Legislature(2011 - 2012)BUTROVICH 205

03/05/2012 03:30 PM RESOURCES

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Bills Previously Heard/Scheduled
Moved CSHB 185(RES) Out of Committee
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 5, 2012                                                                                          
                           3:35 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Joe Paskvan, Co-Chair                                                                                                   
Senator Thomas Wagoner, Co-Chair                                                                                                
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Lesil McGuire                                                                                                           
Senator Hollis French                                                                                                           
Senator Gary Stevens                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Bert Stedman                                                                                                            
OTHER LEGISLATORS PRESENT                                                                                                     
Senator Cathy Giessel                                                                                                           
Senator Joe Thomas                                                                                                              
Senator Dennis Egan                                                                                                             
COMMITTEE CALENDAR                                                                                                            
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 185(RES)                                                                                
"An Act relating to an  exemption from authorizations that may be                                                               
required by the Department of  Environmental Conservation for the                                                               
firing or other use of munitions on active ranges."                                                                             
     - MOVED CSHB 185(RES) OUT OF COMMITTEE                                                                                     
SENATE BILL NO. 153                                                                                                             
"An Act relating  to a gas storage facility; relating  to the tax                                                               
credit for  a gas  storage facility; relating  to the  powers and                                                               
duties  of  the  Alaska  Oil  and  Gas  Conservation  Commission;                                                               
relating to the  regulation of natural gas storage  as a utility;                                                               
relating  to  the  powers  and  duties of  the  director  of  the                                                               
division of  lands and to lease  fees for a gas  storage facility                                                               
on state land; and providing for an effective date."                                                                            
     - HEARD & HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 185                                                                                                                  
SHORT TITLE: EXEMPT DISCHARGES FROM USE OF MUNITIONS                                                                            
SPONSOR(s): REPRESENTATIVE(s) T.WILSON                                                                                          
03/10/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/11       (H)       RES                                                                                                    
03/18/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/18/11       (H)       Heard & Held                                                                                           
03/18/11       (H)       MINUTE(RES)                                                                                            
03/28/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/28/11       (H)       Moved CSHB 185(RES) Out of Committee                                                                   
03/28/11       (H)       MINUTE(RES)                                                                                            
03/29/11       (H)       RES RPT CS(RES) 7DP 1NR                                                                                
03/29/11       (H)       DP: FOSTER, MUNOZ, P.WILSON, HERRON,                                                                   
                         DICK, FEIGE, SEATON                                                                                    
03/29/11       (H)       NR: GARDNER                                                                                            
04/01/11       (H)       TRANSMITTED TO (S)                                                                                     
04/01/11       (H)       VERSION: CSHB 185(RES)                                                                                 
04/04/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/11       (S)       RES                                                                                                    
04/13/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/13/11       (S)       Heard & Held                                                                                           
04/13/11       (S)       MINUTE(RES)                                                                                            
02/17/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/17/12       (S)       Scheduled But Not Heard                                                                                
02/21/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/21/12       (S)       Heard & Held                                                                                           
02/21/12       (S)       MINUTE(RES)                                                                                            
03/05/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: SB 153                                                                                                                  
SHORT TITLE: NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                          
SPONSOR(s): SENATOR(s) THOMAS                                                                                                   
01/17/12       (S)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       RES, FIN                                                                                               
02/09/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/09/12       (S)       Heard & Held                                                                                           
02/09/12       (S)       MINUTE(RES)                                                                                            
03/05/12       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
REPRESENTATIVE TAMMIE WILSON                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of HB 185.                                                                                        
ALPHEUS BULLARD, Legislative Attorney                                                                                           
Legislative Affairs Agency                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Answered questions about HB 185.                                                                          
MCHUGH PIERRE, Deputy Commissioner                                                                                              
Department of Military & Veterans Affairs (DMVA)                                                                                
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported CSHB 185.                                                                                       
SETH BEAUSANG, Assistant Attorney General                                                                                       
