Legislature(2005 - 2006)CAPITOL 124
04/01/2005 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR16 | |
| HB174 | |
| HB142 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 142 | TELECONFERENCED | |
| + | HB 71 | TELECONFERENCED | |
| = | HJR 16 | ||
| = | HB 174 | ||
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 1, 2005
1:05 p.m.
MEMBERS PRESENT
Representative Jay Ramras, Co-Chair
Representative Ralph Samuels, Co-Chair
Representative Jim Elkins
Representative Carl Gatto
Representative Gabrielle LeDoux
Representative Kurt Olson
Representative Paul Seaton
Representative Harry Crawford
MEMBERS ABSENT
Representative Mary Kapsner
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 16
Opposing the designation of any area in the state as a world
heritage site, biosphere reserve, or any other type of
international designation without the consent of the Alaska
State Legislature.
- MOVED CSHJR 16 (RES) OUT OF COMMITTEE
HOUSE BILL NO. 174
"An Act relating to commercial fishing permit and vessel license
fees; and providing for an effective date."
- MOVED CSHB 174 (RES) OUT OF COMMITTEE
HOUSE BILL NO. 142
"An Act relating to regulation of underground injection under
the federal Safe Drinking Water Act; and providing for an
effective date."
- MOVED HB 142 OUT OF COMMITTEE
HOUSE BILL NO. 71
"An Act relating to a credit for certain exploration expenses
against oil and gas properties production taxes on oil and gas
produced from a lease or property in the state; relating to the
deadline for certain exploration expenditures used as credits
against production tax on oil and gas produced from a lease or
property in the Alaska Peninsula competitive oil and gas
areawide lease sale area after July 1, 2004; and providing for
an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HJR 16
SHORT TITLE: OPPOSE UN LAND DESIGNATIONS IN ALASKA
SPONSOR(s): REPRESENTATIVE(s) ELKINS
03/14/05 (H) READ THE FIRST TIME - REFERRALS
03/14/05 (H) RES
03/30/05 (H) RES AT 1:00 PM SENATE FINANCE 532
03/30/05 (H) Heard & Held
03/30/05 (H) MINUTE(RES)
04/01/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 174
SHORT TITLE: FISHING PERMIT AND VESSEL LICENSE FEES
SPONSOR(s): REPRESENTATIVE(s) SAMUELS
02/24/05 (H) READ THE FIRST TIME - REFERRALS
02/24/05 (H) FSH, RES, FIN
03/23/05 (H) FSH AT 8:30 AM CAPITOL 124
03/23/05 (H) Moved CSHB 174(FSH) Out of Committee
03/23/05 (H) MINUTE(FSH)
03/29/05 (H) FSH RPT CS(FSH) 3DP 3NR
03/29/05 (H) DP: ELKINS, LEDOUX, THOMAS;
03/29/05 (H) NR: WILSON, KAPSNER, SALMON
03/30/05 (H) RES AT 1:00 PM SENATE FINANCE 532
03/30/05 (H) Scheduled But Not Heard
04/01/05 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 142
SHORT TITLE: OIL & GAS: REG. OF UNDERGROUND INJECTION
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/14/05 (H) READ THE FIRST TIME - REFERRALS
02/14/05 (H) O&G, RES, FIN
03/15/05 (H) O&G AT 5:00 PM CAPITOL 124
03/15/05 (H) Moved Out of Committee
03/15/05 (H) MINUTE(O&G)
03/16/05 (H) O&G RPT 3DP 3NR
03/16/05 (H) DP: GARDNER, ROKEBERG, KOHRING;
03/16/05 (H) NR: SAMUELS, KERTTULA, DAHLSTROM
04/01/05 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
JIM VAN HORN, Staff
to Representative Jim Elkins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HJR 16 on behalf of Representative
Elkins, sponsor.
HENRY WEBB, Staff
to Representative Ralph Samuels
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 174 on behalf of Representative
Samuels, sponsor.
FRANK HOMAN, Commissioner
Commercial Fisheries Entry Commission (CFEC)
Alaska Department of Fish & Game
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 174.
DAN SEAMOUNT, Commissioner,
Alaska Oil and Gas Conservation Commission (AOGCC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 142.
ACTION NARRATIVE
CO-CHAIR JAY RAMRAS called the House Resources Standing
Committee meeting to order at 1:05:07 PM. Representatives
Ramras, Elkins, LeDoux, Crawford, Samuels, Seaton, and Olson
were present at the call to order. Representative Gatto arrived
while the meeting was in progress.
