Legislature(2001 - 2002)
04/11/2001 01:10 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 205-RESOURCE DEVELOPMENT: BD./GRANTS/FUND [Contains discussion relating to SB 136, the companion bill] Number 1815 CO-CHAIR MASEK announced that the next order of business would be HOUSE BILL NO. 205, "An Act relating to resource development and to grants for the purpose of promoting resource development from appropriations of a portion of the revenue derived from the extraction of certain state natural resources." Number 1850 REPRESENTATIVE GREEN made a motion to adopt the proposed committee substitute (CS) [version 22-LS0803\C, Chenoweth, 4/5/01] for purposes of discussion. [No objection was stated.] Number 1860 REPRESENTATIVE FATE, speaking as the sponsor, explained for the committee members that HB 205 is a companion to SB 136. He paraphrased his sponsor statement [included in the committee packet], which read as follows: House Bill 205 will establish the Resource Development Board [RDB], which will be tasked with the primary duties of facilitating public education and promoting responsible resource development. The board will have authority to award matching grants to private nonprofit corporations for projects such as conducting marketing research, advertising, publishing, and distributing information related to responsible resource extraction. Grants may not be used for an election or a ballot proposition, nor can they be used for influencing issue-specific legislation at the state or local government level. House Bill 205 also establishes the Resource Development Fund from which the board may award grants. The fund will be created within the general fund and will be subject to legislative appropriation from revenues received from the extraction of the state's natural resources. 20 percent of the balance, after administrative costs, will also be appropriated to the New Business Incentive Fund to attract companies to Alaska that build on our resource base. In his annual address to the legislature, [U.S.] Senator Frank Murkowski advised that "the state must do its part to promote economic development of its own lands, irrespective of the prevailing federal attitude and political landscape at the federal level." House Bill 205 represents an investment in Alaska's future. Alaska has been, and will be, dependent on natural resource extraction to fuel our economic engine for the foreseeable future. We need to continue to promote responsible development of our resources while protecting the environment. The best way to protect Alaska's environment is to have a strong diversified economy. The majority of environmental groups apparently do not agree with this concept, as they continue to oppose nearly all development while offering no alternative economic plan. Alaska's environmental protection laws are among the strongest in the world, yet by opposing development of Alaska's natural resources, environmentalists push development offshore to Third World countries, ensuring exploitative development in the absence of adequate environmental protection laws. There are now more than 90 environmental groups with offices in Alaska, and the vast majority of their money comes from the Lower 48. These organizations spend millions of dollars in Alaska attempting to sway public opinion, drive public policy, and inhibit the development of our natural resources. Because of the virtually unlimited funds available to these environmental groups, Alaska-based resource development advocates are unable to compete effectively in presenting a balanced message to the public and are overwhelmed by a one-sided message. House Bill 205 will provide assistance in disseminating a balanced message regarding responsible resource development. Alaska invests in marketing our tourism and seafood industries and in supporting the opening of ANWR [Arctic National Wildlife Refuge] to petroleum exploration in order to benefit our economy. We also need to invest in the promotion of our diverse mineral resources, timber, and oil and gas development. Creating the Resource Development Board will promote responsible resource development in Alaska and assist us in meeting our constitutional mandate of developing our resources by making them available for maximum use consistent with the public interest. REPRESENTATIVE FATE commented that the last statement was taken out of the constitution. He indicated the sectional analysis [in the committee packet] reflects the proposed CS, Version C. Number 2145 REPRESENTATIVE FATE referred to [Amendment 1], which read as follows [original punctuation provided]: Page 1, line 13: After "amount" Insert "based on the gross revenues but appropriated after the transfer of payments required by law to the Permanent Fund, School Fund," Number 2190 REPRESENTATIVE KERTTULA suggested a friendly amendment to proposed Amendment 1 as follows: after "the Permanent Fund, School Fund," add "and Constitutional Budget Reserve Fund,". REPRESENTATIVE KERTTULA explained that there currently is not much being added to the Constitutional Budget Reserve Fund (CBRF) because "we are not getting those big settlements." She stated her belief that since an overall fiscal plan had not yet been made, it may make sense to "maintain where we're at right at the moment." REPRESENTATIVE FATE expressed concern because the CBRF requires a three-quarters vote. He also expressed concern about using those types of funds in this effort. REPRESENTATIVE KERTTULA agreed about the three-quarters vote to withdraw from the fund, but offered her belief that this bill would change how the money goes into the fund. REPRESENTATIVE FATE responded that at some point the funds would have to be taken out to use for grants and to put into the Resource Development Board. Just for argument's sake, Representative Fate said, if the funds were locked up, a three- quarters vote would be required in order to use them. REPRESENTATIVE KERTTULA responded, "It's just that