Civil Division                                                                                                                  
Environmental Section                                                                                                           
Department of Law (DOL)                                                                                                         
Representing the Department of Environmental Conservation (DEC)                                                                 
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Explained provisions in HB 185 related to                                                                 
primacy issues.                                                                                                                 
KEVIN WARD, Regional Counsel                                                                                                    
Regional Environmental Office                                                                                                   
US Army                                                                                                                         
Denver, CO                                                                                                                      
Representing the Regional Environmental Coordinator                                                                             
US Department of Defense                                                                                                        
Washington, D.C.                                                                                                                
POSITION STATEMENT: Related background on primacy issues and how                                                              
they may relate to base closures in HB 185.                                                                                     
GRIER HOPKINS, Staff                                                                                                            
Senator Joe Thomas                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Explained changes in CSSB 153( ), version D,                                                              
for the sponsor.                                                                                                                
GENE THERRIAULT, Vice President                                                                                                 
Resource Development                                                                                                            
Golden Valley Electric Association (GVEA)                                                                                       
Fairbanks, AK                                                                                                                   
POSITION STATEMENT: Supported version D of CSSB 153( ).                                                                       
ACTION NARRATIVE                                                                                                              
3:35:56 PM                                                                                                                    
CO-CHAIR  THOMAS WAGONER  called  the  Senate Resources  Standing                                                             
Committee meeting  to order at 3:35  p.m. Present at the  call to                                                               
order  were  Senators  Stevens,  Wielechowski,  French,  Co-Chair                                                               
Paskvan and Co-Chair Wagoner.                                                                                                   
         HB 185-EXEMPT DISCHARGES FROM USE OF MUNITIONS                                                                     
3:36:46 PM                                                                                                                    
CO-CHAIR  WAGONER announced  HB 185  to be  up for  consideration                                                               
[CSHB 185(RES) was  before the committee]. He said  this bill was                                                               
heard twice by the committee and a motion was pending.                                                                          
3:37:03 PM                                                                                                                    
SENATOR MCGUIRE joined the committee.                                                                                           
3:37:50 PM                                                                                                                    
REPRESENTATIVE TAMMIE  WILSON, sponsor of HB  185, explained that                                                               
a  problem  was created  when  the  Alaska  Clean Water  Act  was                                                               
amended in  2008 to its  current form. The state's  long standing                                                               
comprehensive military  munitions exemption,  AS 46.03.100(e)(7),                                                               
says "unless it results in a  discharge into waters of the United                                                               
States"  and   this  language  potentially  allows   for  a  more                                                               
expansive  unintended application  of  Alaska's  Clean Water  Act                                                               
than  the federal  Clean  Water Act  (CWA) due  to  the many  and                                                               
varying interpretations of "waters of the US."                                                                                  
The proposed amendment in HB  185: "unless otherwise regulated by                                                               
the  federal  Water  Pollution Control  Act"  will  maintain  the                                                               
state's  primacy  and at  the  same  time allow  Alaska  military                                                               
ranges to comply  with state law by operating  in accordance with                                                               
federal law. If not passed,  the possibility exists that military                                                               
ranges  would  have  to  curtail  operations  because  of  unique                                                               
interpretations  of  Alaska  law  even   if  the  ranges  are  in                                                               
compliance  with  federal law.  A  consequence  of the  potential                                                               
limited uses of  the military ranges is that  the U.S. Department                                                               
of Defense (USDOD) could decide  to use this decision to downsize                                                               
Alaska's  military  presence. The  bottom  line  is that  HB  185                                                               
maintains Alaska's  primacy, protects the environment  and allows                                                               
military exercises to continue without potential legal issues.                                                                  
REPRESENTATIVE  T. WILSON  said  she took  this  bill on  because                                                               
Eielson is one  of the bases that could  Alaska could potentially                                                               
3:40:11 PM                                                                                                                    
CO-CHAIR PASKVAN  said last year  one of his  responses indicated                                                               
that the  effects and  purpose of  the legislation  weren't clear                                                               
and asked the drafting attorney what he thought.                                                                                
