Legislature(2023 - 2024)BARNES 124
04/01/2024 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB349 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 394 | TELECONFERENCED | |
| *+ | HB 393 | TELECONFERENCED | |
| += | HB 349 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 1, 2024
2:22 p.m.
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative George Rauscher, Vice Chair
Representative Thomas Baker
Representative Kevin McCabe
Representative Dan Saddler
Representative Stanley Wright
Representative Jennie Armstrong
Representative Donna Mears
MEMBERS ABSENT
Representative Maxine Dibert
COMMITTEE CALENDAR
HOUSE BILL NO. 349
"An Act relating to leases of public land for renewable energy
projects; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 394
"An Act relating to the Regulatory Commission of Alaska and
regulation of the service of natural gas storage and liquefied
natural gas import facilities; relating to records of the
Regulatory Commission of Alaska; relating to rates established
by the Regulatory Commission of Alaska; and providing for an
effective date."
- BILL HEARING RESCHEDULED TO 04/03/24
HOUSE BILL NO. 393
"An Act relating to oil and gas leases and royalty shares; and
providing for an effective date."
- BILL HEARING RESCHEDULED TO 04/03/24
PREVIOUS COMMITTEE ACTION
BILL: HB 349
SHORT TITLE: RENEWABLE ENERGY PROJECT LEASES
SPONSOR(s): REPRESENTATIVE(s) GROH
02/20/24 (H) READ THE FIRST TIME - REFERRALS
02/20/24 (H) RES, ENE, FIN
03/08/24 (H) RES AT 1:00 PM BARNES 124
03/08/24 (H) Heard & Held
03/08/24 (H) MINUTE(RES)
03/11/24 (H) RES AT 1:00 PM BARNES 124
03/11/24 (H) Heard & Held
03/11/24 (H) MINUTE(RES)
03/22/24 (H) RES AT 1:00 PM BARNES 124
03/22/24 (H) <Bill Hearing Canceled>
03/25/24 (H) RES AT 1:00 PM BARNES 124
03/25/24 (H) <Bill Hearing Rescheduled to 03/27/24>
03/27/24 (H) RES AT 1:00 PM BARNES 124
03/27/24 (H) Scheduled but Not Heard
04/01/24 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE CLIFF GROH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, introduced the proposed
committee substitute for HB 349, Version R.
CAMERON EBERSOL, Staff
Representative Cliff Groh
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for HB
349, Version R, on behalf of Representative Groh, prime sponsor.
KRIS HESS, Deputy Director
Division of Mining, Land, and Water
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding the
feasibility study and land lease processes for renewable energy
projects during the hearing on HB 349, Version R.
ACTION NARRATIVE
2:22:19 PM
CHAIR TOM MCKAY called the House Resources Standing Committee
meeting to order at 2:22 p.m. Representatives Saddler, Wright,
Baker, Rauscher, McCabe, Armstrong, Mears, and McKay were
present at the call to order.
HB 349-RENEWABLE ENERGY PROJECT LEASES
2:23:27 PM
CHAIR MCKAY announced the only order of business would be HOUSE
BILL NO. 349, "An Act relating to leases of public land for
renewable energy projects; and providing for an effective date."
2:23:58 PM
CHAIR MCKAY explained that the bill was sponsored by
Representative Groh. This was the third reading of HB 349 in
the House Resources Standing Committee.
2:24:00 PM
REPRESENTATIVE RAUSCHER moved to adopt a proposed committee
substitute (CS) for HB 349, Version 33-LS1325\R, Bullard,
3/26/24, as the working document. There being no objection,
Version R was before the committee.
2:24:14 PM
CHAIR MCKAY explained that the bill sponsor, Representative
Groh, would like to present a new sectional analysis for Version
R rather than a summary of changes, as Version R represented a
significant overhaul of the original version of the bill.
2:25:18 PM
REPRESENTATIVE SADDLER asked for clarification regarding what
version of the bill was addressed by the sectional analysis and
whether it was a proposed CS for HB 349.
