Legislature(2011 - 2012)BUTROVICH 205

04/04/2011 03:30 PM RESOURCES


Download Mp3. <- Right click and save file as

Audio Topic
03:31:41 PM Start
03:32:41 PM SB85
03:57:17 PM Confirmation Hearings: Aogcc, Commercial Fisheries Entry Commission, and Board of Fisheries
04:56:33 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 85 TAX CREDIT FOR NEW OIL & GAS DEVELOPMENT TELECONFERENCED
Heard & Held
+ Confirmations: TELECONFERENCED
AOGCC, Dan Seamount
Commercial Fisheries Entry Commission, Ben Brown
Board of Fisheries, William Brown
Board Fisheries, Susan Jeffrey
Board of Fisheries, John Jensen
Board of Fisheries, Michael Smith
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         April 4, 2011                                                                                          
                           3:31 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                    '5$)7                                                                                  
                                                                                                                                
Senator Joe Paskvan, Co-Chair                                                                                                   
Senator Thomas Wagoner, Co-Chair                                                                                                
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Bert Stedman                                                                                                            
Senator Lesil McGuire                                                                                                           
Senator Hollis French                                                                                                           
Senator Gary Stevens                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senate Cathy Giessel                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 85                                                                                                              
"An Act providing for a tax credit applicable to the oil and gas                                                                
production tax based on the cost of developing new oil and gas                                                                  
production; and providing for an effective date."                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
CONFIRMATION HEARINGS                                                                                                           
     Alaska Oil and Gas Conservation Commission                                                                               
          Dan Seamount                                                                                                          
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
     Commercial Fisheries Entry Commission                                                                                    
          Ben Brown                                                                                                             
                                                                                                                                
     - CONFIRMATION ADVANCED                                                                                                    
                                                                                                                                
     Board of Fisheries                                                                                                       
          William Brown                                                                                                         
          Susan Jeffrey                                                                                                         
          John Jensen                                                                                                           
          Michael Smith                                                                                                         
                                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                   
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  85                                                                                                                  
SHORT TITLE: TAX CREDIT FOR NEW OIL & GAS DEVELOPMENT                                                                           
SPONSOR(s): SENATOR(s) WAGONER                                                                                                  
                                                                                                                                
02/07/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/07/11       (S)       RES, FIN                                                                                               
02/25/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/25/11       (S)       Heard & Held                                                                                           
02/25/11       (S)       MINUTE(RES)                                                                                            
02/28/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/28/11       (S)       Heard & Held                                                                                           
02/28/11       (S)       MINUTE(RES)                                                                                            
03/07/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/07/11       (S)       Heard & Held                                                                                           
03/07/11       (S)       MINUTE(RES)                                                                                            
03/09/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/09/11       (S)       Heard & Held                                                                                           
03/09/11       (S)       MINUTE(RES)                                                                                            
03/25/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/25/11       (S)       Heard & Held                                                                                           
03/25/11       (S)       MINUTE(RES)                                                                                            
03/28/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/28/11       (S)       Heard & Held                                                                                           
03/28/11       (S)       MINUTE(RES)                                                                                            
03/30/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/30/11       (S)       Heard & Held                                                                                           
03/30/11       (S)       MINUTE(RES)                                                                                            
04/01/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/01/11       (S)       <Above Item Removed from Agenda>                                                                       
04/01/11       (S)       MINUTE(RES)                                                                                            
04/04/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MICHAEL PAWLOWSKI, Staff                                                                                                        
Senator Lesil McGuire                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Described changes to CSSB 85, version X on                                                                
behalf of the sponsor.                                                                                                          
                                                                                                                                
DAN SEAMOUNT, nominee                                                                                                           
Alaska Oil and Gas Conservation Commission                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Testified as nominee  to the Alaska  Oil and                                                             
Gas Conservation Commission                                                                                                     
                                                                                                                                
JOHN JENSEN, nominee                                                                                                            
Board of Fisheries                                                                                                              
Petersburg, AK                                                                                                                  
POSITION STATEMENT: Testified as nominee to the .                                                                             
                                                                                                                                
BENJAMIN BROWN, nominee                                                                                                         
Commercial Fisheries Entry Commission                                                                                           
Juneau, AK                                                                                                                      
POSITION  STATEMENT:  Testified  as  nominee  to  the  Commercial                                                             
Fisheries Entry Commission.                                                                                                     
                                                                                                                                
WILLIAM S. BROWN, nominee                                                                                                       
Board of Fisheries                                                                                                              
Juneau, AK                                                                                                                      
POSITION  STATEMENT:  Testified  as   nominee  to  the  Board  of                                                             
Fisheries.                                                                                                                      
                                                                                                                                
SUSAN JEFFREY, nominee                                                                                                          
Board of Fisheries                                                                                                              
Juneau, AK                                                                                                                      
POSITION  STATEMENT:  Testified  as   nominee  to  the  Board  of                                                             
Fisheries.                                                                                                                      
                                                                                                                                
MICHAEL E. SMITH, nominee                                                                                                       
Board of Fisheries                                                                                                              
Newlato, AK                                                                                                                     
POSITION  STATEMENT:  Testified  as   nominee  to  the  Board  of                                                             
Fisheries.                                                                                                                      
                                                                                                                                
KARL JOHNSTONE, representing himself                                                                                            
POSITION STATEMENT:  Testified in support of  the appointments of                                                             
John Jensen,  William Brown,  and Michael Smith  to the  Board of                                                               
Fisheries.                                                                                                                      
                                                                                                                                
JULIANNE CURRY, Executive Director                                                                                              
Petersburg Vessel Owners Association                                                                                            
Petersburg, AK                                                                                                                  
POSITION STATEMENT:  Testified in  support of the  appointment of                                                             
John Jensen to the Board of Fisheries.                                                                                          
                                                                                                                                