3:40:47 PM                                                                                                                    
ALPHEUS  BULLARD,   Legislative  Attorney,   Legislative  Affairs                                                               
Agency,  Alaska State  Legislature, replied  that he  thought the                                                               
sponsor  had spoken  to that.  He didn't  know if  there was  any                                                               
distinction  in enforcement  of "into  the waters  of the  United                                                               
States" or what  is regulated under the Clean Water  Act. At this                                                               
moment  there  is  no  difference.  If the  state  were  to  more                                                               
stringently define "waters  of the United States"  in the future,                                                               
there might be some deviation.                                                                                                  
3:41:31 PM                                                                                                                    
CO-CHAIR PASKVAN  asked if the  issue of primacy is  to establish                                                               
the  Alaska Department  of Environmental  Conservation (ADEC)  as                                                               
the procedural agency  to handle permitting with  the federal law                                                               
being the only substantive law applying.                                                                                        
MR. BULLARD answered that was his understanding.                                                                                
SENATOR  WIELECHOWSKI  asked  if  the essence  of  this  bill  is                                                               
changing current law that says  "firing or other use of munitions                                                               
in training activities is allowed  unless it results in discharge                                                               
into waters of  the United States" to "waters  regulated under 33                                                               
MR.  BULLARD answered  yes. One  other change  includes the  word                                                               
"service", but it doesn't expand the language.                                                                                  
SENATOR WIELECHOWSKI  asked if passing  this law means  Alaska is                                                               
turning over its sovereignty and  allowing the federal government                                                               
to decide what the definition is.                                                                                               
MR. BULLARD replied  that wasn't entirely fair to  say. He didn't                                                               
think  the  state has  that  much  to  say about  federal  waters                                                               
whether it's US waters or the Clean Water Act.                                                                                  
SENATOR WIELECHOWSKI  recapped that  they are  saying there  is a                                                               
law  on the  books against  shooting munitions  if it  results in                                                               
discharge into the waters of the  United States and that is being                                                               
changed  to give  control over  what happens  on a  military base                                                               
regarding munitions  to the federal  government. In  other words,                                                               
the federal government  could change the law in a  way that maybe                                                               
we  wouldn't like  and  by  passing this,  Alaska  is losing  its                                                               
authority in that regard.                                                                                                       
3:45:10 PM                                                                                                                    
MR. BULLARD  replied that  some latitude is  lost, but  he didn't                                                               
know how  much. The  language "waters of  the United  States" was                                                               
originally selected when this section  was drafted to comply with                                                               
the Clean  Water Act  and the  sponsor was  seeking to  keep this                                                               
section consistent with the Clean Water Act.                                                                                    
CO-CHAIR  PASKVAN said  getting  to the  point,  assume that  the                                                               
federal government standard stays  the same and Alaska eventually                                                               
wants to have  a say in what is discharged  into its waters. Does                                                               
this bill authorize that?                                                                                                       
MR. BULLARD replied  it's possible in the future,  that the state                                                               
might more strictly  construe "waters of the  United States" than                                                               
the federal Pollution  Control Act does, but  whatever happens in                                                               
federal waters  will eventually be  under the say of  the federal                                                               
government,  so he  didn't  know how  much  sovereignty would  be                                                               
CO-CHAIR  PASKVAN said  there was  a  "big dust  up" in  Interior                                                               
Alaska last year  on the issue of what waters  are state and what                                                               
waters are federal.  Ultimately the question is:  can Alaska have                                                               
a substantive say  if this law would say that  the federal law is                                                               
the  only substantive  law  that would  be  considered under  any                                                               
permitting process?  If the federal  law is the  only substantive                                                               
law, that seems to eliminate Alaska's  voice if we had a specific                                                               
concern as to discharges into the waters in Alaska.                                                                             
MR.  BULLARD recognized  his concern  as legitimate,  but without                                                               
understanding what  the future changes  might be it was  hard for                                                               
him to comment.                                                                                                                 
3:48:33 PM                                                                                                                    
CO-CHAIR WAGONER  said not passing  this law could  jeopardize at                                                               
least two bases in  the State of Alaska due to  the lack of their                                                               
inability to operate on their  firing ranges. Is that the essence                                                               
of this bill and is the  federal government trying to help us out                                                               
