Legislature(2013 - 2014)BARNES 124
02/19/2014 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB135 | |
| HB161 | |
| HJR26 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 161 | TELECONFERENCED | |
| *+ | HB 135 | TELECONFERENCED | |
| *+ | HJR 26 | TELECONFERENCED | |
| + | TELECONFERENCED |
HJR 26-OFFSHORE OIL & GAS REVENUE SHARING
2:46:00 PM
CO-CHAIR FEIGE announced that the next order of business would
be HOUSE JOINT RESOLUTION NO. 26, Urging the United States
Congress to provide a means for consistently and equitably
sharing with all oil and gas producing states adjacent to
federal outer continental shelf areas a portion of revenue
generated from oil and gas development on the outer continental
shelf to ensure that those states develop necessary
infrastructure to support outer continental shelf development
and preserve environmental integrity.
2:46:07 PM
CO-CHAIR SADDLER, as sponsor of HJR 26, introduced the
resolution. He said that oil and gas development in federal
areas can be a boon for our country, providing revenue and jobs
and secure sources of domestic energy, but it also creates
costly impacts on nearby states, communities, and their
residents. While the federal government recognizes these
strains, they set policies in place to share proceeds from such
development to help states offset the costs for the improvements
and services necessary for safe and responsible development.
The federal government shares 50 percent on onshore areas where
the production occurs, in areas within three miles of shore, the
near shore, it shares 27 percent, and for offshore areas, it
shares 37.5 percent of the revenues. However, current federal
law says the State of Alaska and similarly situated states don't
receive any share of federal revenues oil produced out of
prospects in areas such as the Chukchi or Beaufort Seas.
CO-CHAIR SADDLER said many believe there is lots of oil in the
outer continental shelf (OCS). The industry shares that belief
in its investment of millions of dollars in leasing,
exploration, and drilling. Just as onshore development on the
North Slope requires infrastructure and investment, offshore
development will require infrastructure investment in ports,
roads, airports, utilities, housing, and more. Further, it
would require additional state services such as oil spill
emergency response, public health and safety, and environmental
monitoring and mitigation. Right now might be the best
opportunity in years in progress for OCS revenue sharing. He
pointed out that U.S. Senator Lisa Murkowski is the ranking
Republican member of the Senate Energy and Resources Committee.
The new chair is U.S. Senator Mary Landrieu, Louisiana, a strong
advocate for the oil industry and an advocate for OCS revenue
sharing. These two senators have introduced the Fixing Americas
Inequities with Revenue (FAIR Act), which would extend to all
OCS states the same 37.5 percent share that the Gulf Coast
states currently receive. This resolution, HJR 26, would send a
strong message from the State of Alaska to the U.S. Congress in
support of the FAIR Act or similar legislation that aims at a
fair and sensible system of federal revenue sharing.
2:48:19 PM
CO-CHAIR FEIGE opened public testimony on HJR 26.
2:48:45 PM
CHARLOTTE BROWER, Mayor, North Slope Borough (NSB), speaking
from written testimony, paraphrased, as follows:
Good afternoon. My name is Charlotte Brower. I am
the Mayor of the North Slope Borough and foremost am
the wife of a whaling captain, mother of six children
and grandmother of 25 so I have a dear investment in
the North Slope.
Thank you for the opportunity to speak on HJR 26, a
resolution urging the United States Congress to
provide for sharing with local areas the revenue from
the oil and gas development on our outer continental
shelf.
On July 23rd of this past summer, I was invited to
testify before the U.S. Senate Energy Committee in
support of S. 1273, known as the "Fixing America's
Inequities with Revenues Act of 2013" or "FAIR Act".
Today I am here before you to express support for HJR
26 as a way to help secure passage of measures like S.
1273 in Washington D.C. By working together as
Alaskans, we need to send a message for receiving a
fair and equitable distribution of revenues that come
from energy development on our Outer Continental Shelf
(OCS).
2:50:44 PM
MAYOR BROWER continued reading her written testimony, as
follows:
The Congress should pass legislation to ensure that
state and local governments will have resources to
keep up with infrastructure requirements, expand
emergency response and search and rescue capabilities,
take an active role in oil spill preparedness, and
work to maintain healthy communities and a healthy
ecosystem.