KENNY WILSON, representing himself                                                                                              
Dillingham, AK                                                                                                                  
POSITION STATEMENT:  Testified in  opposition to  the appointment                                                             
of John Jensen to the Board of Fisheries.                                                                                       
                                                                                                                                
DON FOX, representing himself                                                                                                   
Kodiak, AK                                                                                                                      
POSITION STATEMENT:  Testified in  support of the  appointment of                                                             
William Brown,  Susan Jeffrey, John  Jensen and Michael  Smith to                                                               
the Board of Fisheries.                                                                                                         
                                                                                                                                
LINDA KOZAK, Consultant                                                                                                         
Bering Sea fisheries                                                                                                            
POSITION STATEMENT:  Testified in  support of the  appointment of                                                             
William Brown,  Susan Jeffrey, John  Jensen and Michael  Smith to                                                               
the Board of Fisheries.                                                                                                         
                                                                                                                                
RICKY GEASE, Executive Director                                                                                                 
Kenai River Sportfishing Association                                                                                            
POSITION STATEMENT:  Testified in  support of the  appointment of                                                             
William Brown,  Susan Jeffrey, John  Jensen and Michael  Smith to                                                               
the Board of  Fisheries; Dan Seamount to the  AOGCC; and Benjamin                                                               
Brown to the Commercial Fisheries Entry Commission.                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:31:41 PM                                                                                                                    
CO-CHAIR  JOE  PASKVAN  called   the  Senate  Resources  Standing                                                             
Committee meeting  to order at 3:31  p.m. Present at the  call to                                                               
order were  Senators Stevens, Stedman, French,  McGuire, Paskvan,                                                               
and Wagoner. Senator Giessel was also present.                                                                                  
                                                                                                                                
        SB  85-TAX CREDIT FOR NEW OIL & GAS DEVELOPMENT                                                                     
                                                                                                                                
CO-CHAIR WAGONER  announced the consideration of  SB 85. [Version                                                               
27-LS0484\E was before the committee.]                                                                                          
                                                                                                                                
3:32:41 PM                                                                                                                    
CO-CHAIR PASKVAN moved  to withdraw version E and  adopt CSSB 85,                                                               
labeled 27-LS0484\X ("version X"), as the working document.                                                                     
                                                                                                                                
CO-CHAIR WAGONER objected for discussion purposes.                                                                              
                                                                                                                                
3:33:26 PM                                                                                                                    
MICHAEL  PAWLOWSKI, staff  to Senator  McGuire, stated  that CSSB                                                               
85, version  X, makes  two substantive changes.  The first  is in                                                               
Section  2,  page  2,  lines  2-4. The  timeframe  for  the  Sec.                                                               
43.55.026  development  cost  credit  was changed  to  within  24                                                               
months  after completion  of  the first  development  well for  a                                                               
qualifying pool, lease or property.  This responds to the earlier                                                               
concern  that  the way  the  credit  was established  could  have                                                               
incentivized producers to delay the beginning of production.                                                                    
                                                                                                                                
3:34:10 PM                                                                                                                    
The second substantive  change is the addition of  new sections 3                                                               
and 4. Section 3 amends AS  43.55.160(a), on page 3, lines 17-18,                                                               
by referring to a new subsection (f) in AS 43.55.160.                                                                           
                                                                                                                                
Section 4, [page 5, line 31  through page 6, lines 1-5,] adds the                                                               
new subsection (f). It increases  the production tax value by the                                                               
value of  the development cost  credit under Sec  43.55.026. This                                                               
addresses  the concern  that  qualified development  expenditures                                                               
could  be deducted  from a  person's tax  liability, which  would                                                               
essentially overcome the sponsor's intent  of a 100 percent limit                                                               
on the credit.                                                                                                                  
                                                                                                                                
MR. PAWLOWSKI said the other  changes are largely conforming, and                                                               
based  on  moderate language  suggestions  by  the Department  of                                                               
Revenue (DOR). One  of the most important is on  page 2, line 16.                                                               
The development cost  credit under Sec. 43.55.026  is 100 percent                                                               
of the qualified  capital expenditures less other  credits that a                                                               
producer  would  get  under  the  current  tax  system.  Now  the                                                               
exploration  credits  under Sec  43.55.025  are  included in  the                                                               
calculation.  If  there  is  delineation  work  after  the  first                                                               
development well is drilled, this  ensures that credit, too, will                                                               
be subtracted in determining the 100 percent.                                                                                   
                                                                                                                                
Sections  6, 7,  and 8  were  renumbered to  accommodate the  new                                                               
sections.                                                                                                                       
                                                                                                                                
SENATOR FRENCH asked  if he had an estimate on  the fiscal impact                                                               
of the changes.                                                                                                                 
                                                                                                                                
MR. PAWLOWSKI answered  no, but subsection (g), on  page 3, lines                                                               
2-7, tightens the allocation language  to clarify that the credit                                                               
earned under Sec.  43.55.026 can offset a  person's tax liability                                                               
proportional  to the  volume  of  oil and  gas  produced that  is                                                               
attributable  to the  pool or  lease  from which  the credit  was                                                               
earned.  The goal  is  that  the tax  credit  is  only usable  on                                                               
revenue the state isn't getting under current production.                                                                       
                                                                                                                                
3:37:44 PM                                                                                                                    
SENATOR WIELECHOWSKI joined the committee.                                                                                      
                                                                                                                                
SENATOR FRENCH  mused that this  does a good job  of ring-fencing                                                               
the credit, and he appreciates the focus.                                                                                       
                                                                                                                                