with that?                                                                                                                      
MR. BULLARD replied that those  were policy considerations and he                                                               
didn't  know  what the  considerations  of  the military  or  the                                                               
federal  government are.  Without the  state's own  definition of                                                               
"waters  of the  United States,"  they lack  certainty. Having  a                                                               
specific  law cited  would provide  certainty as  to how  this is                                                               
going to be enforced.                                                                                                           
CO-CHAIR WAGONER  said he wanted  to hear from the  military side                                                               
of this issue.                                                                                                                  
3:49:29 PM                                                                                                                    
MCHUGH  PIERRE, Deputy  Commissioner,  Department  of Military  &                                                               
Veterans Affairs  (DMVA), said  the fact is  that everyone  is at                                                               
risk right  now. Alaska,  as a state,  is already  competing with                                                               
other states  to make sure we  are in an environment  in which it                                                               
is  the easiest  to do  business. That  means putting  provisions                                                               
into law that  make sure Alaska is the best  place to do business                                                               
for the military.                                                                                                               
He said this is  one of those areas the military  said could be a                                                               
hindrance and  offered to help  clean it  up so it  still mirrors                                                               
what the state wants to do  and what the federal government needs                                                               
under the Clean  Water Act. In summary, he said,  if there is any                                                               
question  about  what can  and  cannot  be  done in  the  future,                                                               
instead of operating in a grey  area, USDOD will operate where it                                                               
knows it can take care of business.                                                                                             
CO-CHAIR   PASKVAN  asked   if  other   states'  departments   of                                                               
environmental conservation  maintain more than just  a procedural                                                               
role.  In other  words  do other  states  have their  substantive                                                               
state law operate with the substantive federal law.                                                                             
MR.  PIERRE  replied that  he  couldn't  speak to  other  states'                                                               
environmental  conservation departments,  but  every other  state                                                               
has  this  exemption very  clearly  defined  for military  firing                                                               
ranges. Alaska is  the only state that does not;  and we did have                                                               
it  defined   until  we  accidentally   changed  it   and  didn't                                                               
incorporate this into it.                                                                                                       
CO-CHAIR PASKVAN mused  maybe it's ADEC, because  they were going                                                               
to take over primacy last fall, and then they haven't.                                                                          
3:52:05 PM                                                                                                                    
SETH  BEAUSANG,  Assistant   Attorney  General,  Civil  Division,                                                               
Environmental Section, Department of  Law (DOL), representing the                                                               
Department  of Environmental  Conservation (DEC),  Anchorage, AK,                                                               
said  DEC assuming  primacy  over  these kinds  of  permits is  a                                                               
multi-stage process and they hadn't  gone through all the stages,                                                               
but they are in the process.                                                                                                    
CO-CHAIR PASKVAN asked  if he knew whether  other states maintain                                                               
a say in their substantive laws  to their state's Clean Water Act                                                               
in similar situations.                                                                                                          
MR. BEAUSANG answered that he  didn't know, but he would research                                                               
CO-CHAIR PASKVAN asked how many  states have sought primacy under                                                               
these circumstances  where the state DEC  is applying substantive                                                               
federal law.                                                                                                                    
MR.  BEAUSANG said  he  didn't  know that  either,  but he  would                                                               
research it and provide an answer.                                                                                              
3:53:58 PM                                                                                                                    
KEVIN WARD,  Regional Counsel, Regional Environmental  Office, US                                                               
Army, Denver,  CO, said was he  was speaking on behalf  of the US                                                               
Department  of  Defense  Regional Environmental  Coordinator.  He                                                               
believed that approximately 45 states  have primacy for their CWA                                                               
programs and in part they  rely upon the substantive requirements                                                               
of the federal CWA in  establishing their state law requirements.                                                               
In  the  Alaska  situation,  he  said,  even  with  the  proposed                                                               
changed, the  state and its DEC  would be in a  position not just                                                               
to  implement  procedural  requirements, but  also  to  implement                                                               
state   substantive  requirements   as   it   would  pertain   to                                                               
classifying state  waters. For example, what  types of discharges                                                               
would be  allowed to waters  in the state,  pollutants, discharge                                                               
limitations, et cetera. This  amendment exclusively addresses the                                                               
issue of what  waters would be covered. To  answer that question,                                                               