The North Slope Borough is the largest municipality in
the United States encompassing over 94,000 square
miles, including more than 8,000 miles of Arctic
coastline along the Beaufort and Chukchi Seas.
The majority of North Slope residents are Inupiat
Eskimos. We are heavily dependent upon marine
mammals, such as Bowhead and Beluga whales, seals and
walruses to sustain our physical health and our
cultural and spiritual well-being. The importance of
subsistence in our coastal communities and marine
environment goes beyond the need for food. Our unique
Inupiat culture, our traditions, and our links to our
ancestors and history are also tied to our subsistence
lifestyle, to our custom of sharing with others, and
to celebrating our connection to the land and the
ocean.
We are mindful of the critical need to protect the
environment and preserve our culture and our
resources. However, we also recognize that our
ability to continue to provide even basic services to
our communities depends upon revenue from the oil and
gas industry, which today primarily operates on state
land in our region. Without these revenues, the North
Slope Borough would not be able to maintain the
airstrips, health care facilities, water and sewer,
search and rescue or other services we provide in our
villages.
What many people in the Lower 48 do not understand is
that the infrastructure enjoyed today by other coastal
states - paved roads, deep water ports, and modern
communications - those don't exist in the North Slope
region.
Most people do not understand the challenges Alaska's
rural governments' face. As one example, a gallon of
milk costs $10 today in Barrow. That same gallon of
milk might cost $18 or more in some of our villages.
Other food items such as fresh fruits and vegetables
are even more expensive relative to the Lower 48 or
even other parts of Alaska because the cost of
transportation in our region is very high. And now
imagine the cost to the North Slope Borough for new
roads, upgrades to airstrips, new health care
facilities or new water and sewer or gas lines that
must be built through permafrost.
2:54:09 PM
MAYOR BROWER continued reading her written testimony, as
follows:
We also face threats to the infrastructure we have in
place today. With the Arctic Ocean now ice free for a
longer period every spring and fall, storms are
eroding the land around our villages - in some cases
over five to six feet per year. [A] moderate storm
once consumed more than a million dollars in response
costs from our borough. Over the last ten years the
coastline near Barrow has receded toward an old
landfill that holds tens of thousands of barrels of
[U.S.] Navy and {U.S.] Air Force waste. Ten years
ago, the ocean was 200 feet away from the landfill.
Now it is only 120 feet away.
Coastal erosion also threatens Barrow's utility
system, which is an underground system of tunnels
designed to protect the city's utilities from the
cold. This system provides indoor plumbing to our
residents and eliminates the need for outhouses and
water delivery by truck. And like most other things
in the Arctic, it is very expensive.
2:55:30 PM
MAYOR BROWER continued reading her written testimony, as
follows:
I would also like to note that the oil and gas
industry, researchers, and federal agencies, including
the U.S. Coast Guard, all use our local infrastructure
- our airports, roads, and hospitals. We welcome
people to our community and we are grateful for the
[U.S.] Coast Guard's presence in Barrow during the
2012 drilling season, but Congress must recognize the
cost to our community of maintaining and expanding
critical infrastructure as industry develops offshore
resources.
There is also a great [deal] of scientific research
needed to understand how best to mitigate the impact
of oil and gas development on the Arctic Environment
and the North Slope Borough can and should be part of
that effort.
The last thing I would like to emphasize is the role
of the state and local governments in emergency
preparedness associated with offshore energy
development, including oil spill response. Let us
pray that our good Lord will prevent the need, but in
the event of an emergency it will be the brave men and
women from the North Slope Borough Search and Rescue
Department and the Alaska Department of Public
Safety's troopers and the village [police safety
officers] VPSOs who will most likely be first on the
scene.
In summary, the people of the North Slope live in one
of the most undeveloped regions in our nation.
Investments must be made in the infrastructure
necessary to ensure that the OCS development can be
conducted safely and responsibly. And the burden of
providing such infrastructure should not fall solely
on the people [who] have the most to lose in case of
an oil spill.