2:25:37 PM
REPRESENTATIVE CLIFF GROH, Alaska State Legislature, as prime
sponsor, introduced the sectional analysis for Version R of HB
349 [included in the committee packet]. He explained that he
and his staff had worked with the Department of Natural
Resources (DNR) on the proposed CS to HB 349, Version R, and his
staff would explain the changes.
2:26:23 PM
CAMERON EBERSOL, Staff, Representative Cliff Groh, Alaska State
Legislature, presented the sectional analysis for Version R on
behalf of Representative Groh, prime sponsor. He explained that
the intent of the bill has not changed and remains as a means of
creating parity in how the state addresses and handles different
energy projects. In working with DNR, the bill sponsor found a
better model for how to accomplish parity. The new model is
based on a section of statutes that exists for oil and gas
licensing and leases which had work commitments included in the
license application process as well as long-term conditions for
transitioning into leases. He explained that the first three
sections were conforming changes. Beginning with Section 4, he
presented the Sectional Analysis [included in the committee
packet] which read as follows [original punctuation provided]:
Section. 4. Enacts four new sections of the Alaska Statutes
under Chapter 05. Alaska Land Act: AS 38.05.091 094,
which creates a licensing and leasing structure for
renewable energy projects on State-owned land analogous to
the process found in AS 38.05.131 134, Oil and Gas
Exploration Licenses; Leases.
AS 38.05.091 Applicability; determination; regulations.
Provides the provisions and authorities for the Department
to offer feasibility licenses. It requires the Commissioner
to research and make preliminary written determinations of
the state land that may be subject to the provisions of AS
38.05.092 and that those determinations will be given
public notice. It provides the Commissioner with the
authority to adopt necessary regulations to implement
licensing and sets the maximum acreage any licensee may
hold at any time.
AS 38.05.092 Feasibility licenses for renewable energy
projects. The DNR Commissioner may issue feasibility
licenses to encourage energy production on State-owned
land. These licenses give the licensee the exclusive right
to explore the surface estate on state land and evaluate
that land's potential for a renewable energy project. The
term of this license cannot exceed 10 years. A feasibility
license must be conditioned on an obligation to perform a
specified work commitment and make progress on this work
commitment by certain intervals during the life of the
license, post of bond or other security, and be subject to
annual review. The Commissioner may terminate the license
early if the licensee has not made sufficient progress on
their work commitment. It provides the option to convert
the license for all or part of the land into a lease of
State-owned land for a renewable energy project upon
fulfillment of the work requirements contained in the
feasibility license. This option of the licensee does not
apply if the lease is terminated. The land and water
included within an area subject to a feasibility license
must, to the extent practicable, remain open to the public
for hunting, fishing, and other generally allowed uses, and
to mineral exploration and development.
AS 38.05.093. License procedures. This section contains the
procedures to issue a feasibility license. The process may
be initiated by either the Commissioner or an interested
party issuing a proposal describing a specific piece of
land and project. If the Commissioner initiates the
licensing process, they shall publish notice of the
Commissioner's proposal in order to solicit comments and
competing proposals. Within 30 days after receiving a
proposal, the Commissioner shall either reject the proposal
in a written decision or give public notice of the intent
to evaluate the acceptability of the proposal. The
Commissioner shall solicit comments on the proposal for
which public notice is given, and they shall request
competing proposals. The Commissioner must issue a written
finding, including any modifications to the proposal
necessary to make the license conform to the best interests
of the state. This section also contains provisions for
soliciting a competitive bid in the event of multiple
interested parties.
2:31:42 PM
MR. EBERSOL explained that the last section, AS 38.05.094,
outlines how the license converts into a lease at the end of the
license term. The rest of the sections are conforming changes
and add a definition of "renewable energy project" and provide
an effective date.
2:32:09 PM
The committee took a brief at-ease at 2:32 p.m.