there  would be  reference  to the  federal  CWA. Otherwise,  the                                                               
state procedural and substantive requirements would apply.                                                                      
SENATOR WIELECHOWSKI said he had  a note saying this bill doesn't                                                               
change anything and  that there may be a change  in the future by                                                               
the  federal government  and  asked if  it is  fair  to say  that                                                               
nothing changes if they pass this bill today.                                                                                   
3:57:12 PM                                                                                                                    
MR.  WARD answered  that the  ADEC program  is being  implemented                                                               
through  a  number of  stages.  The  stage  that would  apply  to                                                               
military munitions  and ranges according to  the current schedule                                                               
will not be  implemented until October 2012. So,  if something is                                                               
not enacted today and since  USEPA remains the authority, nothing                                                               
would change.  But after October  2012, it is possible  that this                                                               
would have an effect depending  on how "discharge waters into the                                                               
US" is interpreted. If it is  interpreted in a way that is unique                                                               
to  Alaska as  opposed to  the requirements  of the  federal CWA,                                                               
that could have a negative effect on military operations.                                                                       
CO-CHAIR  WAGONER  said  the  economy in  his  district  was  not                                                               
dependent upon the  military and asked how much  a situation like                                                               
this would  weigh in deciding whether  to keep a base  open, move                                                               
it or close it down.                                                                                                            
MR.  WARD  replied  that  he   was  not  privy  to  base  closure                                                               
discussions  in  the  DOD,  but  after the  last  round  of  base                                                               
closures  in 2005  a number  of  criteria were  used to  evaluate                                                               
bases  and  installations throughout  the  US.  One was  military                                                               
value:  factors  included  an installation's  ability  to  absorb                                                               
current and future munitions  requirements, whether the condition                                                               
and  availability  of land  facilities  and  air space  including                                                               
training  areas  were  suitable  for  training  and  staging  and                                                               
whether the military installation  had the ability to accommodate                                                               
unforeseen contingencies et cetera.                                                                                             
4:00:48 PM                                                                                                                    
SENATOR WIELECHOWSKI said he was  trying to balance the state law                                                               
on the  books right  now that controls  firing of  munitions into                                                               
the waters of the  US - his district backs up  to a military base                                                               
and there  have been  firings of munitions  into waters  and land                                                               
that  have had  environmental  impacts -  and  his concern  about                                                               
turning the  state's right to  control where munitions  are fired                                                               
over to  the federal government  that could  say it's okay  to do                                                               
CO-CHAIR PASKVAN said he understood  the intent and he heard that                                                               
this law  would only be necessary  if ADEC were to  interpret the                                                               
law  differently than  it currently  interprets it.  But if  that                                                               
doesn't happen in October 2012, then this law isn't needed.                                                                     
4:03:24 PM                                                                                                                    
REPRESENTATIVE T. WILSON said that  laws are good only until they                                                               
get sued and that  is the purpose of this measure.  Do we want to                                                               
wait until  October? In  March, they will  be looking  at Eielson                                                               
and  all the  relevant legislation  and the  question is  if this                                                               
will be one  of the black marks that goes  on the evaluation. She                                                               
thought they should act now and  added that she wouldn't put this                                                               
forward if  she thought it  jeopardized anything with the  CWA or                                                               
pollution, because the State of Alaska  is good at taking care of                                                               
its land.                                                                                                                       
4:05:04 PM                                                                                                                    
CO-CHAIR WAGONER asked if one  of the reasons the Striker Brigade                                                               
was moved  to Alaska was because  of the ability to  train better                                                               
than in other areas in the US.                                                                                                  
MR.  PIERRE answered  yes; Alaska  has two  brigade combat  teams                                                               
now,  3,500 to  4,000 troops  between Fort  Wainwright and  Joint                                                               
Base  Elmendorf-Richardson  (JBER);  with their  families  that's                                                               
7,000  to 8,000  people. The  USDOD just  announced at  a defense                                                               
community conference last week that the  Army is going to cut two                                                               
of the  eight brigade  combat teams;  two of  those eight  are in                                                               
Alaska. The  primary reason Alaska is  a good place for  the Army                                                               
to be  is because  it has  the open  access to  training. Senator                                                               
Wielechowski's district has  a large section for  training on the                                                               