CO-CHAIR WAGONER asked Senator McGuire to discuss Section 6.                                                                    
                                                                                                                                
SENATOR MCGUIRE  asked the members  to review the bill  in detail                                                               
to better  prepare to  respond to those  people who  believe that                                                               
modification of  the fiscal  system is in  order. She  noted that                                                               
the  Senate version  of the  bill does  not have  a progressivity                                                               
element, but  it could be  added. She emphasized that  the Senate                                                               
is listening and  that her goal is to ensure  that Alaska remains                                                               
the number one  oil and gas province in the  nation. Tweaking the                                                               
tax code  isn't difficult for her  to accept, and this  should be                                                               
the committee that is expert at doing that.                                                                                     
                                                                                                                                
3:41:19 PM                                                                                                                    
SENATOR MCGUIRE  explained that the  proposal in Section 6  is to                                                               
establish  an  "Oil  and Gas  Competitiveness  Review  Board"  to                                                               
maintain  focus  on  the  single   largest  revenue  source  that                                                               
supports the state. This board  will consist of nine members: one                                                               
senator   appointed  by   the  president   of  the   Senate;  one                                                               
representative  appointed   by  the  speaker  of   the  House  of                                                               
Representatives; five  public members appointed by  the governor,                                                               
including one  petroleum engineer, one geologist,  one economist,                                                               
and  one who  is a  member  of an  environmental or  conservation                                                               
group; the  commissioner of natural resources  or their designee;                                                               
and the commissioner of revenue or their designee.                                                                              
                                                                                                                                
The legislative  members will be  co-chairs and each  member will                                                               
serve for the duration of the  Legislature during which he or she                                                               
is appointed. Each  public member will serve three  years and may                                                               
be reappointed.  Vacancies will  be filled in  the manner  of the                                                               
original  appointment.  Board  members  may be  replaced  at  the                                                               
discretion of  the person appointing that  member. Public members                                                               
will not  be compensated,  but will receive  per diem  and travel                                                               
expenses,  as  authorized for  boards  and  commissions under  AS                                                               
39.20.180. The  board may contract for  professional services and                                                               
may hire administrative support staff.                                                                                          
                                                                                                                                
3:44:44 PM                                                                                                                    
SENATOR MCGUIRE  said the  duties of  the board  set out  in Sec.                                                               
44.99.610 are based on what the  Province of Alberta did, when it                                                               
assessed  the competitiveness  of the  province in  terms of  its                                                               
fiscal  and regulatory  regime.  The board  will  be tasked  with                                                               
reviewing  the  historical,  current,  and  potential  levels  of                                                               
investment  in the  state's  oil  and gas  sector  on an  ongoing                                                               
basis. Alaska currently  does not have the necessary  data in one                                                               
readily accessible location.                                                                                                    
                                                                                                                                
The board  will also identify  factors that affect  investment in                                                               
oil  and gas  exploration,  development, and  production in  this                                                               
state, including  the tax structure, rates,  and credits; royalty                                                               
requirements;   infrastructure;   workforce   availability;   and                                                               
regulatory  requirements. She  explained  that this  is meant  to                                                               
compliment  Alaska's Clear  and  Equitable Share  (ACES), and  to                                                               
highlight the need  to have a board that  is continually tracking                                                               
the state's  overall competitiveness.  The board will  review the                                                               
competitive  position  of  the  state  to  attract  and  maintain                                                               
investment  in  the  oil  and  gas  sector  as  compared  to  the                                                               
competitive  position   of  other   regions  with  oil   and  gas                                                               
resources.  She   referenced  the   Wood  Mackenzie   report  and                                                               
emphasized  that  members  should  be  continually  tracking  the                                                               
updates to see how Alaska compares on a worldwide basis.                                                                        
                                                                                                                                
Another  duty of  the board  will be  to establish  procedures to                                                               
accept and  keep confidential information  that is  beneficial to                                                               
the work of the board. This  includes creating a secure data room                                                               
and   confidentiality  agreements   that   will   be  signed   by                                                               
individuals that have access to the confidential information.                                                                   
                                                                                                                                
3:50:47 PM                                                                                                                    
The  board  will  make   written  findings,  recommendations  and                                                               
suggest  legislation before  December 1  of each  year regarding:                                                               
changes  to   the  state's  regulatory  environment   that  would                                                               
encourage  investment  while  protecting  the  interests  of  the                                                               
people and the environment; changes  to the state's fiscal regime                                                               
to   encourage  new   and   ongoing   long-term  investment   and                                                               
development   of  the   state's  oil   and  gas   resources;  and                                                               
alternative means  for increasing the state's  ability to attract                                                               
and maintain  investment and development  of the state's  oil and                                                               
gas resources.                                                                                                                  
                                                                                                                                
SENATOR   MCGUIRE   said   Sec.   44.99.620   states   that   all                                                               
commissioners who are responsible  for information related to oil                                                               
and gas investment  and activity in this state  shall provide any                                                               
information that the board requires  to carry out its duties. She                                                               
noted  that  legislation  passed  last  year  that  directed  the                                                               
Department of  Natural Resources (DNR)  to give a license  on the                                                               
instate  line returned  great dividends.  Except for  information                                                               
that  is  confidential  under  AS43.05.230,  a  commissioner  may                                                               
disclose   information   to   the   board   that   is   otherwise                                                               
confidential.                                                                                                                   
                                                                                                                                
SENATOR  MCGUIRE welcomed  suggestions with  regard to  Section 6                                                               
and  opined that  regardless  of the  viewpoint,  Alaska is  well                                                               
behind the  times in adopting  some sort  of board to  assess the                                                               
its  competitiveness.  She directed  attention  to  a March  2011                                                               
report by Commonwealth North urging a competitiveness review.                                                                   
                                                                                                                                