we're getting the money equal to whatever those amounts are. So it'll never take a three-quarters vote to ... get that money to this fund." She said money would never be appropriated back out of the CBRF for this fund. Number 2347 KRISTY TIBBLES, Staff to Senator Drue Pearce, Alaska State Legislature, spoke on behalf of the Senate Resources Standing Committee, sponsor of SB 136, the companion bill to HB 205. She informed members that the same amendment is being offered on the Senate side with consideration to adding the CBRF, based upon the fiscal note provided by DNR. She told the committee the drafter of the bill had stated his opinion that the money in question does not pertain to the CBRF because [the bills] don't say "oil settlement money." REPRESENTATIVE KERTTULA stated her understanding, "So it's simply because the money never is going to deal with the money that goes through the CBR anyway. ... So actually, then, the fiscal note may be somewhat misleading ... because it mentions the CBR." MS. TIBBLES responded in the affirmative. REPRESENTATIVE FATE stated that he had no personal objection to [Representative Kerttula's friendly amendment], but would like the issue clarified. REPRESENTATIVE KERTTULA agreed that if the money isn't ever going to come from the CBR, there is no reason to mention it; however, it is mentioned in the fiscal note. Number 2423 MS. CARROLL responded: Yes, our fiscal note does do that. What this amount is: it calculates this, based on the gross amount of revenues from our mineral estate. ... So that's ... how you get the $2.6 million. All of the distributions happen after that, and the appropriation comes out of the general fund. The amount that comes out of the general fund is what you're worried about, and that's based on gross revenue. So that is essentially just a calculation. The revenue stream goes its merry way, the way that it always has. And then the appropriation that you make into this fund comes out of the general fund, based on that amount that the Department of Natural Resources has calculated. MS. CARROLL, in response to a question from Representative Chenault, clarified that it is current gross receipts from the end of fiscal year 2000. Number 2488 REPRESENTATIVE KERTTULA read from page 1, lines 12-14, continuing through page 2, line 1: (b) From the money received in the administration of the resources of the state under AS 38.05, the legislature may appropriate an amount equal to one- quarter of one percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments, and bonuses received by the state as follows: REPRESENTATIVE KERTTULA said, "It may be under 'bonuses.'" She stated her belief that Ms. Tibbles had been testifying to the fact that the money that would go into the CBR does not fit within that definition. She added, "And I guess that's the question." Number 2508 MS. CARROLL responded: In this fiscal note we calculated based on gross revenues, which, in my understanding, [include] those settlement amounts that go directly into the constitutional budget reserve because they are based on an error that was made on the revenue that we got - the receipts that we were supposed to receive in prior years. So that's how we did the calculations - the Department of Natural Resources. That's one way of doing it. Number 2543 REPRESENTATIVE CHENAULT asked Ms. Carroll if the one-quarter [of one] percent is based on the latest revenue reports. He also asked if future resource development would be taxed at the current rate and the one-quarter [of one] percent would come out of the gross. In the alternative, would this be an added one- quarter percent increase in future revenue receipts? Number 2588 MS. CARROLL answered that this doesn't increase any royalties that might need to be paid by industry; however, if there is further development "in there" for the royalties that are paid, it will be a part of the calculation, because those would be revenues that [DNR] receives. Addressing a follow-up question, Ms. Carroll clarified that if there is an increase in revenue coming from the mineral estate, this calculation would be done on the increased amount of revenue received. She stated her expectation that this calculation would be made annually. Number 2682 CO-CHAIR MASEK asked whether there was any objection to the adoption of Amendment 1 with Representative Kerttula's amendment to it. There being no objection, Amendment 1, as amended, was adopted. Number 2705 EDWARD C. FURMAN came before the committee to testify in support of HB 205. He said it was too bad that in the past, the government gave eight of our islands to Russia. He mentioned land sold by the federal government without legislative permission. Mr. Furman thanked the committee for taking time to listen to "this 65-year-old retired veteran." He passed out a newsletter [included in the committee packet] describing the things he frowns on about the government. Number 2823 PAMELA LaBOLLE, President, Alaska State Chamber of Commerce (ASCC), testified on behalf of the ASCC in support of HB 205. She told the committee it is important that the state, which has ownership of its resources and is a "business partner at the table," needs help in marketing the importance of resource development. She asserted that resource development was the basis upon which Alaska was allowed into statehood. She said: It's very important at this time, when there is so much effort and false information that is perpetrated by those who would have Alaska be a park, instead of a self-sufficient state of the Union, that has the ability to be on equal footing in the world market as other states do. Number 2924 CO-CHAIR MASEK closed public testimony. Number 2930 REPRESENTATIVE GREEN mentioned the existence of the Resource Development Council (RDC) and asked how the proposed Resource Development Board (RDB) would go to operators and excite them about using Alaska's resources [any differently than the RDC would]. He also mentioned