Mountainside: but  the Joint Pacific  Alaska Range Complex  is in                                                               
the Interior near Senator Paskvan's  district and the legislature                                                               
just invested close to $80 million  to build a bridge for Striker                                                               
vehicles to access it.                                                                                                          
CO-CHAIR PASKVAN said he understood  that the USEPA supports this                                                               
measure,  but he  wanted the  ADEC to  explicitly respond  to the                                                               
question  of if  they  are  willing to  give  up Alaska's  future                                                               
involvement in clean water.                                                                                                     
MR.  PIERRE replied  that it  wouldn't be  proposed here  if they                                                               
CO-CHAIR PASKVAN said he wanted  to hear that explicitly from the                                                               
administration that they are willing to give up that right.                                                                     
4:08:05 PM                                                                                                                    
MR.  BEAUSANG said  because he  was primarily  present to  answer                                                               
legal  questions he  hesitated to  answer the  question directly,                                                               
but he  noted a  letter submitted  to the  committee in  the last                                                               
session  making  it clear  that  DEC  supports this  change.  The                                                               
general  reason  is that  is  an  effort to  promote  consistency                                                               
between state and federal requirements.                                                                                         
It's also not accurate to say that  ADEC is giving up its role in                                                               
CWA permitting  even for munitions  discharges. They will  have a                                                               
role  to the  extent that  permits are  required: the  department                                                               
would issue body  and state standards that would  apply. The only                                                               
thing this act  is trying to do is to  make it consistent between                                                               
state and federal law when those permits would be required.                                                                     
SENATOR MCGUIRE  said she supports  the bill and added  that it's                                                               
easy to let  yourself go down rabbit trails.  Evidence shows that                                                               
every other state has it and Alaska  had it up until 2008 and she                                                               
wasn't aware  of any catastrophic incidents.  Keeping the balance                                                               
between   state  and   federal  government   primacy  is   always                                                               
difficult, but she didn't want to  do anything at this stage that                                                               
would render  Alaska less competitive  when Base  Realignment and                                                               
Closure Commission  (BRAC) closures are being  discussed. Defense                                                               
spending has gone way down and  it's not a given that Alaska gets                                                               
the support it has had in past years for its bases.                                                                             
4:11:36 PM                                                                                                                    
SENATOR  WIELECHOWSKI said  his  concern was  that under  current                                                               
law, a provision  says you can't fire munitions if  it results in                                                               
a discharge  into the waters  of the US.  We would be  saying you                                                               
can't fire  munitions in  a training  area unless  it's otherwise                                                               
regulated under  the federal Water Pollution  Control Act (WPCA).                                                               
Passing  this  would  be  changing  state  law  where  the  state                                                               
directly controls what it is  allowing and disallowing and giving                                                               
it to the federal government. Is that a correct understanding?                                                                  
MR.  BULLARD responded  that  current law  has  an exemption  for                                                               
munitions fired  from active  ranges that go  into the  waters of                                                               
the  US. Under  HB 185,  the state  would have  an exemption  for                                                               
munitions unless the  munitions that went into the  waters of the                                                               
US were  otherwise regulated  by the federal  WPCA, which  is the                                                               
current interpretation under "waters  of the United States." It's                                                               
possible in the  future that "waters of the  United States" could                                                               
be defined differently so that those two were not aligned.                                                                      
CO-CHAIR WAGONER  asked with passage  of this bill if  they would                                                               
remain aligned.                                                                                                                 
MR. BULLARD answered yes.                                                                                                       
SENATOR  MCGUIRE moved  to report  CSHB  185(RES) from  committee                                                               
with  individual  recommendations  and attached  fiscal  note(s).                                                               
There were no objections and  CSHB 185(RES) moved from the Senate                                                               
Resources Standing Committee.                                                                                                   
SENATOR  WIELECHOWSKI  said  he contemplated  objecting,  but  he                                                               
thought  he  understood  the  bill   a  little  better  with  the                                                               
CO-CHAIR WAGONER handed the gavel to CO-CHAIR PASKVAN.                                                                          
4:15:26 PM                                                                                                                    
At ease from 4:15 to 4:17 p.m.                                                                                                  
        SB 153-NATURAL GAS STORAGE TAX CREDIT/REGULATION                                                                    
4:17:36 PM                                                                                                                    
CO-CHAIR PASKVAN  announced SB  153 to  be up  for consideration.                                                               
