HB 330-DNR: DISCLOSURE OF CONFIDENTIAL INFO  1:59:31 PM CHAIR CLAMAN announced that the final order of business would be HOUSE BILL NO. 330, "An Act authorizing the commissioner of natural resources to disclose confidential information in an investigation or proceeding, including a lease royalty audit, appeal, or request for reconsideration and issue a protective order limiting the persons who have access to the confidential information." CHAIR CLAMAN advised that Legislative Legal and Research Services has permission to make any technical amendments and conforming changes to the bill. 2:00:12 PM The committee took an at-ease from 2:00 p.m. to 2:01 p.m. 2:01:53 PM REPRESENTATIVE LEDOUX moved to adopt Amendment 2, Version 30- GH2820\A.2, Radford, 2/23/18, which read as follows: Page 1, lines 2 - 3: Delete "in an investigation or proceeding,  including a lease royalty audit, appeal, or request  for reconsideration"  Insert "during a royalty or net profit share  audit or appeal" Page 3, lines 25 - 26: Delete "in an investigation or proceeding of the  department, including a lease audit, appeal, or  request for reconsideration"  Insert "during a royalty or net profit share  audit or appeal" Page 3, line 28: Delete "lease" Insert "royalty or net profit share audit or  appeal" Page 4, line 1: Delete "investigation or proceeding" Insert "royalty or net profit share audit or  appeal" Page 6, line 20: Delete "lease" Following "royalty" Insert "or net profit share" 2:02:08 PM GREG SMITH, Staff, Representative Gabrielle LeDoux, Alaska State Legislature, advised that the intent of Amendment 2 is to restrict the disclosures of confidential information made by the commissioner of the Department of Nature Resources (DNR) to "royalty or net profit share audits for appeals." This amendment "kind of tightens in" the authority the department was seeking because it strikes a balance between the concerns expressed by the industry and the needs of DNR to efficiently process these cases. This language will still allow DNR to process the vast majority of its cases in which it needs to disclose confidential information and create protective orders, he said. REPRESENTATIVE KREISS-TOMKINS objected to the adoption of Amendment 2. 2:03:39 PM ED KING, Legislative Liaison, Commissioner's Office, Department of Natural Resources (DNR), advised that Amendment 2 would further narrow the scope of the commissioner's authority rather than being a general power to adjudicate and resolve issues and resolve audits or appeals related to information that is held confidential. This amendment would restrict that authority solely to royalty issues and net profit share issues. Mr. King advised that the vast majority of the issues requiring these types of protective orders are, in fact, in the royalty audit and net profit share. However, he pointed out, there are issues outside of royalties and net profit share that DNR would prefer to also adjudicate under the protective orders. The preference of DNR is that Amendment 2 does not pass; however, if it is the will of the committee, DNR appreciates the efforts being made. 2:04:40 PM REPRESENTATIVE KOPP asked whether it was Mr. King's understanding that this would also protect the confidentiality of geological data or sensitive data as to what a field might contain. MR. KING responded that with Amendment 2, DNR would no longer have that authority to issue protective orders to resolve those types of issues. He explained that without Amendment 2, it is DNR's reading of the bill that it would have the ability to resolve those issues through the commissioner's office without going to the court system and obtaining a protective order. 2:05:18 PM REPRESENTATIVE KREISS-TOMKINS noted Mr. King's statement regarding the strong majority of instances in which a protective order would be issued that would relate to royalties and net profit share. He requested examples of those other issues that could take advantage of this tool were it available to the commissioner. MR. KING answered that a specific example that DNR had to deal with is related to private property owners with a mineral interest surrounding a geologic structure. For example, a resource specifically in oil and gas, is when DNR makes a decision related to the extent of the resource and to what extent it provides revenue to the resource owner, DNR's decision could impact how much money that individual would earn from the production of those resources. The department did have a fairly rare issue in Cook Inlet approximately 10-years ago, and the issue could not be resolved internally because DNR did not have the ability to disclose that confidential data to the property owner because the data was collected by the operator. In that circumstance, that audit sat in the commissioner's office until the appellant finally went to court and the court issued a protective order, at that point, DNR was able to resolve the case, he explained. 2:06:51 PM REPRESENTATIVE KREISS-TOMKIN asked whether there are any other examples. MR. KING reiterated that one is currently being litigated, and he is not aware of any other circumstances. 2:07:10 PM CHAIR CLAMAN asked whether the audit is being litigated or the protective order. MR. KING answered that that is a different and separate issue related to the same (audio difficulties) but it is currently in the superior court and the protective order in that case has not yet been issued. CHAIR CLAMAN asked whether that is the main issue being litigated or was it being litigated over the audit as well. MR. KING responded that the case is not related to an audit. 2:07:44 PM REPRESENTATIVE REINBOLD noted that the regional native corporations own the minerals below the surface, and if Amendment 2 does not pass, she asked whether that would allow the state to also obtain information on the regional native corporations. MR. KING reiterated testimony from a previous hearing advising that the department, under this bill, does not have the ability to obtain any new information, the information is given to DNR by the producer. The question is how can DNR use that information to adjudicate when there is an appeal, and under Representative Reinbold's circumstance, the mental health trust or the native corporation would have a lease with the producer, and they would have to administer and adjudicate their own appeals around that issue. In the specific case being discussed here, where DNR has this private landowner adjacent to a resource, there may or may not be a lease issued that needs to be resolved there. In those circumstances, the appellant is bringing the appeal and has standing due to its financial interest as an adjacent landowner. In those situations, DNR cannot share the producer's information with this private third- party without some protections over that confidential data, he explained. 2:09:17 PM REPRESENTATIVE EASTMAN requested another example of how the sponsor envisions Amendment 2 having a positive impact on a particular situation. REPRESENTATIVE LEDOUX responded that she believes the one example being litigated today and another example from ten years ago, does not provide a compelling circumstance. She related that she is uncomfortable with the ability of DNR to release what otherwise would be confidential information to someone outside of the department. While she realizes the need for this legislation, she would feel far more comfortable with the bill if it was limited to the circumstances where it was actually most needed, she said. 2:10:41 PM REPRESENTATIVE REINBOLD commented that she is supportive of this amendment because the legislature does not need to chase investment out of this state, she believes in private property rights and understands there is a point where some information is needed. She pointed out that Amendment 2 narrows the focus, and during the previous hearing the department did not object to the change. She said she would be a yes vote on the amendment. CHAIR CLAMAN clarified for Representative Reinbold that DNR was not in possession Amendment 2 until today. REPRESENTATIVE REINBOLD responded that when people had testified previously, "they said" the primary responsibility was being even with this issue, and at the time there was no objection to it, which is why she will be supporting the amendment. REPRESENTATIVE KREISS-TOMKINS maintained his objection. 2:12:18 PM A roll call vote was taken. Representatives Eastman, Stutes, Reinbold, Kopp, and LeDoux voted in favor of the adoption of Amendment 2. Representatives Kreiss-Tomkins and Claman voted against it. Therefore, Amendment 2 was adopted by a vote of 5- 2. 2::19 PM REPRESENTATIVE KREISS-TOMKINS moved to report HB 330, Version 30-GH2820\A, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objections, CSHB 330 moved out of the House Judiciary Standing Committee. 2:13:53 PM