that costs us both timber and               
 fish.                                                                         
                                                                               
 SENATOR TAYLOR said he hated to see our adversaries saying we're              
 taking too many fish.  When they actually look at their own                   
 streams, it isn't because Alaskans are taking their fish.  The                
 problem is that they have just about destroyed the habitat, damned            
 every river that fish wanted to run up.  Now that they've destroyed           
 the runs, they want to come back and say well, you're taking too              
 much of a limited amount of stock that's returning.                           
                                                                               
 SENATOR HALFORD said he agreed with most of what Senator Taylor               
 said, but he concluded that that's why we need to do the study.               
                                                                               
 JOE MAKINKO, Kodiak fisherman, said he didn't think anyone had any            
 idea of the cost of this.  He thought the questions they were                 
 asking were only politically correct and not biologically correct             
 ones.  He thought the proposal was physically impossible to do.               
                                                                               
 CHRIS BERNS, Kodiak fisherman, said he agreed that this was a set             
 up and biologically was "goofy stuff."  He thought Republicans were           
 supposed to be unburdening an industry from goofy regulations.                
                                                                               
 Number 511                                                                    
                                                                               
 BRUCE SCHACTLER said this has all been said before, but this bill             
 has a different agenda than what is really being said.  It's                  
 advocating terminal fisheries which can cause real damage to a                
 fishery.  He said this is cost prohibitive; it's absolutely absurd.           
 What the Department is doing now is just fantastic.                           
                                                                               
 Bob Penny, Cook Inlet Sportfishing Caucus, said he represents sport           
 fishing associations in Kenai, Southcentral, and Mat-Su.  They                
 support SB 285 because they didn't see how fishing was going to               
 last into the future without something like it.  He thought there             
 would be a shut down of certain species in the Upper Susitna                  
 because legislation like this isn't in place.                                 
                                                                               
 ROBERT HALL, Houston Chamber of Commerce, said they strongly                  
 support this bill.  He said there is a growing concern about the              
 health of our salmon catch.  There are a lot of stories about large           
 and small streams where there used to be salmon runs, but they are            
 now weak or no longer there.                                                  
                                                                               
 He said the mixed stock fishery clearly has the most potential                
 problems since fishing technology has become much more efficient.             
                                                                               
 Number 420                                                                    
                                                                               
 JUDE HINZLER, Bering Sea Fishing Association, said they wanted chum           
 salmon to be included in the waters north of the Kuskokwim River.             
 Existing fishery management areas are often superficial and are not           
 comprehensive because they don't include the Northern Interior                
 spawners as part of the management area.  He said the formula for             
 how the study gets paid for bothers them because it is hard to                
 understand.                                                                   
                                                                               
 DEAN PADDOCK, Bristol Bay Driftnetters Association, supported SB              
 285.  He said it would supply much needed direction and intent to             
 management of our salmon fisheries.  He said he was a salmon                  
 biologist before he was a salmon fisherman and he didn't think this           
 would cost as much as Senator Halford thinks and the technology is            
 there.  It doesn't need to take 15 years if the staff is committed            
 to it.                                                                        
                                                                               
 Number 345                                                                    
                                                                               
 ROBIN SAMUELSEN said he is a past member of the Board of Fisheries            
 and a commercial fisherman all his life and he supported SB 285               
 conceptually.                                                                 
                                                                               
 JOE MCGILL, Bristol Bay Herring Marketing Coop., said he has                  
 questions about the bill.  He knows that work has to be done not              
 only in the streams, but out on the high seas which he thinks is              
 most important.  He said fishermen are already paying taxes for               
 enhancement and he wanted to know how much money this would take              
 and how would the assessment work.                                            
                                                                               
                                                                               
 Number 330                                                                    
                                                                               
 JAMES EVENSON, commercial fisherman in Cook Inlet, opposed SB 285             
 because it's unnecessary and misguided.  Alaska has the most                  
 successful wild salmon management in the world and our runs are               
 basically in good shape.  He speaks from the perspective of a Cook            
 Inlet Drifter.  In Cook Inlet the rivers are managed for the                  
 specific stocks that are in them.  A great deal of effort has been            
 put into identifying and protecting the separate stocks.  All the             
 stocks seems to be healthy and meeting their escapement goals.                
                                                                               
 He noted that this bill was not motivated by ADF&G or on any                  
 biological basis.  It's for a reallocation of salmon away from the            
 commercial fisheries.                                                         
                                                                               