[CSSB 153( ), version 27-LS1187\I,  was before the committee]. He                                                               
said  Senator Thomas  presented the  merits  of the  bill at  the                                                               
February  9 meeting  and testimony  was taken.  He noted  the new                                                               
committee substitute (CS).                                                                                                      
4:18:35 PM                                                                                                                    
CO-CHAIR  WAGONER  moved  to  adopt  CSSB  153(  ),  version  27-                                                               
CO-CHAIR PASKVAN objected for discussion purposes.                                                                              
4:19:24 PM                                                                                                                    
SENATOR JOE THOMAS, sponsor of SB  153, recapped that the cost of                                                               
fuel oil,  particularly in the  Interior and through much  of the                                                               
northwest  and  western  part  of the  state,  is  crippling  the                                                               
economy. In  Fairbanks, heating  fuel is $4  a gallon  and people                                                               
are  spending $667  million  annually on  energy  costs or  about                                                               
$6,667 for every man, woman and  child; and much of this money is                                                               
leaving the community.                                                                                                          
He explained that  Fairbanks currently pays $23.35  for 1 bcf/gas                                                               
and $.23  per kilowatt  hour for  electricity. Heating  bills run                                                               
$1,000 to  $1,500 a  month for September  through April.  He said                                                               
that  many  Alaskans take  advantage  of  the weatherization  and                                                               
energy efficiency programs, but  these increased costs have eaten                                                               
up much of  the savings and while the increasing  price of oil is                                                               
great for the state it's crippling for individuals.                                                                             
He said that natural gas is  the lowest cost fuel, but it's three                                                               
times  the price  in Southcentral  and  it is  only available  to                                                               
1,100  customers  in  Fairbanks  because  Fairbanks  Natural  Gas                                                               
(FNG), the  distributor, is limited  by what  it can get.  If the                                                               
winter is cold  in Southcentral as well, FNG is  the first one to                                                               
be limited  on the amount  of gas  they can purchase  and resell.                                                               
The ones that have auxiliary power are cut off first.                                                                           
SENATOR THOMAS  said Fairbanks has  distribution lines,  but they                                                               
aren't connected  up because  of the  natural gas  limitation. If                                                               
they could  access more gas,  things would be different.  This is                                                               
why the  trucking project  has come  to light.  SB 153  begins to                                                               
address  that  problem by  incentivizing  the  private sector  to                                                               
deliver additional  trucks of natural  gas to Fairbanks  over the                                                               
next couple of years. It would  extend $15 million of tax credits                                                               
to  a  liquid  natural  gas  trucking project  such  as  the  one                                                               
proposed  by Golden  Valley Electric  and Flint  Hills with  some                                                               
involvement  from  FNG.  This  is  basically  equivalent  to  $15                                                               
million in tax  credits that currently is applicable  to the Cook                                                               
Inlet Gas Storage Alaska project (CINGSA).                                                                                      
SENATOR THOMAS  said he  was looking  to drive  the price  of gas                                                               
down in the  Interior through the use of the  credits, because it                                                               
is a regulated  utility, so savings have to be  passed through to                                                               
the consumers.                                                                                                                  
4:23:42 PM                                                                                                                    
GRIER  HOPKINS,  staff  to Senator  Joe  Thomas,  explained  that                                                               
version D has one substantive change  from version I; the rest is                                                               
formatting and organization within  statute. Version D mirrors HB                                                               
289, which  is the House companion  bill that just passed  out of                                                               
the House  Resources Committee. The  one substantive  change that                                                               
came out of  the committee was the lowering of  the floor for the                                                               
size of  LNG storage  facility that  can apply  for a  tax credit                                                               
from 1 million gallons to  25,000 gallons, because Representative                                                               
Feige wanted  the smaller  utilities along  the Railbelt  to have                                                               
access to  this credit.  It is  a substantial  drop, but  it will                                                               
open  up the  opportunity  for small  utilities,  such as  Alaska                                                               
Power and  Telephone or the  Copper Valley  Electric Association,                                                               
that are not connected to the  grids to get backup power or lower                                                               
their own  costs. The  new floor  to qualify  for the  tax credit                                                               
brings storage  size to about  2.1 mmcf/gas, but it's  mostly for                                                               
the optional 50 percent of the construction costs.                                                                              
MR. HOPKINS  explained that  the other change  is that  version I                                                               
addressed storage  credits within  existing statute and  that was                                                               
modeled  after HB  280 from  the 2010  legislature, sponsored  by                                                               
Representative  Hawker  and  the  Legislative  Budget  and  Audit                                                               
