Legislature(1995 - 1996)

02/05/1996 08:13 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HSCR 1 - DISAPPROVING EXECUTIVE ORDER 92                                    
 Number 1888                                                                   
 CO-CHAIRMAN GREEN brought HSCR 1 before the committee.  No one from           
 the House Special Committee on Oil & Gas was available to testify.            
 A memorandum from Representative Rokeberg, Chairman, House Special            
 Committee on Oil & Gas to the House Resources Committee is as                 
 "Executive Order No. 92 consolidates the Division of Oil and Gas              
 with the Division of Geological and Geophysical Surveys located               
 within the Department of Natural Resources.  The testimony before             
 the House Special Committee on Oil and Gas indicated that there is            
 no consensus regarding whether the consolidation outlined in                  
 Executive Order No. 92 is the correct configuration of the two                
 "Remarks during public testimony indicates there are both good and            
 bad consequences if the consolidation goes forward.  As a result of           
 committee testimony, the members of the committee voted to                    
 introduce a special resolution to oppose the consolidation in order           
 to expedite the process and move the executive order to the                   
 appropriate authorized committee.                                             
 "In addition, we checked with Legislative Legal on the proper                 
 procedure for handling a resolution opposing an executive order.              
 The legal memorandum we received stated that under Uniform Rule 21,           
 joint standing committees must consider executive orders."                    
 Number 1924                                                                   
 NICO BUS, Acting Director, Division of Support Services, Department           
 of Natural Resources provided background information on the bill.             
 During last year's budget process, the funding for the director's             
 position of the Division of Geological and Geophysical Surveys was            
 deleted.  He said the department then looked at the division to see           
 if it warranted it's own division status.  The commissioner asked             
 the Alaska Geologic Mapping Advisory Board to establish a committee           
 and assess the role and function of the Division of Geological &              
 Geophysical Surveys and decide whether or not the department needed           
 a director.                                                                   
 MR. BUS said that report was finalized, last fall.  The board                 
 recommended that the director/state geology office be relocated to            
 Anchorage; recruiting through a nationwide recruiting system, and             
 that the director be appointed for a five year term.  Another                 
 recommendation was that the Division of Geological and Geophysical            
 Surveys needed to have a strong presence in the state of Alaska               
 because of its importance to the resource and because of recurring            
 geological hazards.                                                           
 MR. BUS said another recommendation was that the geological surveys           
 division pursue and develop partnerships with those who are working           
 towards common goals.  He said during the Fiscal Year 97 budget               
 preparations, the department looked at efficiencies.  The DNR did             
 not want to diminish the mission of the Division of Geological and            
 Geophysical Surveys, and the department also wanted to implement              
 the recommendations of the Alaska Geologic Advisory Board.  He said           
 the DNR's objective was to strengthen the surveys and improve                 
 administrative support.  As a result, the Department of Natural               
 Resources proposed Executive Order No. 92.                                    
 Number 2082                                                                   
 MR. BUS said, to make sure that the Division of Geological and                
 Geophysical Surveys does not get absorbed into the Division of Oil            
 and Gas, which was a concern of the House Special Committee on Oil            
 and Gas, they will be doing best interest findings for the oil and            
 gas people.  The DNR basically wants to keep them separate in terms           
 of budgetary issues.  These two divisions will each have their own            
 budget component and the legislature will have the opportunity to             
 fund them at appropriate levels.  The DNR plans to keep the field             
 presence in tact for the geological surveys which it feels is very            
 MR. BUS said the consolidation provides some budget efficiencies by           
 sharing administrative support for both divisions and, in that                
 process, the DNR saves $50,000 in the FY97 budget, which is in line           
 with what the legislature charged us with during the budget                   
 MR. BUS said the DNR feels Executive Order No. 92 is an efficiency            
 measure in state government aimed at improving cooperation and                
 communication between the two divisions and strengthening their               
 missions.  In the process, the department is gaining budgetary and            
 administrative efficiencies.  He said Mr. Ken Boyd was available to           
 answer programmatic questions.                                                
 Number 2282                                                                   
 KENNETH A. BOYD, Director, Division of Oil and Gas, Department of             
 Natural Resources, testified that the resolution combines two                 
 divisions with a long history of cooperation on various projects              
 including methane projects, and North Slope field work in general.            
 He hoped this combination will provide new opportunities to work              
 together in the future.  He said he strongly supports Executive               
 Order No. 92.  It is an opportunity for administrative                        
 Number 2347                                                                   
 CO-CHAIRMAN GREEN referred to Executive Order N0. 92. Section 3. AS           
 41.08.010 and Section 4. AS 41.08.020 and discussed requirements              
 and duties of the state geologist.  There is no prerequisite in the           
 order requiring that the person who does the administration be a              
 registered geologist; like the Oil and Gas Conservation Commission,           
 for example.                                                                  
 CO-CHAIRMAN GREEN said, speaking in accordance with the Special               
 Committee on Oil and Gas, his concern is that, as a function, the             
 prior Division of Geological and Geophysical Surveys would be under           
 the auspices of the Division of Oil and Gas....end tape.                      