 BEN ELLIS, Executive Director, Kenai River Sportfishing                       
 Association, supported SB 285.  It will give the direction and                
 funding needed to uphold our constitutional mandate to provide for            
 sustained yield of wild salmon.                                               
                                                                               
 This bill provides the framework where science may be gathered in             
 an organized manner so we can move toward management of genetic               
 diversity of discrete stocks in a timely fashion with a minimum               
 amount of disruption to commercial fisheries.                                 
                                                                               
 DALE BONDURANT supported SB 285 and said this bill is vital to the            
 integrity of the survival of Alaskan salmon fisheries.  He read               
 from a 1988 ADF&G memo that said the commercial fisheries are                 
 currently managed only for the sockeye escapement goals with coho             
 and chinook harvest incidental to sockeye.  He just sat for 15 days           
 at a Board of Fisheries meeting and he is convinced they will fail            
 to address discrete salmon stock management that is absolutely                
 necessary.                                                                    
                                                                               
 DENNIS RANDA, Trout Unlimited, said that the national organization            
 of Trout Unlimited opposes mixed stock fisheries because they                 
 result in decline of weak stocks all across the West Coast.  In the           
 face of increasing public demand when the Board drafted their mixed           
 stock policy they admitted that the burden of conservation of the             
 resource was disproportionately shared and he agreed with them.  He           
 sees an ulterior motive in terms of reallocation.                             
                                                                               
 Number 154                                                                    
                                                                               
 MR. RANDA read an article by a biologist named Hilburn that said              
 that few salmon fisheries operate on single stocks.  Stock                    
 recruitment analysis will usually underestimate the optimum                   
 escapement and overestimate the optimum harvest rate when mixed               
 stocks are stated as a single stock.  These conclusions will be               
 true for any mixed stock fishery with different productivities of             
 the stocks.  They support SB 285.                                             
                                                                               
 THEO MATTHEWS, United Cook Inlet Drift Association, said the first            
 part of the bill makes the assertion the discrete stock management            
 is necessary to preserve our salmon runs or we will lose them.  The           
 second part talks about the need for more information.  UCIDA is              
 absolutely opposed to the concept that mixed stock fisheries are              
 going to lead to the loss of our fisheries.  They do not agree with           
 the sponsor statement that current management centers around heavy            
 exploitation of mixed stock fisheries and disregards the negative             
 effects of this policy on discrete stocks of all salmon species.              
 He said that sound State management has rebuilt salmon runs from              
 the dismal runs inherited with statehood.  Existing data does not             
 support the fact that the world's fisheries are in trouble.                   
                                                                               
 MR. MATTHEWS commended Lieutenant Governor Ulmer and ASMI for their           
 educational efforts to promote Alaska's plentiful salmon.  Finally,           
 we need to get to the real issue, he said, that recreational                  
 advocates will not seriously address.  The problem is not with the            
 commercial fisheries; the problem as noted in an article he read is           
 that overfishing, entering new species, and dams have devastated              
 native fish populations.  He said there is overfishing in rivers by           
 recreational anglers.                                                         
                                                                               
 Number 75                                                                     
                                                                               
 KARL KIRCHER, President, Kenai Peninsula Fisherman's Association,             
 opposed SB 285 and agreed with most of the opposition to the bill.            
 He thought this bill represented taxation without understanding.              
 He asked if we were after better data from mixed stock management             
 or are we after weak stock management which could lead us to a                
 spotted owl type situation or some type of abuse in river which               
 makes the stock diminish.  Do we put the burden of conservation on            
 the mixed stock fisheries, he asked.  The terms, like genetic                 
 diversity, are being unevenly applied in mixed stock commercial               
 fisheries.  Genetic diversity of fish stocks is being destroyed in            
 river sport fisheries.                                                        
                                                                               
 MEL ERICKSON, Vice President, Kenai River Guides Association, said            
 they have 150 members who are sportfish guides in the Deep Creek              
 Marine Waters and the Kasilof and Kenai Rivers.  They support SB              
 285.  He said there is a lot of enhancement going on and they are             
 wiping out the wild runs.                                                     
                                                                               
 SENATOR HALFORD commented that he didn't think there was any moral            
 evil in mixed stock fisheries and he didn't think the bill intended           
 to say that.  The question is one of management difficulty because            
 when you harvest commingled stocks, you affect the weaker stock.              
                                                                               
 TAPE 96-29, SIDE A                                                            
 Number 001                                                                    
                                                                               