CO-CHAIR WAGONER announced he would hold SB 85 in committee.                                                                    
                                                                                                                                
3:53:34 PM                                                                                                                    
^Confirmation   Hearings:  AOGCC,   Commercial  Fisheries   Entry                                                               
Commission, and Board of Fisheries                                                                                              
                                                                                                                                
                     CONFIRMATION HEARINGS                                                                                    
           Alaska Oil and Gas Conservation Commission                                                                       
                                                                                                                                
CO-CHAIR WAGONER  announced the next  order of business  would be                                                               
confirmation  hearings.  He  asked   Dan  Seamount  to  give  his                                                               
statement.                                                                                                                      
                                                                                                                                
DAN   SEAMOUNT,  nominee,   Alaska  Oil   and  Gas   Conservation                                                               
Commission (AOGCC), said  it has been satisfying to  serve on the                                                               
AOGCC for the past 11 years,  and he'd like to continue. He holds                                                               
the petroleum  geologist seat, and  for three years he  served as                                                               
chair.  The mission  of the  AOGCC, in  part, is  to protect  the                                                               
public interest in  exploration and development of  oil, gas, and                                                               
geothermal   resources  throughout   the  state.   This  includes                                                               
protection of groundwater.  AOGCC primarily regulates underground                                                               
drilling and reservoir development operations.                                                                                  
                                                                                                                                
MR. SEAMOUNT  informed the committee  that for 27 years  prior to                                                               
working  on   the  commission  he   worked  in   exploration  and                                                               
development geology for  Chevron, Marathon, and Unocal.  He has a                                                               
master's  degree  in  geology  with  an  emphasis  in  geothermal                                                               
development and exploration, and  holds a professional license in                                                               
Alaska.                                                                                                                         
                                                                                                                                
He  pointed out  that ongoing  issues include  Cook Inlet  energy                                                               
challenges; decreasing  natural gas; natural gas  storage issues;                                                               
the  LNG plant  closure; and  the  potential arrival  of jack  up                                                               
drilling rigs.  The AOGCC  is also  reexamining the  offshore and                                                               
extended-reach  drilling  regulation  in  light of  the  Gulf  of                                                               
Mexico   blowout,   has   taken   over   geothermal   and   other                                                               
nontraditional  drilling, and  is  trying to  educate the  public                                                               
about hydraulic fracturing.                                                                                                     
                                                                                                                                
MR. SEAMOUNT asked the committee to support his reappointment.                                                                  
                                                                                                                                
3:57:17 PM                                                                                                                    
SENATOR  FRENCH stated  that  Mr. Seamount  keeps  in touch  with                                                               
legislators when he  comes to Juneau, and is exactly  the kind of                                                               
person that the commission needs.                                                                                               
                                                                                                                                
SENATOR PASKVAN asked  what role he sees  technology playing, now                                                               
compared to five years ago, in  the recovery of oil in the legacy                                                               
fields.                                                                                                                         
                                                                                                                                
MR. SEAMONT  replied the obvious  things are viscous  oil, ultra-                                                               
extended-reach  drilling, and  continuing enhanced  oil recovery.                                                               
Geologic horizons that  have been proven elsewhere  may be coming                                                               
to the state including deep  basin-centered gas on both the North                                                               
Slope and  the Cook Inlet, and  shale oil and shale  gas. He said                                                               
Alaska has the foremost conventional  and nonconventional oil and                                                               
gas  potential  of all  the  basins  he's worked  throughout  the                                                               
country.                                                                                                                        
                                                                                                                                
CO-CHAIR  WAGONER asked  his  opinion of  the  Ormat Mount  Spurr                                                               
Geothermal Project.                                                                                                             
                                                                                                                                
MR. SEAMOUNT replied he hasn't  seen any results, but he believes                                                               
the project has a fairly good chance for success.                                                                               
                                                                                                                                
3:59:58 PM                                                                                                                    
CO-CHAIR PASKVAN asked  him to talk about well  workovers and the                                                               
number that are currently ongoing on the North Slope.                                                                           
                                                                                                                                
MR. SEAMOUNT responded  well workovers are the number  one way to                                                               
maintain,  and sometimes  increase,  an oilfield's  productivity.                                                               
It's done  by perforating new  zones and doing  stimulations. The                                                               
data  indicates that  the  numbers of  well  workovers have  been                                                               
constant since 2003.                                                                                                            
                                                                                                                                
4:00:56 PM                                                                                                                    
CO-CHAIR PASKVAN  asked if technology  advances have  helped well                                                               
workovers compared to 5-10 years ago.                                                                                           
                                                                                                                                
MR.  SEAMOUNT  replied  there have  been  modifications  on  well                                                               
workovers; hydraulic frac sizes  are bigger and stimulations have                                                               
been tweaked so they are more effective.                                                                                        
                                                                                                                                
CO-CHAIR WAGONER thanked Mr. Seamount,  and stated that committee                                                               
action would be  held until all the nominees were  heard. He then                                                               
asked John Jensen to give his statement.                                                                                        
                                                                                                                                
                       Board of Fisheries                                                                                   
                                                                                                                              
4:02:27 PM                                                                                                                    
JOHN JENSEN, nominee,  Board of Fisheries, said he  has served on                                                               
the Board  of Fisheries for  nine years  and would like  to serve                                                               
another  three-year   term.  He  was  born   in  Petersburg,  and                                                               
continues to live there and work as a commercial fisherman.                                                                     
                                                                                                                                
SENATOR FRENCH asked  what parts of the job he  likes, what parts                                                               
he doesn't like, and which issues are the most difficult.                                                                       
                                                                                                                                