2:33:08 PM
CHAIR MCKAY requested that Representative Groh and Mr. Ebersol
explain the title change.
2:33:40 PM
MR. EBERSOL explained that there were no references to licenses
in the previous version of the bill. The revised title
addressed the changes in the new version, including the
licensing into leasing procedure which was similar to the oil
and gas procedures.
2:34:20 PM
REPRESENTATIVE SADDLER referred to page 6, line 28 [Section
38.05.092, subsection (c)(1)] and questioned the feasibility of
a license for renewables to cover a half million acres. He
acknowledged the reasons for similar large acreages for oil and
gas development leases but questioned why a renewables energy
project would need 500,000 acres.
MR. EBERSOL explained that the language regarding acreage was
taken directly from the language for oil and gas leasing. He
said the cost of a lease is based on the number of acres, and
whoever enters an agreement with the state would be weighing the
pros and cons of how many acres they would want to license for
exploring. He pointed out that land leases for feasibility
studies might encompass larger acreages than the eventual lease
which would be paired down based on where it would make sense to
put wind turbines, for example. At the present time, mirroring
the oil and gas language makes sense, but in time that might
change.
REPRESENTATIVE SADDLER asked what the acreage might be for a
typical renewable energy facility.
MR. EBERSOL responded that it would depend on the type of
project because different projects would vary in size.
REPRESENTATIVE SADDLER requested examples of sizes of various
projects such as wind and solar.
MR. EBERSOL explained that the largest renewable energy project
in the state occupied less than 10,000 acres but he offered to
follow up with more information for Representative Saddler.
2:38:29 PM
REPRESENTATIVE MEARS described her experience of traveling
through areas in the Lower 48 which had vast numbers of wind
turbines. She said the size option for wind projects was
important because evaluations would not only include wind
direction and speed but would also need to take transmission
into account. A larger swath of land would be beneficial for
evaluating a project's economics and feasibility before a
project was put in place.
2:39:45 PM
REPRESENATIVE BAKER asked what the benchmarks for progress would
be over a ten-year lease which would ensure the proposed work
had been done.
2:40:07 PM
MR. EBERSOL requested clarification of Representative Baker's
question and whether he was asking how the department would
evaluate the project's progress or how progress is being
measured.
REPRESENTATIVE BAKER clarified his question concerning how a
company would evaluate whether a piece of land was the right
spot for a specific renewable and what the benchmarks would be
in determining whether that land would work for the proposed
project.
MR. EBERSOL answered that the basic definition of "work
commitment" in the oil and gas process is expressed in dollar
amounts, namely what work would be done in the process of
determining the viability of a project. For example, in oil and
gas, that might be a seismic study. For instance, in two years
and again in four years, the work commitment should show that
the money has been spent as proposed. The state could then use
that information in its assessment.
REPRESENATIVE BAKER followed-up by describing various projects
that had been put in place in Kotzebue as well as some proposed
projects. He explained that the city leases land to the local
co-op for diesel, solar, and wind power. Studies have been
proposed for other areas around the community to determine the
feasibility of additional projects for consistent power
production. He inquired about the benchmarks for projects on
state lands such as solar and wind, and whether they were
clearly laid out.
2:43:29 PM
REPRESENTATIVE GROH referred his question to Deputy Director
Hess of DNR.
2:43:53 PM
KRIS HESS, Deputy Director, Division of Mining, Land, and Water,
Department of Natural Resources, explained the renewable energy
lease process. The applicant for a feasibility study would line
out how the process would be advanced for specific projects,
what studies would be conducted, and how much money would be
spent over the course of the study. The applicant would have up
to ten years to complete a feasibility study. The department
would assess whether the proposed goals were being met, would
ascertain whether the work at the location was proceeding as
planned, and would determine the level of completion. In this
way, the department would determine whether the applicant was
meeting the components of the requirements.
2:45:35 PM
CHAIR MCKAY requested clarification of the l0-year limit for a
feasibility study, commenting that 10 years seemed like a long
time.