 His intent is to ensure that wherever we fish stocks that are mixed           
 we can prove and manage where they are going.                                 
                                                                               
 MELANIE GUNDERSON, President, Peninsula Marketing Association,                
 opposed SB 285 because she was sure this bill targets some of the             
 conflicts going on in Area M.  She noted that there are no river              
 systems from her area listed in the bill and they at least have               
 some major red streams.                                                       
                                                                               
 SENATOR TAYLOR commented that allocation seems to be at least a               
 fear - commercial on one side and recreational on the other.  If              
 you look at the legislation without that thought, it appears to be            
 an information collection and management tool.  He asked if                   
 allocation was part of the process and how did it fit in.                     
                                                                               
 SENATOR HALFORD answered that it was not his intent to get into the           
 allocation fights.  He believes that the propagation, escapement,             
 and maintaining sustained yield is moral high ground.  The area he            
 represents in Upper Cook Inlet has not been meeting escapement                
 goals and they have endangered at least some subspecies in                    
 drainages to the point that you can't find them anymore.                      
                                                                               
 He said that interception questions come up in all fisheries where            
 there are mixed stocks.  He said he thought everyone looked at                
 every management structure for its potential advantage and often              
 that applies to the allocative affects.                                       
                                                                               
 GERALD MCCUNE, United Fishermen of Alaska, said the reason there is           
 a lot of problems with this bill is because it is very allocative.            
 He said he didn't want to see them get into weak stock management.            
 He said he wanted the true picture.  He wanted to know how much it            
 would cost.                                                                   
                                                                               
 Number 195                                                                    
                                                                               
 SENATOR HALFORD responded that he hoped both commercial and sport             
 interests would keep an open mind because he thought we would                 
 eventually have to go to this kind of database for management.                
                                                                               
 SENATOR PEARCE said they would set SB 285 aside for further work.             
                                                                               
        SB 230 MANAGEMENT OF PARKS & RECREATIONAL AREAS                       
                                                                              
 SENATOR PEARCE announced SB 230 to be up for consideration and that           
 they will consider a proposed CS, Luckhaupt/K/3/11/96.                        
                                                                               
 SENATOR TAYLOR moved to adopt the CS to SB 230.  There were no                
 objections and it was so ordered.                                             
                                                                               
 SENATOR PEARCE explained that the changes were substantial and                
 narrowed the focus of the effort to Title 41.  It adds a section              
 requiring the Department to give the legislature a list on an                 
 annual basis that tells them what designations of incompatible uses           
 that would either prohibit or restrict the traditional means of               
 access, what of those they have done and what their reasons were.             
 It also further defines traditional means of access and                       
 recreational activity.                                                        
                                                                               
 Section 2 has a new subsection saying the Department may not manage           
 as special purpose park land those areas not inside park boundaries           
 as designated by the legislature.  She explained that one of the              
 reasons she introduced this bill is because Blair Lake is outside             
 the boundaries of Denali Park.  However, because Division of Lands            
 transferred that Lake to the Division of Parks through an ILMA,               
 Division of Parks closed that lake to traditional access (by                  
 airplane).  This subsection keeps the Department from being able to           
 take lands that have not been designated parks by the legislature             
 and manage them as parks.                                                     
                                                                               
 Section 3 sets new boundaries for Denali Park.                                
                                                                               
 Number 264                                                                    
                                                                               
 JIM STRATTON, Division of Parks, asked when they were to start                
 doing the reporting.  SENATOR PEARCE indicated it would start from            
 this point and go forward.                                                    
                                                                               
 MR. STRATTON said they have no problem with the reporting                     
 requirement.  He asked if they are to report on all the parks or              
 just on ones that were administratively created.  SENATOR PEARCE              
 answered all of the park lands assuming there are new restrictions.           
                                                                               
 MR. STRATTON noted that there was a conflict between the intent of            
 section 2 and existing statutes for Chugach, Point Bridgette, and             
 Kenai which do give them direction to add lands outside of the                
 park.  He said there are no guidelines for Woodtikchik and Denali             
 so they assumed they have the authority to do that.                           
                                                                               
 SENATOR PEARCE responded that the three parks he mentioned there is           
 within the legislation which established the parks the ability for            
 the Division to add areas or change uses.  When SB 230 passes, the            
 revisor would go through and change language in those areas they              
 have legislatively designated that authority.                                 
                                                                               
 MR. STRATTON said this is a management tool that is important for             
 them to have in areas outside of the three that are listed.  In               
 addition to ILMA's they secure land that could be made available to           
 expand the boundaries of the parks through management agreements              
 with other government agencies, through gifts from people, and                
 through purchases from cash court settlements, to name a few.                 
                                                                               