Thank you for sponsoring HJR 26 [and] to help the
people of the North Slope Borough [to] send this
message to the United States Congress.
2:57:59 PM
CO-CHAIR SADDLER remarked that it is appropriate to have Mayor
Brower and Inupiaq spoken in the House Resources Committee room
as the committee discusses the impact of the OCS on the North
Slope.
2:58:31 PM
SARAH ERKMANN, External Affairs Manager, Alaska Oil and Gas
Association (AOGA), stated that AOGA supports HJR 26. She
related that AOGA is the business trade organization
representing the majority of oil and gas producers, explorers,
refiners, transporters, and marketers in Alaska. With 15 member
companies, the AOGA represents both large and small companies
with interest on the North Slope, in the Cook Inlet, and in the
OCS [often referred to as the "Offshore"].
MS. ERKMANN said the AOGA appreciate the focus on developing
Alaska's offshore resources in a way that recognizes Alaskans'
interest in advancing the issue because the Offshore is
considered the "next generation" of oil and gas development in
Alaska. It is truly a world-class resource with an anticipated
27 billion barrels of oil to produce. She said, "AOGA can say
at a high level that we support an OCS revenue-sharing program
as long as additional costs are not passed on to the offshore
oil and gas industry in the form of bonuses, rent, or
royalties." The AOGA appreciates the legislature's efforts as
well as efforts made by Alaska's Congressional delegation to
keep the Offshore Revenue Sharing alive at the federal level.
She thanked members for the opportunity to testify.
3:00:15 PM
ADRIAN HERRERA, Washington D.C. Coordinator, Arctic Power, asked
to speak in support of HJR 26. He related that Arctic Power is
a 501 (c) (6) not-for-profit citizens' based organization
arguing for the environmentally responsible development of oil
and gas resources in the Arctic region of Alaska. The Arctic
Power strongly supports HJR 26 and support for OCS revenue
sharing nationwide as well as in the state. Two prime reasons
are to bring parity with the rest of the nation, in particular,
with the Gulf of Mexico states, which receive 37.5 percent.
Additionally, Arctic Power works to mitigate impacts to coastal
communities in Alaska and the state as a whole. The current
status of zero percent revenue sharing does nothing to encourage
the State of Alaska or any other coastal state to pursue
offshore development nor does it provide any mitigation costs
against problems or impacts to the environment or coastal
communities. As previously mentioned, a bill is before the
Congress, S. 1273, the "Fair Act", which is probably the prime
target HJR 26 will be used for although another bill, S. 199 by
U.S. Senator Mark Begich. He advised that S. 199 carries much
the same language as S. 1273, except it is geographically
limited to the State of Alaska. It has received strong support
and U.S. Senator Begich has signed on as a sponsor of S. 1273,
which will likely be the vehicle. Thus, Alaska has full support
for the OCS revenue-sharing bills currently active in the U.S.
Senate, he said. Last year, in the U.S. House of
Representatives, H.R. 2231, an OCS revenue-sharing bill, passed
carrying the same figure of 37.5 percent to the state closest to
the development, which was sponsored by U.S. Representative
Richard Norman "Doc" Hastings, Chair of the Natural Resources
Committee, representing Washington's 4th district.
3:02:43 PM
MR. HERRERA related that the White House has expressed strong
concerns against revenue sharing towards states not receiving
it, such as Alaska due to the loss of revenue to the federal
government. He noted that taking 37.5 percent from the entire
OCS royalties and revenues going to states would represent a
loss to the U.S. Treasury. Similarly, based on a bill passed in
2006 called the "Gulf of Mexico Energy Security Act of 2006
(Pub. Law 109-432 [GOMESA], drafted by U.S. Senator Mary
Landrieu, allow 37.5 percent of royalty and revenue to the local
communities up to a cap of $500 million per year. The "FAIR
Act" reduces that cap to zero in 2025 and the White House and
U.S. Treasury finds this to be "stealing money from the
treasury." In fact, during hearings U.S. Senators stated this
concern.