HJR 16-OPPOSE UN LAND DESIGNATIONS IN ALASKA
CO-CHAIR RAMRAS announced that the first order of business would
be HOUSE JOINT RESOLUTION NO. 16, Opposing the designation of
any area in the state as a world heritage site, biosphere
reserve, or any other type of international designation without
the consent of the Alaska State Legislature.
CO-CHAIR SAMUELS moved to adopt the committee substitute (CS)
HJR 16, labeled 24-LS0748\G, as a work draft. There being no
objection, it was so ordered.
1:05:50 PM
JIM VAN HORN, Staff to Representative Jim Elkins, Alaska State
Legislature, said that the committee substitute (CS) for HJR 16
added language to request that local governments also give
consent prior to the designation of a world heritage site by the
United Nations.
1:07:34 PM
REPRESENTATIVE ELKINS moved to report HJR 16 as amended out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHJR 16(RES) was
reported out of the House Resources Standing Committee.
HB 174-FISHING PERMIT AND VESSEL LICENSE FEES
1:08:16 PM
CO-CHAIR SAMUELS announced that the next order of business would
be HOUSE BILL NO. 174 "An Act relating to commercial fishing
permit and vessel license fees; and providing for an effective
date."
REPRESENTATIVE OLSON moved to adopt CSHB 174(RES), labeled 24-
LS0676\F, Utermohle, 3/29/05, as a work draft.
The committee took an at-ease from 1:09 p.m. to 1:10 p.m.
1:10:19 PM
CO-CHAIR SAMUELS said the state was involved in litigation, the
Carlson case, which forbade it from charging nonresident
fishermen three times the fee charged to residents. Under
current law, four tenths of one percent of the value of the
fishery is divided up and charged to the permit holder, he said.
It is now capped at $300, and the Commercial Fisheries Entry
Commission (CFEC) is not getting adequately funded. He
explained that the original bill had no cap, but in the current
committee substitute (CS) there is a $3,000 cap. The CS also
slightly increases the license fee on a vessel, dependent on
length, he said.
HENRY WEBB, Staff to Representative Ralph Samuels, Alaska State
Legislature, said the CS changes the original bill in two ways.
It creates a cap of $3,000 for an entry permit. The vessel fees
in the original bill had a compounding $15 increase, but in the
CS, the fees go up 20 percent across the board for all classes
of vessels.
1:13:06 PM
MR. WEBB said the vessel fees have been in place for ten years,
so annually it is a two percent increase per year.
1:15:00 PM
FRANK HOMAN, Commissioner, Commercial Fisheries Entry Commission
(CFEC), said the Carlson case, the consolidation of fisheries,
and reduced permit values have created a trend of decreasing
revenues to the CFEC. There are no general funds in the CFEC,
and it has obligations to the fishermen's fund and the Division
of Commercial Fisheries in the Alaska Department of Fish & Game.
The CFEC predicts staff layoffs or general fund requests, he
said. He added that this is a good opportunity to increase
revenue, but there will still likely be a downward trend. He
predicted HB 174 will cover costs for another seven years.
MR. HOMAN said the current $300 cap is artificial, and the CS
would raise it to $3,000. He said high-value fisheries will be
paying their proportional share of the fees. The statute says
that the fee should reflect the economic return of the fishery,
he added. He also noted that there is a number plate required
for vessels, and the CFEC charges $2, but it costs $7 to make
the plate. There is a spreadsheet in the committee packet
showing the revenue generated by the legislation, he said.
1:19:58 PM
REPRESENTATIVE SEATON expressed concern about equity, because
the cap only affects the highest value fisheries who will be
paying proportionally less than the smaller inshore fisheries.
MR. HOMAN said the original bill had no cap, and "there was some
concern expressed about a no-cap that the commissions would be
able to charge the maximum ... where it would actually fall. I
think there were some concerns by some of the fisheries that
that could be unlimited." The cap at $3,000 only affects the
highest value fisheries, but all those below it will be paying
their proportional share.
REPRESENTATIVE SEATON said it is not truly proportional because
of the cap, because a "very wealthy fishery" won't pay its
proportion and the burden will be shifted to the less-profitable
fisheries. He noted the growing trend and possibility of
consolidation of fisheries, which means fewer vessels. So the
cap could extremely depress the amount of revenue, he said.
MR. HOMAN said that is a correct assessment, and that is why he
considers the downward trend will continued.