 SENATE PEARCE said that something like a land exchange the                    
 legislature would look favorably upon as they have a number of                
 times in the past.  The legislature should designate parks lands;             
 it should not be done administratively.                                       
                                                                               
 MR. STRATTON suggested that if the target is ILMA's, to rewrite               
 section 2 to target them.  He said they would like to retain the              
 power to add acreage to a park that doesn't restrict anyone's                 
 traditional access.  SENATOR FRANK commented that they haven't                
 turned any of those down to date.                                             
                                                                               
 MR. STRATTON asked if the intent of this bill was to disallow stand           
 alone ILMA's from being managed as part of the park.  SENATOR                 
 PEARCE said that was the intent.                                              
                                                                               
 MR. STRATTON explained that the ILMA's they create they manage as             
 though they are part of the park system so their park regulations             
 can operate.  He said the reason they seek ILMA's is to develop and           
 create recreational opportunities like trail heads, camp grounds,             
 boat launch ramps, etc.  They feel they need to manage those under            
 Title 41 as part of the park system.                                          
                                                                               
 SENATOR PEARCE responded that if he gets legislative approval to              
 add that land to a park, then he'll get to do it.  MR. STRATTON               
 said they are not added to parks right now; they are stand alone.             
 They are called State recreation sites and they have been creating            
 them administratively for 25 years.  They are under 640 acres and             
 they have not been getting legislative approval.  He asked if he              
 needed to get legislative approval now.  If he does, he has very              
 serious reservations about this bill.                                         
                                                                               
 SENATOR PEARCE said the intent is to go forward from now, but they            
 need legislative approval for creation of all parks.                          
                                                                               
 Number 406                                                                    
 MR. STRATTON said AS41.21.022 already allows for hunting and the              
 use of firearms in all of the State parks so he thought section 3             
 was redundant.  However, if the intent is to allow target practice,           
 he would oppose that.                                                         
                                                                               
 MR. STRATTON said the language identifying incompatible uses                  
 changes the direction Denali State Park will be managed.  For 26-             
 years it has been managed to balance different uses and user groups           
 from conflicting with one another.  There is nothing that gives one           
 use access over another use.  He said there is a lot of public                
 ownership of the Denali State Park master plan and it was that plan           
 that set forth the aircraft closures that are behind this whole               
 bill.  He is concerned that they are changing the management mode             
 for Denali State Park that a lot of people have bought into.                  
                                                                               
 Regulations under review right now in the Department of Law opens             
 the park to recreational gold panning and they want that language             
 reflected in the bill.  Their intent is to let people pan for gold,           
 but they don't want recreational suction dredges being used in the            
 park and he thought that might be interpreted under recreational              
 mining.                                                                       
                                                                               
 SENATOR PEARCE said it is her intent after 26 years to put sidebars           
 on the management of Denali State Park because some difficulties in           
 other parks have arisen from overutilization.  She said they will             
 be getting more requests for restricting access and she thought the           
 legislature should be able to make changes if it's desirable.                 
                                                                               
 Number 470                                                                    
                                                                               
 LEIF PETERSON said he is a bush resident and he objects to more use           
 in Denali State Park because it will destroy habitat.  He said dog            
 mushing doesn't make much of an impact.                                       
                                                                               
 INGRID PETERSON asked if this is a companion bill to HB 447.                  
 SENATOR PEARCE replied the two bills were introduced at the same              
 time, but they are different now.  Peterson said she thought if SB            
 230 was anything like HB 447 that it was just a Republican industry           
 profit give away to big business at the expense of all Alaskans.              
 She said a lot of public input has gone into deciding the uses of             
 Denali.  She didn't think the industry controlled legislature                 
 needed to be dabbling in that.                                                
                                                                               
 She understood that Alaska Air Carrier Pilots/Big Game Guides are             
 supporting this bill.  She said that the only traditional access is           
 mother nature.  The way they define traditional access as motor use           
 just destroys the natural environment.  She said the Attorney                 
 General's office is reviewing the State Park Management Regulations           
 right now and that should be sufficient.                                      
                                                                               