Committee. Senator Thomas met with  a number of members from both                                                               
bodies who were interested in  changing the volume because of the                                                               
differences in  storing LNG methods  and wanted  to see it  in an                                                               
entirely different section in statute.                                                                                          
MR.  HOPKINS said  Section 1  of  version D  addresses the  lease                                                               
exemption specifically, which was  taken identically from version                                                               
I, Section  2. He referred  any questions on the  lease exemption                                                               
to  Gene  Therriault  from  Golden  Valley  Electric  Association                                                               
4:27:34 PM                                                                                                                    
He explained further that version  D has a definition of "natural                                                               
gas  storage facility"  and specifically  adds "LNG  or an  above                                                               
ground  containment  structure",  because  LNG  is  stored  in  a                                                               
thermos,  essentially,  above ground.  That  is  very similar  to                                                               
version I  except for  the addition of  the above  ground storage                                                               
Section 3 creates  the section in statute for  the tax exemption,                                                               
AS  43.20.047  (following   directly  from  43.20.046).  Language                                                               
matches  previous language  except  for the  changes  in how  the                                                               
credits are  applied: the $15  million cap  or the 50  percent of                                                               
construction costs  where ever it  says "storage of  natural gas"                                                               
to storage of  "liquefied natural gas". From there  on it mirrors                                                               
the goal  of what  version I  intended to  do, but  with slightly                                                               
different formatting  and continues on  for some pages. It  has a                                                               
definition for  "liquid natural  gas storage  facility." Language                                                               
on page  4, lines 5-9, makes  sure that any savings  passed on to                                                               
the  utilities will  be passed  on to  the customers  through RCA                                                               
CO-CHAIR PASKVAN removed  his objection to version  D and finding                                                               
no  further objection,  announced that  it was  officially before                                                               
the committee. He asked Mr. Therriault if he supported the CS.                                                                  
4:30:24 PM                                                                                                                    
GENE  THERRIAULT, Vice  President,  Resource Development,  Golden                                                               
Valley Electric  Association (GVEA),  said he had  worked closely                                                               
with the sponsor  and staff in both the Senate  and the House and                                                               
supported version  D of  SB 153. It  addresses the  concerns that                                                               
the  prime sponsors  heard  from some  legislators  in trying  to                                                               
insert  "liquefied   natural  gas  storage"  language   into  the                                                               
existing  statute   that  was   put  into   place  in   2010  and                                                               
specifically denied to application  to gaseous methane or storage                                                               
of natural gas  in a gaseous form. They  have duplicated sections                                                               
of the statute and made them applicable to liquid storage.                                                                      
MR. THERRIAULT  said they also understood  Representative Feige's                                                               
concern  of  making  the  product   available  to  other  smaller                                                               
communities so  they could  get state  assistance to  receive the                                                               
resource  and actually  put  it to  good use.  He  said they  are                                                               
trying very much  to serve the largest volume  possible under the                                                               
concept of larger volumes bring  better prices. So as the product                                                               
is brought into  Interior Alaska, if there are  utilities or some                                                               
industrial use  up and down  the highway system that  could avail                                                               
themselves  of putting  in  smaller storage,  they  would be  the                                                               
industrial base  in a  smaller community,  like Alaska  Power and                                                               
Telephone  in  Tok  that produces  the  electric  power.  Perhaps                                                               
others in the community could  figure out how to avail themselves                                                               
of the resource for space heat. He  said that he did not have any                                                               
problem  dropping  the  volume   threshold  down  to  the  25,000                                                               
CO-CHAIR  PASKVAN  clarified that  when  one  thinks of  $4.00  a                                                               
gallon for heating  oil to get the same number  of BTUs using gas                                                               
under  the current  cost structure  it would  cost $1,400.  So if                                                               
Southcentral had  to pay the equivalent  of $4 a gallon  for gas,                                                               
their bill  would increase  from about $1,400  to $4,000  a year.                                                               
Then people would  understand why that is budget  busting. If you                                                               
add doubling  the electric  price per month  as well,  the crisis                                                               
gets  bigger. He  said  he would  hold SB  153  in committee  for                                                               
further work.                                                                                                                   
4:34:56 PM                                                                                                                    
CO-CHAIR PASKVAN,  finding no other  business to come  before the                                                               
Senate  Resources Standing  Committee, adjourned  the meeting  at                                                               
4:34 p.m.                                                                                                                       

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