CO-CHAIR SAMUELS said he had a balancing act, and he could argue
either way for or against the cap. The cap won't cause a big
loss in revenue because there will be higher fees from boat
length. He said he wants to make the process go forward, and
nobody wants the legislation killed.
1:24:20 PM
CO-CHAIR SAMUELS said Representative Thomas was comfortable.
"We have done our juggling," he added.
1:24:46 PM
REPRESENTATIVE LEDOUX asked how many boats will be over the new
cap.
1:25:07 PM
MR. HOMAN said out of 21,000 vessels, 265 will be affected by
the cap.
REPRESENTATIVE LEDOUX asked what the additional revenue would be
without the cap.
MR. HOMAN guessed approximately $200,000.
CO-CHAIR SAMUELS noted that they will also pay more in the
vessel licensure.
MR. HOMAN said the original fiscal note was $2.3 million, and
now it is about $1.9 million.
REPRESENTATIVE LEDOUX asked if Mr. Homan was still working with
boats that may be in a "higher end fishery, but in a different
location, for example, boats that fish around Kodiak aren't
charged the same as boats that fish out at the Bering Sea."
MR. HOMAN said the bill will simply lift the cap, but by
regulation the CFEC will establish a new fee structure. It will
be a public process, he said. With a $300 cap, many vessels
were in the same category, and now larger vessels will pay more.
REPRESENTATIVE LEDOUX asked if there is justification for
eliminating the cap for the small percentage of very, very
affluent vessels.
MR. HOMAN said the $3,000 cap was put on after discussion and "a
lot of give and take." It was a balance, he said.
1:29:31 PM
REPRESENTATIVE SEATON said the larger vessels are going from
$750 to $900, so it doesn't seem like a good balance to try to
recoup the money lost by the cap for only a $150 vessel fee. He
said he is glad that the commission is looking at the vessel
sizes. He suggested a per foot rate instead of broad
categories. A 76-foot vessel will pay the same as a 149-foot
vessel, even though there is "hugely different fishing power."
MR. HOMAN said there could be different ways to do it, and said
the CFEC does not have any ability to change it; the vessel fees
are in statute. He said the CFEC did not come up with the
vessel lengths. The lengths went into statute "some years ago."
It would take time to make the statutory change, he added.
1:31:39 PM
REPRESENTATIVE SEATON said, "We are making a statutory change,
and it seems like we've got this inequity," of 76-foot vessels
in the same category as 150-foot vessels. It would be more
equitable and consistent to tax by size, for example, $20/foot.
MR. HOMAN said the vessel license fee is the smaller part of the
bill and the permit fee is where the money will come in relation
to the economic return of the fishery. He said the original
license fee was to just make sure any vessel operating in Alaska
was licensed. It hasn't been the major contributor of the
revenue, he added.
REPRESENTATIVE SEATON said it may not be a major contributor to
the revenue, but it is a "major grouse among fishermen." He
repeated that it might be more appropriate to tax vessels on a
per foot length.
CO-CHAIR SAMUELS said not today.
REPRESENTATIVE SEATON said he understands but he wants the bill
drafters to consider it.
MR. HOMAN said, "We could look at that."
1:35:12 PM
REPRESENTATIVE ELKINS moved to report CSHB 174(RES) out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE SEATON objected for discussion. He said he has a
problem with the cap when the industry is becoming more
consolidated. He stated that the "scallop fishery is now all
being taken by three vessels--it may all be taken by one vessel
because the person doesn't have to be on board." Restructuring
now makes it legal to do an entire fishery with one boat, and
the total recovery will only be $3,000, he noted. With the cap,
"we are setting ourselves up" to repeat this restructuring, so
why not do it now, he said. He then removed his objection.
1:37:33 PM
There being no objection, CSHB 174(RES) moved out of the House
Resources Standing Committee.
1:37:48 PM
HB 142-OIL & GAS: REG. OF UNDERGROUND INJECTION
CO-CHAIR SAMUELS announced that the next order of business would
be HOUSE BILL NO. 142 "An Act relating to regulation of
underground injection under the federal Safe Drinking Water Act;
and providing for an effective date."
1:39:23 PM
DAN SEAMOUNT, Commissioner, Alaska Oil and Gas Conservation
Commission (AOGCC), said HB 142 gives the state the authority
over a very small number of waste disposal wells from the
Environmental Protection Agency (EPA), which will probably save
money and time for the state, federal government, and industry.