 Number 507                                                                    
                                                                               
 Sarah Hannan, Alaska Environmental Lobby, said she wanted to talk             
 about the Blair Lake controversy.  She said that both the                     
 conservation community and the air carrier community were concerned           
 about that ILMA addition to State parks and the closure to air                
 traffic.  She said she thought it was a good intention by State               
 Parks at the encouragement of the legislature to be more                      
 cooperative with commercial development.  She thought it was a                
 special interest effort to accommodate Princess Hotel's interest in           
 having a monopoly on the air traffic on that lake to accommodate              
 their new hotel.  She thought they did a bad job of it.  She said             
 they should follow what the statutes tell them to do because the              
 policy is already decided at the legislative level.                           
                                                                               
 In an attempt to appease a commercial user there is a bad situation           
 where no one is happy.  Any time you limit an Alaskan to do                   
 anything, they are going to be upset.                                         
                                                                               
 MS. HANNAN asked the committee to think about the extensive process           
 State Parks needs to go through to come with a management plan that           
 promulgates regulations that close things.  To close some portions            
 of Denali State Park to commercial air traffic and recreational               
 aircraft landings while keeping open others.  She said in the                 
 future we are going to need to regulate commercial uses in our                
 State parks.  Air traffic is going to be one of the great                     
 industries tourism will grow in.                                              
                                                                               
 SENATOR PEARCE said for 26 years people had been flying into the              
 Blair Lake area and it doesn't make sense for the Parks Division to           
 close it to everybody.                                                        
                                                                               
 MS. HANNAN said her only criticism of CSSB 230(RES) is Section 4.             
 She thinks the extensive public process that has gone into                    
 developing the current regulations that are out there for the new             
 management plan of Denali State Park should go forward.  There has            
 been a nearly two year process with three task forces, with 50-odd            
 people serving on those and hundreds of hours of public testimony             
 taken.  At this point, to repeal those regulations discredits the             
 public process.  She thought the legislature could encourage State            
 Parks to immediately revisit those regulations if they view them as           
 inappropriate.  She said the controversy will not go away because             
 we have put prime real estate into parks for the purpose of it                
 being prime real estate. With increased use there is going to be              
 competition for that air space and land.  It will burden the                  
 legislature extensively to take those kinds of public planning                
 processes away from State Parks.                                              
                                                                               
 SENATOR FRANK said he appreciated the tenor of her remarks.                   
                                                                               
 ED GRASSER, Alaska Outdoor Council, supported SB 230 and had                  
 concerns with access being restricted by administrative orders.               
 His organization is becoming increasingly concerned about the                 
 restrictions that are being placed on Alaskans and their                      
 traditional life style pursuits.                                              
 TAPE 96-29, SIDE B                                                            
 Number 580                                                                    
                                                                               
 MR. GRASSER said the public process doesn't always work as well as            
 some people believe.  He said the advisory committee for Mat-Su               
 Parks is made up mostly of people who are opposed to motorized                
 access and, in many instances, hunting and trapping.  They make               
 sure the membership against motorized access are notified of                  
 meetings, but their organization is left to find it in the                    
 newspaper somewhere.                                                          
                                                                               
 SENATOR PEARCE asked which statute allows for gold panning in                 
 parks.  MR. STRATTON said he would get that for her and he                    
 understands that most of the park system is open for recreational             
 gold panning.  They just haven't gotten around to doing Denali.               
                                                                               
 JIM DODSON, board member of Alaska Airmen's Association, said they            
 are not confused as to the intent of this legislation and they                
 support it wholeheartedly.                                                    
                                                                               
 CLIFF EAMES, Alaska Center for the Environment, opposed SB 230.  He           
 said they felt that the real problem is not that there aren't                 
 adequate opportunities for use of motorized recreational vehicles,            
 but that there are inadequate opportunities for quiet recreation              
 which is an activity that is important to Alaskans and visitors.              
                                                                               
 SENATOR HALFORD moved to pass CSSB 230(RES) out of committee with             
 individual recommendation and the accompanying fiscal notes.  There           
 were no objections and it was so ordered.                                     
                                                                               
                SB 112 DISCOVERY ROYALTY CREDIT                               
                                                                              
  SENATOR PEARCE announced  SB 112  to be up for consideration.                
 SENATOR HALFORD moved to adopt CSSB 112(RES), version G, as the               
 working draft.  There were no objections and it was so ordered.               
                                                                               
 ANNETTE KREITZER, Staff, Senate Resources Committee, explained that           
 she worked with Ken Boyd, Director, Division of Oil and Gas, to               
 come to some agreement about the applicability section. She said              
 this version deleted the "commercial quantities" language in all              
 sections because administration felt it was more to the point                 
 without it.  It also adds applicability language.                             
                                                                               