AOGA [Alaska Oil and Gas Association]. TAPE 01-34, SIDE B REPRESENTATIVE FATE explained that the purpose of the RDB would be to not only support, but to promote - to act as a public relations [entity] and to be actively involved in the placement of funds. For example, the RDB might choose to use funds to support tourism, promote the development of resources, and fight the environmentalists who are opposed to it. The RBD could disseminate funds to aid the efforts of other established groups. REPRESENTATIVE GREEN agreed that resources should be marketed. He mentioned the existence of fish marketing, including that by ASMI [Alaska Seafood Marketing Institute] and other existing organizations. He also mentioned approximately $2.7 million in fiscal notes. He said, "From a commerce point of view, I just don't ... see where they're going to go that we're not already going." Representative Green stated his belief that an oil company, for example, would most likely talk to other oil companies, or approach DNR [for funds]. He named a fictitious oil company in Texas and asked how it would be notified to come to Alaska through the RDB. REPRESENTATIVE FATE said that wouldn't be the purpose of the RDB. Number 2833 CO-CHAIR MASEK referred to the sponsor statement and the proposed CS, which specifies that nonprofit corporations organized under the Alaska Nonprofit Corporation Act will be given preference for receiving grants. She asked Representative Green if the council he'd mentioned gives grants as well. Number 2805 REPRESENTATIVE GREEN answered that the council does not give grants. He questioned whether there would be enough money available to give grants, to create that kind of an activity for something of any consequence regarding natural resources. CO-CHAIR MASEK pointed out AS 44.33.917 in the proposed CS. She remarked, "From what I see here, this is another tool to help nonprofit organizations to develop our state's resources." Number 2689 REPRESENTATIVE FATE said he understood Representative Green's concern regarding a possible duplication of process, which is a waste of money. He remarked that many times nonprofit corporations could be a benefit to the state by getting out the desired messages of the legislature and "other members of the state," which cannot get those messages out because of political correctness, for instance. Representative Fate said he envisions those funds as nonprofit funds that can promote economic development, especially in the extraction of resources. Number 2625 REPRESENTATIVE GREEN said, "Rather than actually distribute the money to a nonprofit who might then try and extract, ... it's for an information dissemination, primarily, like Arctic Power." REPRESENTATIVE FATE concurred. REPRESENTATIVE GREEN stated that that was his point: another [entity] is already doing this. REPRESENTATIVE FATE said the exception is that Arctic Power has not come under this purview; had this been in place, it might have. However, it has received funds from other sources. He said he hadn't cited Arctic Power because [legislators] felt the necessity for a nonprofit organization to carry a message. He alluded to the fact that Arctic Power had been funded, partially, by the legislature recently [in its efforts to open ANWR]. He added, "Had this been in place, they would have had to go through those procedures that have been prescribed in this bill in order to get any grant funds from this organization, and I would suspect that they would have done that." CO-CHAIR MASEK clarified that Arctic Power is solely promoting the opening of ANWR, whereas the bill refers to "many other resource entities." Number 2527 REPRESENTATIVE KERTTULA said she must echo some of the same concerns Representative Green had offered. She referred to earlier mention of tourism and stated that if tourism were added [to the bill], she would "have to come pretty close to supporting an idea like this." REPRESENTATIVE KERTTULA indicated [people involved in tourism] are struggling to "put it together to come back up with their marketing scheme." She also mentioned "responsible resource extraction" and expressed concern that there is not a balance with some of the other industries. Noting that differing statistics regarding tourism, fishing, and oil as leading industries, she concluded by saying, "This money stream is either going to be way up or possibly way down, and that kind of worries me too." Number 2453 CO-CHAIR MASEK asked if the Department of Community and Economic Development (DCED) would "fall under" tourism. She noted that [the bill] states that the commissioner [of DCED] shall be on the board. REPRESENTATIVE KERTTULA stated her interpretation that tourism is under that department; however, it is not being funded that way, because there is a private nonprofit board. She pointed out that tourism would never be able to get a grant, because it's not an extractive industry. Number 2419 REPRESENTATIVE FATE said he does not preclude tourism; however, it is not the thrust of this legislation. REPRESENTATIVE KERTTULA clarified that she had brought up the issue of tourism because neither the title of the bill nor the thrust includes it; however, unless the sponsor of the bill wanted to redo the whole idea, [she was not asking for an amendment.] Number 2365 REPRESENTATIVE FATE noted that in Denver, in the mineral industry at large, it takes 7-15 years to get a project through. He said: If we have somebody who is going to bat for the state, wherein sometimes we can't, and we have a nonprofit organization that needs some funds to help facilitate reducing the time it gets something [going], we should take advantage of that. REPRESENTATIVE FATE told the committee Alaska's problem is worse than that of many of states in the Lower 48. For example, a gas pipeline from Prudhoe Bay to the Lower 48, by way of Chicago and California, was authorized, with all certificates, as long ago as 1978. Number 2274 REPRESENTATIVE KERTTULA