MR.  JENSEN replied  allocations are  by far  the most  difficult                                                               
part  of the  job,  but allocations  for  conservation aren't  as                                                               
difficult  as for  different user  groups. It  is rewarding  that                                                               
fisheries in  the state are,  for the most part,  sustainable, he                                                               
said.                                                                                                                           
                                                                                                                                
CO-CHAIR  WAGONER  asked what  should  be  done to  mitigate  the                                                               
impact  on  the resource  of  having  about 100,000  king  salmon                                                               
intercepted in  federal fisheries off  the west coast and  in the                                                               
Gulf of Alaska.                                                                                                                 
                                                                                                                                
MR.  JENSEN responded  the  king salmon  issue  along the  entire                                                               
coast of Alaska  is one of his biggest concerns,  and those areas                                                               
are the  most problematic. The  board did  write a letter  to the                                                               
federal  government about  better  management in  the Bering  Sea                                                               
fishery, and intended to write one  this year about the Gulf. The                                                               
federal government  has more  observer coverage,  particularly in                                                               
the  Gulf  of Alaska,  and  hopefully  that  will help.  It  will                                                               
probably be  discussed at the  meeting that's going on  right now                                                               
in Anchorage, he said.                                                                                                          
                                                                                                                                
CO-CHAIR  WAGONER asked  what would  be wrong  with a  mitigation                                                               
program where they put one back if they take one.                                                                               
                                                                                                                                
MR.  JENSEN replied  that sounds  fair; the  current methods  for                                                               
keeping away from the king salmon don't seem to be working.                                                                     
                                                                                                                                
CO-CHAIR  WAGONER  urged  him  to continue  to  think  about  it,                                                               
because he and  other legislators are ready to  take some action.                                                               
It's been going on a long time with no improvement.                                                                             
                                                                                                                                
             Commercial Fisheries Entry Commission                                                                          
                                                                                                                                
4:06:11 PM                                                                                                                    
CO-CHAIR WAGONER  asked Ben  Brown to tell  the committee  why he                                                               
should  be  endorsed  as  the newest  member  of  the  Commercial                                                               
Fisheries Entry Commission.                                                                                                     
                                                                                                                                
BENJAMIN BROWN,  nominee, Commercial Fisheries  Entry Commission,                                                               
Juneau,  said he  began service  on March  1 and  enjoys it  very                                                               
much. He  informed the committee  that he is a  life-long Alaskan                                                               
who  worked in  the Legislature  before going  to law  school. In                                                               
addition to being a law clerk,  he has been an administrative law                                                               
judge,  a  lobbyist,  and  now  works  in  private  practice.  He                                                               
reminded the committee that the  Limited Entry Act was adopted in                                                               
1973 after  the voters  amended the  state constitution  to allow                                                               
for   limited   entry.  Up   to   that   time  it   was   clearly                                                               
unconstitutional.  The  amendment  passed  by  a  more  than  3:1                                                               
margin,  even   in  Kodiak.   It  was   more  popular   than  the                                                               
constitutional    amendment    that    year    that    eliminated                                                               
discrimination against women  in Alaska, and it  was more popular                                                               
than the amendment creating the right to privacy.                                                                               
                                                                                                                                
The Limited Entry Act calls for  three members with a broad range                                                               
of  professional experience  and no  vested economic  interest in                                                               
any limited fishery.  Mr. Brown offered his belief  that that his                                                               
resume  and  experience  shows  that  he has  a  broad  range  of                                                               
professional  experience,  and  he   does  not  have  any  vested                                                               
interest  in a  commercial  fishery. When  he  became aware  that                                                               
Frank Holman was going to retire  after many years of service, he                                                               
contacted Judge Larry Weeks, Judge  Peter Froehlich and others to                                                               
ascertain whether or not they  thought he had the necessary skill                                                               
set and  aptitude for the  job. When  he submitted his  name, the                                                               
Governor saw fit to appoint  him. He reiterated that he's enjoyed                                                               
serving and would like the committee to support his appointment.                                                                
                                                                                                                                
4:11:17 PM                                                                                                                    
SENATOR STEVENS  asked if he'd had  any surprises, or if  the job                                                               
is exactly as he'd expected.                                                                                                    
                                                                                                                                
MR.  BROWN  replied  it's  a   unique  institution  within  state                                                               
government, and he tried not  to bring preconceived notions. He's                                                               
listened to the other commissioners  and 26 hard-working staff to                                                               
figure out their  vision of how to be successful  in the mission,                                                               
and he's tried  to familiarize himself with  the jurisprudence of                                                               
the cases.                                                                                                                      
                                                                                                                                
CO-CHAIR WAGONER thanked Mr. Brown.                                                                                             
                                                                                                                                
                       Board of Fisheries                                                                                   
                                                                                                                                
CO-CHAIR WAGONER asked William Brown to give his statement.                                                                     
                                                                                                                                
4:13:11 PM                                                                                                                    
WILLIAM S.  BROWN, nominee, Board  of Fisheries, Juneau,  said he                                                               
has lived in Alaska for 20 years,  and has served on the Board of                                                               
Fisheries for one three-year term.  The reason he'd like to serve                                                               
a  second  term is  a  continuing  desire  to help  preserve  the                                                               
fishery resource for Alaska's  children, grandchildren, and great                                                               
grandchildren.  The fish  will  last forever,  only  if they  are                                                               
managed  correctly. He  explained that  he holds  a Doctorate  in                                                               
Economics,  and has  provided  training  in statistical  methods,                                                               
population   dynamics   and   economic  rationale   for   fishery                                                               
regulation. A  background in statistics made  it possible, during                                                               
his  first term,  to understand  and analyze  the models  used to                                                               
estimate  optimal sustained  yield and  other key  parameters for                                                               
designing  fishing regulations.  Training  in  economics is  also                                                               
helpful in  understanding and calculating the  economic impact of                                                               
various  fisheries  statewide.  Biology   and  social  issues  do                                                               
matter, but so does the economic impact of communities.                                                                         
                                                                                                                                