 KEN BOYD, Director, Division of Oil and Gas, commented that they              
 had come a long way in getting the language straightened out.  They           
 took the commerciality standard out because the same arguments that           
 have existed in past languages don't exist any longer.                        
                                                                               
 MR. BOYD thought the committee needed to consider in the                      
 applicability section to exclude things in existing units because             
 a unit is formed to produce all the oil and gas within the unit.              
 If it's already in a unit, it's already been discovered.                      
                                                                               
 SENATOR PEARCE asked if the unitization agreement is for a discrete           
 pool.  MR. BOYD answered a unitization agreement generally covers             
 the field and all the pools within the field.  He explained that              
 sometimes there is more than one participating area within one                
 unit.  The participating area being that area of the unit that                
 actually contributes production.                                              
                                                                               
 SENATOR PEARCE asked if there could be a discovery royalty on a               
 well in an overlapping unit.  MR. BOYD answered that he thought the           
 answer would be no because sometimes there is more than one                   
 participating area within a unit.  He said they would not want to             
 make this applicable to leases that already were eligible for the             
 old provisions of discovery royalties because of the conflict it              
 would recreate and he said that should be put in statute.                     
                                                                               
 Number 390                                                                    
                                                                               
 SENATOR FRANK asked if there were leases from before 1969 that                
 don't have production on them.  MR. BOYD answered yes.  SENATOR               
 FRANK said he thought there had to be some kind of production to              
 extend a lease beyond 10-years.  MR. BOYD explained that some of              
 the old leases are DL 1 leases and are still not producing, but               
 have provisions of the earlier law.                                           
                                                                               
 SENATOR FRANK asked why they would be extended if they didn't have            
 any production on them.  MR. BOYD replied that he would have to               
 check that out.                                                               
                                                                               
 MR. BOYD asked if it was the committee's intention to have multiple           
 discovery royalties on one lease or should there be one per lease.            
 In other words would you want the discovery well to discover all              
 the pools that might be discovered from a single well or would it             
 be possible to have two discovery royalties if two pools were                 
 discovered.  SENATOR FRANK said he would not allow that.                      
                                                                               
 MR. BOYD thought the place that need clarifying was on page 3, line           
 31.  He was also concerned with the retroactivity of the bill.  He            
 opposed making something retroactive that is a discovery royalty              
 activity.  He explained that when we became a state we adopted                
 federal law about discovery royalties which was there for years.              
 People knew nothing about the North Slope or Cook Inlet.  He                  
 questioned whether the discovery royalty provision ever helped                
 discover any oil.                                                             
                                                                               
 MR. BOYD pointed out that coal bed methane under discovery                    
 royalties would create something unusual because coal is difficult            
 to define.  It occurs differently than normal sediments.                      
                                                                               
 Number 297                                                                    
                                                                               
 MR. PAUL RICHARDS, Stewart Petroleum, said he felt the purpose of             
 the bill seems to have gotten lost in the discussion.  He                     
 appreciates the way the bill is drafted now.  Speaking on behalf of           
 independents who could possibly come into marginal fields within              
 the Cook Inlet, the intent of the bill is to help those companies             
 who do not have the financial weight to invest millions of dollars,           
 but look for assistance through royalty credit.  If this bill gets            
 passed, more independents would go into Cook Inlet which would                
 create good paying jobs for an industry that is being flattened               
 out.                                                                          
                                                                               
 One  question he has is on page 4, line 3 - undiscovered oil or gas           
 pool within five years of the effective date of the lease.  He                
 thought there was a collective agreement on Senator Taylor's                  
 amendment to delete "within five years of the effective date of the           
 lease" which would apply the royalty for future leases and to                 
 leases that are active now.                                                   
                                                                               
 SENATOR PEARCE explained that Senator Taylor's amendment was                  
 divided into two parts and the committee didn't actually take                 
 action on that part.                                                          
                                                                               
 MR. RICHARDS said his second concern was with applicability of the            
 effective date and whether it referred to the date of the                     
 regulations or the effective date of this particular bill.                    
                                                                               
 Number 192                                                                    
                                                                               
 SENATOR TAYLOR said that the primary concern he had was that they             
 provide the discovery opportunity for existing leases and the                 
 initial amendment he offered went back too far.  The intent of the            
 effective date is to have it start with the bill so that when it's            
 signed into law in July any discoveries made after that on existing           
 leases would receive that benefit.                                            
                                                                               