 TAPE 96-13, SIDE A                                                            
 Number 000                                                                    
 CO-CHAIRMAN GREEN stated that the geology surveys division has                
 consistently been utilized by the minerals industry for their                 
 expertise, maps, and hazard specialization which are the described            
 duties for the general public and for entities that do not have               
 large and sophisticated groups of geological and geophysical                  
 expertise; whereas the oil and gas industry has these resources at            
 their command.                                                                
 CO-CHAIRMAN GREEN mentioned his past association with the oil and             
 gas industry and expounded on the industry's self-reliance in doing           
 its own surveys. He alluded to the bidding on bonus lease sales and           
 lease sales where there has been no bidding.  He said a more direct           
 example would be "bonus bidding" and "the money left on the table."           
 What that is, is significant amounts of money left on the table,              
 even with the most sophisticated geological departments in some of            
 these companies.                                                              
 CO-CHAIRMAN GREEN declared that a better use of the agency's                  
 resource might be to keep the Division of Geological & Geophysical            
 Surveys either autonomous or combined with the Division of Mines.             
 He said he agreed with the House Special Committee on Oil and Gas             
 and tended not to approve Executive Order No. 92.                             
 Number 327                                                                    
 MR. BOYD said the Division of Oil and Gas does not nominate areas             
 for leasing, the division takes lease sale nominations from                   
 industry as far as the five-year process.  The two lease sales that           
 had no bidders, both of those areas were nominated by industry, in            
 areas where they had an interest.  As time passes, economics may              
 change and companies interest may move, but industry does nominate            
 the acreage.                                                                  
 MR. BOYD continued, the purpose of the geology section in the                 
 Division of Oil and Gas is not just the technical part of the lease           
 sale, it is there to do a lot of the work that involves unitization           
 computerization and other issues that involve geological and                  
 geophysical knowledge.  In summary, to protect the state's                    
 MR. BOYD said he would try to do a good job as the state's                    
 geologist.  It is not his intention to meld the groups together               
 except to use the capabilities of both groups in a cross                      
 pollination.  He would like the people in Fairbanks involved in               
 day-to-day operations, the unitization and computerization                    
 functions and to learn how tract allocation works.  He felt this is           
 a valuable lesson for any geologist.                                          
 Number 429                                                                    
 CO-CHAIRMAN GREEN commended Mr. Boyd on the work that he has been             
 doing, he said the work is exemplary.  Chairman Green clarified               
 that his comments, in no way, reflect any disrespect for the great            
 job Mr. Boyd is doing.                                                        
 Number 457                                                                    
 CO-CHAIRMAN WILLIAMS said the state is encouraging fiscal restraint           
 and talking about consolidation in many areas.  He asked Chairman             
 Green that if his concern was resolved, would it hinder the                   
 industry to consolidate.                                                      
 Number 500                                                                    
 CO-CHAIRMAN said consolidation would not hurt the Division of Oil             
 and Gas, it would help them.  He said his concern is that the                 
 divisions would not stay separate, and the Division of Geological             
 and Geophysical Surveys would not continue to be as aggressive in             
 the charges that are incumbent upon them.  He said if there is an             
 economy of scale, he would rather see them combined with a group              
 that does utilize them and stay focused on hard rock and tectonics.           
 Number 643                                                                    
 REPRESENTATIVE AUSTERMAN asked if consolidation can be done and               
 still protect those issues.  He said, there is nothing wrong with             
 saving money and now we are saying that we do not want to save                
 CO-CHAIRMAN GREEN said there may be a better marriage that saves              
 the same amount of money but does away with the potential of                  
 drifting into the wrong element.                                              
 CO-CHAIRMAN GREEN said the intent of HSCR 1 is to not put the                 
 Division of Geological and Geophysical Surveys in the Division of             
 Oil and Gas. Leaving it by itself will require a fiscal note, or              
 continue without a leader, or meld them with the Division of Mines.           
 Number 709                                                                    
 REPRESENTATIVE AUSTERMAN asked if the committee could amend the               
 Executive Order No. 92 to delete the Division of Oil and Gas and              
 include the minerals division.                                                
 CO-CHAIRMAN GREEN said the House Resources Committee or someone               
 would have to sponsor a bill to do that prior to February 11th.               
 Number 751                                                                    
 REPRESENTATIVE OGAN moved HSCR 1 move from the House Resources                
 Committee with individual recommendations and attached zero fiscal            
 note.  Hearing no objection, it was so ordered.                               

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