02/28/1994 09:15 AM Senate FIN

                                                                               
  SB 322  -  DELAYS OF OIL AND GAS LEASE SALES                                 
                                                                               
  Co-chair  Pearce  directed that  SB  322 be  brought  on for                 
  discussion.   JIM EASON, Director, Division  of Oil and Gas,                 
  Dept.  of  Natural  Resources, came  before  committee.   He                 
  explained  that  the  legislation   contains  a  simple  but                 
  important amendment  to Title  38.   Current law  includes a                 
  provision requiring that if the department places  a sale on                 
  its  five-year oil  and gas leasing  schedule, it  must hold                 
  that sale within a quarter (90 days) of the quarter in which                 
  the sale  was originally  scheduled.   That requirement  was                 
  incorporated in 1978  amendments to leasing provisions.   At                 
  the time  amendments were  made, industry  expressed concern                 
  that, in spite  of the five-year leasing schedule,  a future                 
  commissioner  might  not  follow through  with  oil  and gas                 
  leasing.  The industry would  thus expend considerable time,                 
  effort,  and  moneys preparing  for  lease sales  that would                 
  ultimately not be held.  The 90-day requirement was included                 
  in statute to create pressure to continue a leasing program.                 
                                                                               
                                                                               
  Mr.  Eason voiced  his  belief that  the provision  has long                 
  outlived  its usefulness.  The record since 1978 reflects an                 
  active leasing program supported  by Democratic, Republican,                 
  and Independent  administrations.  Concerns  that originally                 
  led  to  inclusion  of  the  provision  never  materialized.                 
  Further, the balance  of regulations and statutes  that must                 
  be met make the  leasing program more vulnerable to  delays.                 
  The current effect of the provision provides opportunity for                 
  litigants to cause minor  delays in the leasing  program and                 
  ultimately  win  what cannot  be won  in  litigation.   If a                 
  litigant is successful in delaying a  sale more than 90 days                 
  beyond its original  quarter, the sale must again be noticed                 
  and placed on the five-year schedule for two full years.                     
                                                                               
  The proposed legislation deletes the 90-day requirement.  It                 
  retains the provision that the commissioner may not hold the                 
  sale any  earlier than would  normally occur.   Amendment of                 
  the statute also  provides the commissioner a  variable tool                 
  in situations where  there are  valid reasons for  extending                 
  public comment to ensure that proceeding with the sale is in                 
                                                                               
                                                                               
  the state's best interest.  That flexibility is needed.  Mr.                 
  Eason urged passage of the bill.                                             
                                                                               
  Discussion followed  between Co-chair Pearce  and Mr.  Eason                 
  concerning the  relationship between allowance  for possible                 
  lease sale extension and coastal policy council legislation.                 
                                                                               
  Co-chair  Frank  inquired  concerning possible  need  for an                 
  immediate  effective date.  Mr. Eason said that an immediate                 
  effective date would  be most helpful since it would provide                 
  needed flexibility for upcoming sale 79 and increase options                 
  for  dealing  with litigation,  should  it occur.   Co-chair                 
  Frank MOVED for  adoption of an  amendment providing for  an                 
  immediate effective date.  No  objection having been raised,                 
  the amendment was ADOPTED.                                                   
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None was forthcoming.  Senator Kerttula MOVED for passage of                 
  CSSB  322 (Finance)  with  individual  recommendations.   No                 
  objection   having  been  raised,  CSSB  322  (Finance)  was                 
  REPORTED OUT of committee  with a zero fiscal note  from the                 
  Dept. of Natural Resources.  All members present signed  the                 
  committee report with a "do  pass" recommendation.  Senators                 
  Jacko and Rieger  were absent from  the meeting and did  not                 
  sign.