stated her belief, regarding promoting development in Alaska, that the money would be better spent by aiding the company itself, for example, or developing a good permitting system. She mentioned Red Dog [Mine], air [quality] violations, and a six-month lag in communication. She said she respects where Representative Fate is going, but respectfully disagrees that that is where the money is best spent. Number 2229 REPRESENTATIVE McGUIRE drew attention to page 2, lines 4-7, of the proposed CS, which read: (2) after allowance for the expenses described in (1) of this subsection, not more than 20 percent of the remaining estimated balance of the amount authorized for appropriation under this subsection to the new business incentive fund for purposes authorized by AS 45.81.010 - 45.81.050; REPRESENTATIVE McGUIRE remarked that she liked the idea. She offered her belief that one current problem is attracting new business to Alaska. She said she would like to see that [percentage] increase, although she did not know how that might affect the makeup of the rest of the bill. Representative McGuire said she thought new business incentives were one of the key elements of the bill. REPRESENTATIVE FATE responded that there might be other problems, of which he is unaware, with increasing the percentage; however, he had no personal objection to the suggestion. He added that the next committee of referral would be a proper place to look at that. Number 2142 REPRESENTATIVE GREEN asked how much of the $2.7 million would be available to pass out, after the agencies that are writing these [grants] extract their [expenses]. He asked if anything would be gained by this, other than having some additional literature going somewhere. He said it is difficult to see how much more money will actually be required in order to do some good. Number 2042 REPRESENTATIVE FATE told Representative Green he could not answer his questions at this point because there has been no experience with this to determine projected expenses. REPRESENTATIVE GREEN responded that he loves the goal if it is certain it would work as planned. He agreed Alaska needs to extract its resources. He said some problems with permitting stem directly or indirectly from the EPA [Environmental Protection Agency]; therefore, if this [legislation] were going to go towards education and the EPA, he could be more easily persuaded, because it is a major stumbling block in need of correction. He suggested that striking a deal with the EPA may be an incentive for other companies to come to Alaska. He said [Alaska] operates in a more environmentally sound manner than any other place in the world. He added, "If we could strike a deal with EPA, because of that history, then ... let's go to ... two percent." REPRESENTATIVE FATE asked Representative Green if he was suggesting an amendment. REPRESENTATIVE GREEN answered, "If I knew where it was going." Number 1931 MS. TIBBLES offered an example: the Alaska Miners Association could apply for a grant to produce new information regarding mining in Alaska. REPRESENTATIVE GREEN said they produce the information now, without the grant. He mentioned a Canadian company that got Red Dog [Mine] started. He asked if "we" had talked to any of the people who might be looking for funding. Number 1859 REPRESENTATIVE FATE restated that he understood Representative Green's concerns. This would be a reinforcement for things that already exist; the bill addresses the nonprofit aspect. He said there is a process to follow, and the grants would not be given out indiscriminately. Although there may be overlap, it may be very beneficial. Number 1768 REPRESENTATIVE GREEN stated that the tourism business is in need of money every year; it competes with [businesses] that are "being subsidized by other states, by other countries." He said their marketing council has really helped. He also mentioned the battle to open ANWR and spoke of "specific need" and "specific issue." To illustrate his point, Representative Green told the committee that his children were given money when they were specific about what they wanted, rather than vague. Number 1695 CO-CHAIR MASEK explained that the proposed board would be made up of [five] people: [one each] from the forestry, mining, oil, and gas industries [through their respective trade associations], as well as the commissioner of DCED. She indicated those people would be the ones to issue the grant money and that grants would help [groups] promote themselves. Number 1614 REPRESENTATIVE FATE referred to the first line of his sponsor statement, which read: House Bill 205 will establish the Resource Development Board, which will be tasked with the primary duties of facilitating public education and promoting responsible resource development. REPRESENTATIVE FATE said to Representative Green: If you consider that, I suppose, some of the beauty of this land is a resource, then I would assume also that you would say that this could help develop that resource through tourism, which both you and Representative Kerttula have been talking about. It does not, as I have said before, ... negate advancing any funds from ... going in that direction, but that's going to be a process that we'll have to go through from the applicant and from the review of each application. Number 1523 REPRESENTATIVE KERTTULA emphasized, however, that there cannot be tourism under this. It is for the development of resources having commercial promise, using methods of responsible resource extraction. It cannot be used for tourism. Number 1493 REPRESENTATIVE FATE moved to report CSHB 205 [version 22- LS0803\C, Chenoweth, 4/5/01, as amended] out of committee [with individual recommendations and the accompanying fiscal notes]. [Representative Kerttula first objected, then withdrew her objection.] There being no objection, CSHB 205(RES) was moved out of the House Resources Standing Committee.
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