MR. SEAMOUNT said there is redundancy and confusion between the
industry and agencies. There are two agencies regulating the
same kind of wells, he said. Much time is spent deciding what
kind of waste goes down which wells. "The AOGCC regulates what
goes on underneath the ground," he said, and the most important
mandate is protecting underground fresh water. The state
currently oversees the Class 2 program. There are five classes
he said, "but basically the best place to put oil field waste is
deep underground near where it has been produced."
1:41:57 PM
MR. SEAMOUNT said injection wells enhance oil recovery and
generates billions of dollars to the state. Alaska's statute
gives the state authority over Class 2 wells. The bill gives
the state control over Class 1 wells.
1:43:08 PM
MR. SEAMOUNT said two agencies are now protecting a non-existent
resource--underground fresh water. The North Slope has no
underground fresh water, he said. After the bill passes, the
AOGCC would like to do away with Class 1 wells. He added that
EPA supports this effort and is trying to come up with an
ingenious way to give partial primacy to the state.
1:44:42 PM
MR. SEAMOUNT said there are five classes of wells created under
the federal Safe Drinking Water Act. Wastes are injected below
freshwater aquifers for Class 1 wells, the state has primacy for
Class 2 wells, there are no Class 3 wells in Alaska, Class 4
wells are outlawed, and Class 5 wells are the most numerous in
Alaska, and they take any waste that doesn't fit in the other
classes of wells, and most are septic systems. He said there
are 1,150 Class 2 wells and only seven Class 1 wells in Alaska.
1:46:36 PM
MR. SEAMOUNT noted that over 98 percent of injected materials go
into Class 2 wells. The biggest problem is the confusion by
operators of what is allowed in the wells, and they deal with
two agencies, which is a waste of time. Mr. Seamount said they
should all be Class 2 wells, but EPA does not agree with that.
1:47:36 PM
MR. SEAMOUNT said there would not be any waste for Class 1 wells
were it not for the North Slope infrastructure, and AOGCC
believes that means they all qualify for Class 2 wells. He said
often the same type of fluids go down different wells.
Sometimes the wells are right next to each other, and the fluids
end up in the same zone, he added.
1:49:23 PM
MR. SEAMOUNT said the current system protects a non-existent
resource and is inefficient. He stated that the AOGCC is faster
than EPA because EPA staff have to be sent from Seattle.
CO-CHAIR SAMUELS asked about EPA's position.
1:50:38 PM
MR. SEAMOUNT said EPA is supportive. He explained that Class 1
and 2 wells are the same construction, but Class 2 wells are
deeper so they are better for the environment. "There really
isn't much difference at all between them," he said. He noted
that it costs $1 more per barrel to operate a Class 1 well.
MR. SEAMOUNT pointed out the options: "We can conduct business
as usual, which means that we don't have to put any more effort
into this initiative, but we're going to continue with the same
confusion, same cost to taxpayer and industry, two agencies are
going to be doing the same work." He said he doesn't think it
is anybody's preference to continue that same way.
1:52:31 PM
MR. SEAMOUNT said HB 142 would allow AOGCC to try to obtain
primacy of Class 1 and 2 wells. In the long run, AOGCC sees
only one class of wells on the North Slope--Class 2 wells
overseen by the state--but not until this bill is passed and
there is a favorable ruling by EPA.
REPRESENTATIVE LEDOUX asked about the EPA ruling.
MR. SEAMOUNT said there is a four-person task force with EPA to
figure out how to make the change.
REPRESENTATIVE LEDOUX asked if the task force is already in
place, why is there a need for the legislation.
MR. SEAMOUNT said the state would need language in statute to
legally take over the program.
1:54:41 PM
MR. SEAMOUNT said if EPA does not agree, the bill will not be
needed.
REPRESENTATIVE LEDOUX asked about waiting for the EPA to approve
the change, and then ask for legislative approval.
MR. SEAMOUNT answered that the AOGCC is trying to be prepared.
REPRESENTATIVE OLSON asked the view of the North Slope Borough.
MR. SEAMOUNT said he didn't know.
REPRESENTATIVE GATTO asked where the North Slope gets drinking
water.
MR. SEAMOUNT said from surface water.
1:57:08 PM
REPRESENTATIVE GATTO asked about surface contamination on top of
permafrost.
MR. SEAMOUNT said he thinks there is minimal surface
contamination through disposal operations.
1:57:47 PM
REPRESENTATIVE ELKINS moved to report HB 142 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 142 was passed out of the
House Resources Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 1:58 p.m.
1:58:58 PM
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