MR. HERRERA said another front mentioned by the White House and
the Department of the Interior relates to the environmental
mitigation programs specific to the Land and Water Conservation
Fund (LWCF). The Land and Water Conservation Fund so far has
been a boondoggle because it has been raided by various
presidents and Congressional committees to fund other projects
not related to environmental conservation or environmental
mitigation. He reported that the President seeks to fund the
LCWF with $900 million, noting it already receives $125 million
under GOMESA and will receive $62.5 million under the proposed
FAIR Act. During debate on the proposed FAIR Act in July the
Chair and ranking member Senator Murkowski both stated for the
record that LWCF should not be reduced. However, in the Arctic
Power's opinion the proposed $900 million for future OCS revenue
for the LCWF is really a "pie in the sky" and would not receive
that type of support in the Congress, he said. He reiterated
that the Arctic Power supports the clause in HJR 26 that
addresses this.
3:05:45 PM
MR. HERRERA pointed out that the delegation agree that the
purpose of the change in revenue sharing is to bring parity
between onshore development, which receives 50 percent from
federal lands going towards the state; parity between the Gulf
of Mexico under the GOMESA Act of 2006, which receives 37.5
percent; and parity between the entire nation as a whole. He
questioned why one state would receive some funds but another
state, such as Alaska receives nothing at all, particularly
since the state has more coastline, more rural area, and is
closer to development than any other state.
MR. HERRERA said the second point brought up by U.S. Senator
Murkowski was impact. She indicated that it doesn't matter if
it is one mile offshore or 50 miles offshore, the impact to the
shoreline is still very high. Finally, in his organization's
opinion, the White House has been taking a very myopic view in
that it "doesn't look at the big picture." For example, if one
increases the attractiveness of development by allowing
infrastructure to be built on the shoreline, more companies will
take advantage of that and develop offshore. Further, greater
offshore development leads to greater revenue streams and under
the proposed FAIR Act and GOMESA Act of 2006, additional
environmental mitigation would exist. The proposed FAIR Act
allows for 10 percent of the entire OCS revenue nationwide to be
spent by coastal communities on environmental mitigation and
also on alternative energy development. In closing, he said the
Arctic Power believes this will address the views of President
Obama, the White House, and the DOI. He offered appreciation
for HJR 26 to address these issues.
3:08:44 PM
CO-CHAIR FEIGE, after first determining no one else wished to
testify, closed public testimony on HJR 26.
3:09:03 PM
REPRESENTATIVE JOHNSON moved to report HJR 26 out of committee
with individual recommendations and the accompanying fiscal
note.
REPRESENTATIVE JOHNSON said he would like the committee to take
a roll call vote on this measure.
REPRESENTATIVE SEATON objected to reporting HJR 26 from
committee.
The committee took a brief at-ease.
3:09:57 PM
A roll call vote was taken. Representatives Johnson, Olson,
Seaton, Feige, and Saddler voted in favor of reporting HJR 26
out of committee. [Representatives Hawker, P. Wilson, Tarr, and
Kawasaki were not in the room]. Therefore, HJR 26 was reported
out of the House Resources Standing Committee by a vote of 5-0.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 135 2010 DNR Letter.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Legal question memo.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Michele Stevens Testimony.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Petersville Mine Map II.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Petersville Mine Map.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Sponsor.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Version A.PDF |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB135-DNR-MLW-2-14-14.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB161 Auction Proceeds.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Fiscal Note.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Explanation of Changes U to Y.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Permit count.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 SCI Support.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Sponsor.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Support JHall.xps |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Support LOHCAC.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB161 Version Y.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HJR 26 BOEM Alaska OCS Lease Sales.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 BPC Revenue Sharing 101.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 OCS States Letter.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 Sponsor Statement.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 Version N.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR26-LEG-SESS-02-18-14.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HB161 SCI President Letter.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 161 |
| HB135 AMA Letter.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HB 135 Tileston Letter.pdf |
HRES 2/19/2014 1:00:00 PM |
HB 135 |
| HJR 26 FAIR Act (S.1273).pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 FAIR Act Summary.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |
| HJR 26 Mayor Brower Testimony.pdf |
HRES 2/19/2014 1:00:00 PM SRES 2/26/2014 3:30:00 PM |
HJR 26 |