2:45:49 PM
MS. HESS agreed that 10 years was a long time to complete a
feasibility study but reminded the committee it was based on the
oil and gas feasibility study structure. A study of that length
would not necessarily be authorized by DNR, but the department
wanted the flexibility to determine whether the selected
location was feasible for the project based on the information
the applicants provided, the type of project, and estimations
regarding how long it would take.
2:47:17 PM
CHAIR MCKAY asked whether the Shovel Creek project near
Fairbanks is on state land.
MS. HESS responded in the affirmative.
CHAIR MCKAY inquired whether Shovel Creek needed this
legislation in order to proceed.
MS. HESS explained Shovel Creek did not need this authorization
and that HB 349 was for larger acreages than the Shovel Creek
project.
CHAIR MCKAY asked how many acres the proposed Shovel Creek wind
farm was and whether there were regulations in place.
MS. HESS responded that it was less than 640 acres, that there
were regulations in place for Shovel Creek, and that it was a
leased area. She pointed out that the proposed legislation was
for acquiring a license during the exploration phase of a
project. If a company determined that their project was
feasible, then they would propose converting it to a lease.
2:49:48 PM
REPRESENTATIVE RAUSCHER asked whether a project such as the
Susitna Dam would qualify under the acreage limit.
2:50:08 PM
MS. HESS described the process of a feasibility study for the
proposed Eklutna project. If HB 349 passed, the legislation
would provide a framework for such a feasibility study on state
land. If it were determined to be feasible, then it would be
converted to a lease.
REPRESENTATIVE RAUSCHER redirected the conversation to the
Susitna-Watana project.
MS. HESS explained that the Susitna has already been evaluated,
so it would not need the proposed legislation in order to move
forward. There are other complications with the project that
are preventing it from moving forward.
REPRESENTATIVE RAUSCHER questioned whether another project the
size of Watana would be covered under the legislation.
MS. HESS replied that a project needing that type of acreage
would be covered under the legislation.
2:52:54 PM
REPRESENTATIVE SADDLER asked whether there are limitations on
the number of leases any one party could obtain through this
bill.
MS. HESS responded if an applicant came forward with a project
and they wanted to do a feasibility study, they could hold
licenses only for a maximum of 2 million acres. She gave
scenarios of several acreage combinations.
REPRESENTATIVE SADDLER asked whether current state laws or
regulations preclude leasing state lands for renewable energy
projects.
MS. HESS responded there was nothing at the time that prevented
DNR from leasing state land for renewable projects. However,
there was a limit in the number of acres they could authorize
because a lease is considered "a disposable" and the leaseholder
usually gets exclusive use of that acreage, and it would not be
open to multiple use. The limitations include a maximum of 640
acres. She said the proposed legislation would keep options
open for multiple use.
REPRESENTATIVE SADDLER questioned whether there are places in
Alaska where state land is subject to feasibility leases with a
10-year window.
MS. HESS explained that authorizations of feasibility licensing
for exploration were limited to oil and gas exploration. The
Division of Mining, Land, and Water did not have authority to do
exploration licensing. They were limited to leasing land for
renewable projects that were under 640 acres. Larger renewable
projects would require legislative approval.
REPRESENTATIVE SADDLER asked Ms. Hess what she saw as the effect
of HB 349, [Version R].
2:58:01 PM
MS. HESS responded that DNR had been approached by several
companies who were interested in developing renewable projects
on larger acreage, but the department needed the ability to do a
feasibility study on state land in order to determine whether
that land would be conducive for their projects. Exploration
licensing for large renewable projects was not available at that
time.
2:59:29 PM
CHAIR MCKAY announced that HB 349, Version R, was held over.
2:59:47 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:59 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 349(RES) 33-LS1325R.pdf |
HRES 4/1/2024 1:00:00 PM |
HB 349 |
| CSHB 349(RES) 33-LS1325 Sectional.pdf |
HRES 4/1/2024 1:00:00 PM |
HB 349 |