MR. BROWN said he was  surprised that board members were expected                                                               
to read so much. For example,  there were 8,000 pages of material                                                               
to read  for the Upper Cook  Inlet meeting. As a  board member he                                                               
made  many tough  and  unpopular decisions,  but  his voting  was                                                               
always  based on  logic  and careful  consideration.  He said  he                                                               
recognizes the importance of the job  and has a desire to improve                                                               
the fisheries.                                                                                                                  
                                                                                                                                
4:15:36 PM                                                                                                                    
SENATOR FRENCH asked him to talk  about one of the more difficult                                                               
decisions he had to make while serving on the board.                                                                            
                                                                                                                                
MR.  BROWN responded  one  of the  most recent  was  in the  Cook                                                               
Inlet. That is  a mixed stock fishery making it  perhaps the most                                                               
complex fishery in  the state. Cook Inlet has  a large commercial                                                               
fishery for  sockeye salmon and  just north is the  largest sport                                                               
fishery in  the state for king  and silver salmon. The  board had                                                               
to  make a  decision  to  get the  optimal  sustainable yield  on                                                               
sockeye  salmon for  commercial  fisheries,  while also  allowing                                                               
sufficient  numbers  of king  and  silver  salmon for  the  sport                                                               
fisheries. Because  there are several  stocks of  concern farther                                                               
north,  it  was necessary  to  make  serious cuts  in  commercial                                                               
fishing. What complicated the matter  was that it is not possible                                                               
to  manage  for  maximum  sustained  yield  with  a  mixed  stock                                                               
fishery, because  maximizing sustained yield for  one species may                                                               
devastate another species. It was a difficult decision.                                                                         
                                                                                                                                
SENATOR FRENCH asked him to explain  the article he wrote in 1994                                                               
called,  "The  Alaska Permanent  Fund:  good  sense or  political                                                               
expediency?"                                                                                                                    
                                                                                                                                
MR.  BROWN  responded the  main  argument  was that  the  Alaskan                                                               
economy needs  to be  diversified, and one  solution would  be to                                                               
use some of  the Permanent Fund monies to stimulate  a variety of                                                               
other industries across  the state. He opined  that spending that                                                               
money  differently might  result in  better education  and better                                                               
allocation of resources in the state.                                                                                           
                                                                                                                                
CO-CHAIR  WAGONER commented  that it  seems that  there would  be                                                               
fewer problems  allocating fish  to user groups,  if there  was a                                                               
better  mitigation  process  for  the high  seas  catch  of  king                                                               
salmon. He asked Mr. Brown to respond.                                                                                          
                                                                                                                                
MR. BROWN  said he  would recommend  salmon excluders  on pollock                                                               
nets,  and require  them  in  both the  Bering  Sea  and Gulf  of                                                               
Alaska. That  might exclude half  the current king  salmon catch.                                                               
It's also a good idea to  put observers on the pollock boats, but                                                               
many  of the  king  salmon  that are  caught  in  those nets  are                                                               
juveniles and it's  difficult to tell them from  the pollock when                                                               
there are  thousands of fish  in the  net. He added  that drastic                                                               
measures are needed, and he'd consider a hard cap.                                                                              
                                                                                                                                
CO-CHAIR WAGONER said with enough  practice it's not difficult to                                                               
differentiate between  the two, and  he would again ask  what the                                                               
board can do to mitigate the salmon catch.                                                                                      
                                                                                                                                
MR.  BROWN  said  a  first   step  would  be  to  require  salmon                                                               
excluders.  He explained  that the  monitoring is  electronic and                                                               
the  camera  can't  tell  the   difference  between  pollock  and                                                               
juvenile king salmon,  so perhaps better monitoring  is in order.                                                               
A hard  cap is another  step. Cooperation with  federal fisheries                                                               
is necessary  and that's  difficult for  the board  to do  on its                                                               
own, he said.                                                                                                                   
                                                                                                                                
CO-CHAIR WAGONER  said he understands  that, but he wants  him to                                                               
hold that thought.                                                                                                              
                                                                                                                                
4:22:46 PM                                                                                                                    
CO-CHAIR WAGONER asked Susan Jeffrey to give her statement.                                                                     
                                                                                                                                
SUSAN  JEFFREY,  nominee, Board  of  Fisheries,  said the  Alaska                                                               
Constitution wisely  mandates that resources will  be managed for                                                               
sustainability  and  the  maximum  benefit  of  the  people.  She                                                               
understands  that   the  Board  of  Fisheries   is  charged  with                                                               
conserving and  developing the state's  fisheries for  all users.                                                               
It is  also up to the  board to make decisions  about allocations                                                               
among the  fisheries, which  requires thoughtful  analysis, based                                                               
on  science  and  socio-economic   factors.  She  said  she  also                                                               
understands that  the deliberative  public process  can sometimes                                                               
be contentious. While it's not a  process for the faint of heart,                                                               
she said  she would be  honored to  serve, and help  conserve the                                                               
fisheries  resource   for  future   generations.  The   Board  of                                                               
Fisheries process plays a vital role.                                                                                           
                                                                                                                                