 SENATOR HALFORD said he thought they had to delete the "within five           
 years of the effective date of the lease" and then the                        
 applicability section would work if they changed the effective date           
 of the regulations to the effective date of this law.  SENATOR                
 TAYLOR agreed.                                                                
                                                                               
 Number 168                                                                    
                                                                               
 MR. BOYD commented that however they adopt the effective date, if             
 there are no regulations that means there are no definitions which            
 means there are no tools at all to define anything.  He said that             
 none of the terms the committee wants defined are in law and                  
 regulations take time.  If they want the law applicable now, then             
 there will be a period of time when there will be nothing.                    
                                                                               
 SENATOR HALFORD moved to delete on page 4, line 3 "within five                
 years of the effective date of the lease."  There were no                     
 objections and it was so ordered.                                             
                                                                               
 There was general discussion on how to deal with the regulations.             
                                                                               
 SENATOR PEARCE asked what the drilling season in Cook Inlet was.              
 MR. BOYD answered that it ran from April to November.                         
                                                                               
 SENATOR FRANK suggested saying "were entered into before May 1,               
 1996" or something like that.  MR. BOYD said there would be no way            
 of knowing it was a valid credit because the Commissioner would               
 have to certify with no rules.  He thought that they would have to            
 have regulations prior to certifying anything, awarding any                   
 credits, or giving anybody a hint that you might do so.                       
                                                                               
 SENATOR FRANK asked if it didn't take a long time to actually start           
 drilling.  MR. BOYD replied that it did.                                      
                                                                               
 PATRICK COUGHLIN, Division of Oil and Gas,  explained that the old            
 regulations define what is "first encounter" and further define               
 what evidence you have to submit in order to prove it.  If someone            
 was unable to produce that evidence, then under the old                       
 regulations, they couldn't qualify.                                           
                                                                               
 MR. BOYD added that if companies wanted certainty, they would have            
 to have a clear definition of what they would be expected to do.              
 The State would be at risk to certify something it shouldn't be               
 certifying.  He thought we would be subject to a potential lawsuit.           
                                                                               
 SENATOR HALFORD said to get any incentive that has an effect this             
 year, the accrual has to start based on events and investments and            
 spending that maybe occurs in May or June of this year.  He wanted            
 language saying the credit would be available pursuant to                     
 regulations and definitions, etc, being promulgated.  If there's              
 royalty paid in the meantime, it's paid at the rate and credited              
 back and there probably wouldn't be any anyhow, he said.                      
                                                                               
 SENATOR PEARCE asked Mr. Boyd if he thought there could                       
 realistically be any wells drilled this season that hadn't already            
 been permitted.  MR. BOYD replied in general no, but given the                
 extent of the bill not necessarily no.  He thought that coal bed              
 methane or shallow gas wells in the Northern part of Cook Inlet               
 could be drilled.                                                             
                                                                               
 TAPE 96-30, SIDE A                                                            
 Number 001                                                                    
                                                                               
 SENATOR PEARCE commented that she thought the bill should be moved            
 to the Finance Committee where Senator Frank and Senator Halford              
 could work on it.                                                             
                                                                               
 SENATOR FRANK asked if they could do a temporary regulation that              
 was broad enough to capture all new wells.  MR. BOYD replied that             
 there have been many lawsuits going on for so many years on                   
 virtually every one of the applications.  The lawsuits are over the           
 definition of words - who was the first person who discovered it.             
                                                                               
 MR. COUGHLIN added that there is the question of whether you want             
 to use an objective or a subjective test.  He said the committee              
 could make an effective date, then they could adopt regulations,              
 but a person who drilled in the interim would run the risk of not             
 complying with the regulations.                                               
                                                                               
 SENATOR FRANK added that the State would be at risk for losing a              
 lawsuit, too.                                                                 
                                                                               
 SENATOR TAYLOR said that he thought the risk was that the                     
 regulations might be found to be inappropriate relative to the law.           
 The only thing we would lose would be the incentive credit which we           
 were going to give up in the first place.                                     
                                                                               
 MR. BOYD said he understands what reasonable people would like to             
 do, but there are thousands of pages of lawsuits that argue against           
 what he's saying.  Big money is involved.                                     
                                                                               
 SENATOR HOFFMAN asked if the June 1 date suggested by Senator                 
 Halford would be enough time for the Department to promulgate                 
 regulations.  SENATOR PEARCE responded that that wouldn't work                
 because the bill doesn't have an effective date and it becomes a              
 law 90 days after the Governor signs it and they don't know when he           
 would sign it.  So it could be the first of October before it goes            
 into effect.  Unfortunately putting in a date before it becomes law           
 or they have a chance to write regulations is not appropriate.                
                                                                               
