Legislature(2017 - 2018)

2018-02-05 House Journal

Full Journal pdf

2018-02-05                     House Journal                      Page 2329
HB 330                                                                                                                        
HOUSE BILL NO. 330 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
    "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."                                                                           
was read the first time and referred to the Judiciary and Resources                                                             
The following fiscal note(s) apply:                                                                                             
1.  Zero, Dept. of Natural Resources                                                                                            
The Governor's transmittal letter dated February 2 follows:                                                                     
"Dear Speaker Edgmon:                                                                                                           
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill that clarifies how confidential                                                          
information obtained by the Commissioner of natural resources may                                                               
be used and treated as part of the Department of Natural Resources                                                              
(DNR) appeals, audits, and requests for reconsideration.                                                                        
A long-standing dilemma faces DNR with respect to the handling of                                                               
oil and gas sales price information considered "confidential" under                                                             
Alaska law. Specifically, this dilemma impedes the department's                                                                 
ability to effectively audit and enforce royalty payments when                                                                  
multiple companies working the same lease negotiate different prices.                                                           
Because sales contracts by one party cannot be provided to another                                                              
due to confidentiality, producers object to the audit on the basis of a                                                         

2018-02-05                     House Journal                      Page 2330
lack of due process. The department then faces administrative                                                                   
obstacles in finalizing the royalty audits.                                                                                     
While the department believes it has the statutory and contractual                                                              
authority to share this information for audit purposes, providing the                                                           
information in the face of objection from the affected parties could                                                            
expose the department and its employees to a claim for improper                                                                 
disclosure of confidential information and criminal penalties. This bill                                                        
would clarify that the department may disclose pricing information to                                                           
affected parties under a protective order to finalize the audits without                                                        
going to court. This will allow the State to more quickly and                                                                   
efficiently collect the royalties it is owed in the future.                                                                     
I urge your favorable action on this measure so the State may timely                                                            
finalize audits and recover the royalties it is owed moving forward.                                                            
Bill Walker