MS. JEFFREY  said that for  nearly 40 years she  has participated                                                               
in  Alaska's   subsistence,  sport,  and   commercial  fisheries.                                                               
Working  as a  fisheries writer  and editor  for many  years, she                                                               
developed a  keen understanding of  the complexities  involved in                                                               
managing  Alaska's renewable  fisheries resources.  Currently she                                                               
is serving  a second term  on the Kodiak Island  Borough Assembly                                                               
and  this has  helped her  develop  a deep  appreciation for  the                                                               
public process.  She understands  the importance of  studying the                                                               
issues   and   carefully   listening  to   all   parties   before                                                               
deliberating on matters.                                                                                                        
                                                                                                                                
MS.  JEFFREY said  she  will  be a  newcomer  on  the board,  and                                                               
therefore has  a lot  to learn.  She promised to  do her  best to                                                               
ensure  the sustainability  of Alaska's  fisheries  for all  user                                                               
groups, now and in the future.                                                                                                  
                                                                                                                                
4:27:53 PM                                                                                                                    
SENATOR STEVENS said  he's known Ms. Jeffrey for  many years, and                                                               
he'd like  her to tell  those who don't  know her why  she thinks                                                               
she is tough enough to do the job.                                                                                              
                                                                                                                                
MS. JEFFREY  responded she is both  approachable and open-minded.                                                               
In the past she has had to report  or vote on issues that put her                                                               
at   odds  with   friends  and   acquaintances,  but   she's  not                                                               
uncomfortable doing so because she does the homework.                                                                           
                                                                                                                                
CO-CHAIR WAGONER thanked  Ms. Jeffrey and asked  Michael Smith to                                                               
give his statement.                                                                                                             
                                                                                                                                
4:30:36 PM                                                                                                                    
MICHAEL  E. SMITH,  nominee, Board  of  Fisheries, said  he is  a                                                               
Koyukon Athabascan  and his family  is from Newlato on  the Yukon                                                               
River. He's  been a subsistence  advocate for about 25  years and                                                               
has focused  on fishery issues  for the past 10  years, primarily                                                               
along the  Yukon River. He said  he's been involved in  the Yukon                                                               
River treaty processes and has  served on the king salmon bycatch                                                               
committee  of  the  North  Pacific  Fishery  Management  Council.                                                               
Currently he's working on the  chum bycatch issues and looking at                                                               
the king  salmon bycatch  issue in  the Gulf  of Alaska.  He said                                                               
he's   also   worked  in   the   Western   Alaska  Salmon   Stock                                                               
Identification Program.                                                                                                         
                                                                                                                                
MR. SMITH said  he's pleased to have been  nominated. He's served                                                               
on  the  board   for  one  meeting  cycle,  and   found  it  very                                                               
interesting.                                                                                                                    
                                                                                                                                
CO-CHAIR PASKVAN asked what his priorities would be.                                                                            
                                                                                                                                
MR. SMITH  replied low abundance  of king salmon is  probably one                                                               
of the  biggest priorities. Reduced  returns all over  Alaska are                                                               
hampering both personal and subsistence users.                                                                                  
                                                                                                                                
CO-CHAIR  WAGONER asked  how he  feels about  mitigation of  king                                                               
salmon due to interception on the high seas.                                                                                    
                                                                                                                                
MR. SMITH  replied the board  is somewhat limited in  its ability                                                               
to address  actual mitigation, but  it will continue to  keep the                                                               
bycatch  limits as  low as  possible. The  North Pacific  Fishery                                                               
Management  Council  didn't  implement  the 32,000  cap  on  king                                                               
salmon bycatch  that the board  advocated for, but for  the first                                                               
time a cap  is in place. Additionally, the  100 observer coverage                                                               
will have a positive effect on reporting and sampling.                                                                          
                                                                                                                                
CO-CHAIR WAGONER  asked what the  board discussed with  regard to                                                               
king salmon  escapement in the  upper district of Cook  Inlet. He                                                               
said he doesn't  believe the commercial fleet has  anything to do                                                               
with the reduction  in those numbers because  the kings generally                                                               
go through  the central district  much earlier than the  fleet is                                                               
fishing on them.                                                                                                                
                                                                                                                                
MR. SMITH  replied the board  looked at  action plans for  six or                                                               
seven streams in  that upper region, and each  one had management                                                               
concerns  about king  salmon stocks.  In-river restrictions  were                                                               
put in  place and some of  the fisheries were shifted  around. He                                                               
said that  was his first upper  Cook Inlet meeting and  while the                                                               
issue  is complex,  he  feels the  board came  up  with a  fairly                                                               
balanced  approach  to try  to  get  more  fish to  the  spawning                                                               
grounds.                                                                                                                        
                                                                                                                                
4:37:50 PM                                                                                                                    
KARL JOHNSTONE, representing  himself, said he has  served on the                                                               
Board of  Fisheries for the last  three years and he  is speaking                                                               
in  support of  John Jensen,  William Brown,  and Michael  Smith.                                                               
John Jensen has a lot  of experience and significant knowledge of                                                               
Alaska's fishery  resources, and  the entire board  benefits from                                                               
this experience.  He's always available  to stakeholders  and the                                                               
advisory committees.                                                                                                            
                                                                                                                                
William Brown has  proven to be an effective  and valuable member                                                               
of the  board. He has raised  the bar and overall  performance of                                                               
the board. His background in  economics and statistics has helped                                                               
the  board  understand  and  sometimes  question  conclusions  or                                                               
science  that is  presented. This  has helped  the department  as                                                               
well. He assimilates data quickly,  studies hard, listens to user                                                               
groups, takes  advisory committee  comments seriously, and  is an                                                               
active participant in the deliberative process.                                                                                 
                                                                                                                                
Michael Smith  is a new member  who adds a dimension  that's been                                                               
missing from  the board.  He provides  a perspective  on Interior                                                               
Alaska,   including  the   Yukon   and   Kuskoquim  rivers,   and                                                               
subsistence  users. He  understands the  resource and  is already                                                               
familiar with  the deliberative process.  He studies hard  and is                                                               
ready to listen to user groups.                                                                                                 
                                                                                                                                