 Number 197                                                                    
                                                                               
 MR. RICHARDS said he realized there needs to be some negotiation              
 and regulatory development of this bill.  He said no one was going            
 to make a decision to drill this year.  The bill tells investors              
 that it's marketable to invest in a company that will do it.  He              
 thought passing the bill would be a good indication to investors              
 getting the financing part going and also give the Department                 
 enough time to write regulations.                                             
                                                                               
 SENATOR FRANK asked if it was reasonable for the Department to                
 start immediately on regulations when the bill is signed.  MR. BOYD           
 replied absolutely.                                                           
                                                                               
 SENATOR TAYLOR commented that they had already done all the                   
 research and he didn't see why regulations would take so long.  MR.           
 BOYD responded that every one of the "warts" was still being                  
 litigated.  Adopting what's already there is not the right answer.            
 He has been told it takes a year to promulgate regulations because            
 of all the reviews it takes.  When he developed exploration                   
 incentive credit regulations, it took two years, for example.                 
                                                                               
 MR. BOYD said the problem with the discovery royalty process is               
 that it has been a lawsuit generator.                                         
                                                                               
 MS. KREITZER reviewed the issues in the first proposed amendment              
 for the committee.  Does the committee intend to allow more than              
 one discovery royalty per lease or do they want DNR to define it in           
 regulation.                                                                   
                                                                               
 Number 300                                                                    
                                                                               
 SENATOR TAYLOR moved to amend line 13 to delete "are" and insert              
 "were nonproducing leases on the effective date of the act."                  
                                                                               
 SENATOR PEARCE noted that was on another topic and they were                  
 considering the issue of allowing one or more discovery royalties             
 per lease.                                                                    
                                                                               
 SENATOR FRANK moved to adopt an amendment limiting it to one.                 
 There were no objections and it was so ordered.                               
                                                                               
 MS. KREITZER then reviewed the second issue of applicability and              
 whether to include "nonunitized" wherever "nonproducing" is used.             
                                                                               
 MR. BOYD interjected that if leases are determined not to be                  
 producible, they are removed from the unit.  So he recommended that           
 things in units should be excluded.                                           
                                                                               
 SENATOR FRANK asked if you could get out of a unit without the                
 approval of the State.  MR. COUGHLIN answered that you couldn't and           
 the reason you would want to stay in the unit if you're not                   
 producing is because you would expect to eventually drill a well.             
                                                                               
 MR. RICHARDS asked if the bill intends to reference unitization you           
 have done before the bill.  The committee answered no.  MR. BOYD              
 explained the credit would apply to future unitization.                       
                                                                               
 SENATOR FRANK moved to add "nonunitized" wherever "nonproducing"              
 leases were mentioned.  There were no objections and it was so                
 ordered.                                                                      
                                                                               
 Number 495                                                                    
                                                                               
 MS. KREITZER said the final issue was whether the committee wanted            
 to make a policy decision regarding the nonapplicability of the old           
 discovery royalty where the new one applies because of the                    
 conflicting nature of the two.                                                
                                                                               
 SENATOR TAYLOR moved to disallow usage of the old program in areas            
 where the new program would apply once it goes into effect.  There            
 were no objections and it was so ordered.                                     
                                                                               
 Number 523                                                                    
                                                                               
 There was more discussion on the effective date issue.                        
                                                                               
 TAPE 96-30, SIDE B                                                            
 Number 554                                                                    
                                                                               
 SENATOR TAYLOR and SENATOR FRANK moved to adopt a conceptual                  
 amendment to make the act effective on all leases now and in the              
 future on nonproducing and nonunitized leases after the certifiable           
 discovery six months after the effective date.                                
                                                                               
 SENATOR PEARCE objected to the amendment and asked for a roll call            
 vote.  SENATOR FRANK, SENATOR TAYLOR, and SENATOR HOFFMAN voted               
 "Yes" and SENATOR PEARCE voted "Nay;" and so, the amendment was               
 adopted.                                                                      
                                                                               
 SENATOR TAYLOR moved to pass CSSB 112(RES), as amended, from                  
 committee with individual recommendations.  There were no                     
 objections and it was so ordered.                                             
 SENATOR PEARCE adjourned the meeting at 7:48 p.m.                             
                                                                               

Document Name Date/Time Subjects