4:43:20 PM                                                                                                                    
JULIANNE  CURRY,  Executive  Director, Petersburg  Vessel  Owners                                                               
Association, stated support for John  Jensen. He's bright and has                                                               
the institutional knowledge to be  an effective board member. The                                                               
resource  comes  first; he  puts  science  at the  forefront,  he                                                               
listens,  and  he   treats  people  with  respect.   He  has  the                                                               
institutional  knowledge   that  is  imperative  to   manage  the                                                               
fisheries,  and is  concerned with  the issues  before the  North                                                               
Pacific Fishery  Management Council,  including king  and halibut                                                               
bycatch.                                                                                                                        
                                                                                                                                
4:45:01 PM                                                                                                                    
KENNY  WILSON, representing  himself,  Dillingham, said  he is  a                                                               
Bristol Bay  fisherman who is speaking  against the reappointment                                                               
of  John  Jensen  because  in   the  past  he  hasn't  taken  the                                                               
recommendations of  the advisory committees. Mr.  Jensen voted to                                                               
open the  outer Port Heiden area  in 2010, which resulted  in the                                                               
interception  of 5,694,479  sockeye and  silver salmon  that were                                                               
headed  to Bristol  Bay and  Chignik. Last  summer fishing  was a                                                               
flop in  the Egegik  districts, the  Arctic-Yukon-Kuskokwim (AYK)                                                               
region is  suffering, and  the Kvichak has  been identified  as a                                                               
river of concern. Bristol Bay  has been losing ground every year,                                                               
and it's time to make a change on the Board of Fisheries.                                                                       
                                                                                                                                
4:50:13 PM                                                                                                                    
DON  FOX, representing  himself,  Kodiak, said  he  is a  retired                                                               
commercial  fisherman who  attends a  lot of  Board of  Fisheries                                                               
meetings  as  a  representative  of  the  Kodiak  Fish  and  Game                                                               
Advisory   Committee.  He   urged   confirmation   of  all   four                                                               
appointments  to the  Board of  Fisheries. He  has observed  that                                                               
John  Jensen and  William Brown  both come  to the  meetings well                                                               
prepared;  they work  hard and  are very  approachable; and  they                                                               
always take time  to fully explain their votes.  Michael Smith is                                                               
on a  learning curve as  a new  member, and should  be confirmed.                                                               
Susan Jeffrey  is on  the local borough  assembly and  he's known                                                               
her  for 30  years. She  works hard,  looks at  both sides  of an                                                               
issue, is  open to the public,  doesn't have an agenda  and knows                                                               
the fisheries.  These qualities will  serve well on the  Board of                                                               
Fisheries.                                                                                                                      
                                                                                                                                
4:52:10 PM                                                                                                                    
LINDA KOZAK,  Consultant, Bering Sea crab  industry, halibut hook                                                               
and  line  fishermen, and  Pacific  Cod  pot  and hook  and  line                                                               
fishermen, said  she is speaking  for all the  current applicants                                                               
to  the Board  of  Fisheries, particularly  Susan  Jeffery. As  a                                                               
reporter, Ms. Jeffery was always  willing to listen to both sides                                                               
of  an issue.  She  was always  fair and  seemed  to present  the                                                               
issues  without a  slanted opinion,  and has  exhibited the  same                                                               
qualities  while serving  on the  local  borough assembly.  Susan                                                               
Jeffery is  highly qualified, and will  be a very good  member of                                                               
the Board of Fisheries, she stated.                                                                                             
                                                                                                                                
4:53:38 PM                                                                                                                    
RICKY  GEASE,   Executive  Director,  Kenai   River  Sportfishing                                                               
Association,   stated  support   for  all   the  nominees   under                                                               
consideration. Dan  Seamount served on the  governor's Resources,                                                               
Energy and Environment transition  committee and is well informed                                                               
on oil  and gas issues.  He should  be reappointed to  the AOGCC.                                                               
All the  Board of Fisheries  candidates are  strong appointments.                                                               
Susan Jeffrey will serve well  on the board. William Brown brings                                                               
strong  economic and  statistical  skills, and  has  been a  good                                                               
addition  to  the board.  John  Jensen  has tremendous  statewide                                                               
experience.  He brings  valuable knowledge  about the  commercial                                                               
fishery,  which adds  to  the continuity  of  the board.  Michael                                                               
Smith  brings a  tremendous amount  of information  from Interior                                                               
Alaska.  He   has  a  deep  understanding   and  appreciation  of                                                               
subsistence,  commercial, sport  and  personal-use fisheries.  He                                                               
commended the Governor's Office for  bringing forth such a strong                                                               
slate of candidates.                                                                                                            
                                                                                                                                
[There was  no motion regarding the  Governor's appointments, but                                                               
the assumption was that the names  would be forwarded to the full                                                               
body for confirmation.]                                                                                                         
                                                                                                                                
4:56:33 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Co-Chair Wagoner adjourned the Senate Resources Standing                                                                        
Committee at 4:56 pm.                                                                                                           

Document Name Date/Time Subjects
Apr 4 Confirms.pdf SRES 4/4/2011 3:30:00 PM
Confirmations
UFA Support Ben Brown CFEC - Senate Resources 040411.pdf SRES 4/4/2011 3:30:00 PM
Confirmation
SB 85 CompStudyPresentation2Stakeholders.pdf SRES 4/4/2011 3:30:00 PM
SB 85
CompStudyStakeholderBriefing.pdf SRES 4/4/2011 3:30:00 PM
SB 85