Legislature(2005 - 2006)BUTROVICH 205
04/20/2006 03:30 PM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB300 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 300 | TELECONFERENCED | |
HB 300-OIL & GAS CONSERVATION COMMISSION MEMBER
CHAIR GENE THERRIAULT announced that HB 300 would be the first
order of business. He asked Representative Kohring to present
the bill.
3:37:31 PM
REPRESENTATIVE VIC KOHRING, Sponsor of HB 300, stated that
because of the complexity and expansion of the oil and gas
industry, the public seat on the Alaska Oil and Gas Conservation
Commission (AOGCC) ought to have at least some understanding of
the industry. He noted that there are three seats on the AOGCC
and two require expertise in the field. Currently the third seat
doesn't require any kind of petroleum background. He argued that
the third position ought not be a wide-open spot with the
opportunity for on-the-job training.
If the person doesn't have fundamental knowledge he or she would
have to learn from scratch. He drew a parallel to the standards
for the Regulatory Commission of Alaska and said it makes sense
to hold AOGCC to the same standard.
3:40:23 PM
SENATOR KIM ELTON asked about the administration's position.
REPRESENTATIVE KOHRING responded the administration didn't have
a problem with the bill after he changed the requirement to a
fundamental knowledge of the industry as opposed to specific
knowledge.
SENATOR ELTON asked what fundamental knowledge means.
REPRESENTATIVE KOHRING replied that is intentionally generic and
vague so that the governor is able to make the determination.
SENATOR ELTON commented without a definition it provides a
loophole and gives the governor absolute discretion to appoint
whomever.
3:43:24 PM
JOHN NORMAN, Chair, Alaska Oil and Gas Conservation Commission
(AOGCC), testified that the bill would further the goal of
having knowledgeable and responsible oil and gas regulation in
Alaska.
Giving background on the AOGCC, he explained that it is one of
the oldest and most important regulatory commissions in the
state. The AOGCC was created in 1955 in a remarkable and forward
thinking legislative act. The commission consists of three
commissioners who are appointed by the governor and confirmed by
the Legislature for staggered six-year terms.
Under current statute, one commission member is required to be a
petroleum engineer, the second must be a geologist with
petroleum experience, and the third position requires no
particular training or experience. The commission has
jurisdiction over all oil and gas wells drilled in the state and
its work is becoming increasingly complex as the industry
changes. The commission has the authority to conduct subpoena
hearings, engage in rule making and to adjudicate and resolve
disputes among conflicting owners of oil and gas rights. It can
impose penalties and can order unitization of pools and
integration of interests to avoid multiplicity of facilities and
to ensure greater recovery of oil and gas resources.
MR. NORMAN opined that the change proposed in HB 300 is in
keeping and is a step in the right direction. He noted that the
commission website has a detailed description of the powers and
duties.
3:48:58 PM
SENATOR ELTON noted that legislators aren't required to have
specific experience or knowledge in a particular arena but that
the list of legislative duties is similar. He suggested that the
notion of having a public member who has no specific experience
gives the governor the opportunity to appoint someone from
"outside the box." Also, the three commissioners have a staff of
20 or 21 people most of which have specific expertise. Just as
legislators deal with highly qualified staff on complex issues,
he questioned whether there isn't value in having AOGCC
commissioners do the same.
MR. NORMAN said the comparison is valid, but legislators are
required to deal with a broad range of issues while the AOGCC is
a very specialized agency. On a daily basis there is at least
one permit and numerous applications and conservation orders.
There isn't time for on the job training, but this doesn't mean
that a commissioner must come from the industry and have an
industry mindset.
3:55:17 PM
SENATOR WAGONER observed that sometimes it's the person with the
least amount of knowledge that asks the best questions because
having everyone thinking on the same track isn't always the most
beneficial. Noting that AOGCC has a tremendous staff, he said
someone who is accustomed to analyzing information and making
decisions might be more effective than someone who is more
familiar with the industry. He questioned whether the
commissioners didn't rely heavily on staff.
MR. NORMAN responded staff does give recommendations, but
decisions are ultimately up to the three commissioners. If the
third commissioner doesn't have experience he or she will be
severely handicapped and Alaska won't be well served in the long
run, he opined.
CHAIR THERRIAULT asked whether the bill is addressing a past
problem or a potential problem.
MR. NORMAN replied the bill addresses a potential future
problem. Over the years the third commissioner has by and large
met the requirements set forth in the bill. He reiterated that
commissioners could obtain experience without working directly
in the industry.
The bill doesn't craft tight sideboards; it allows future
governors and Legislatures considerable latitude to make a
determination on qualification.
4:03:59 PM
CHAIR THERRIAULT recapped the questions Senator Elton and
Senator Wagoner had raised and asked the sponsor if the
administration would oppose the legislation as originally
written.
REPRESENTATIVE KOHRING said the administration requested more
generic language and he complied.
CHAIR THERRIAULT noted that the original bill contained specific
requirements that didn't necessarily speak to a background in
oil and gas, but that the current requirements call for a
fundamental understanding of the industry. He asked why there
was a change in emphasis from a background in business to one in
oil and gas.
REPRESENTATIVE KOHRING replied in hindsight he would have worded
the bill differently to include a background in the petroleum
industry.
4:08:27 PM
SENATOR ELTON voiced the concern that without a definition for
"fundamental understanding" there is the opportunity for 61
different interpretations. He asked the sponsor to think about
how to avoid that difficulty.
SENATOR CHARLIE HUGGINS asked if this would preclude the former
mayor of Wasilla from serving on the commission.
REPRESENTATIVE KOHRING said it probably would, but the bill
isn't directed at past members.
SENATOR HUGGINS noted that the position is well compensated,
which might draw candidates, but if the language were tightened
the administration and the other commissions might not be as
supportive.
REPRESENTATIVE KOHRING said that is his assumption.
CHAIR THERRIAULT asked if the director of Boards and Commissions
would screen and filter the applicants before the names were
submitted to the administration.
REPRESENTATIVE KOHRING replied he would expect that to be the
case.
CHAIR THERRIAULT announced he would hold the bill. He asked Mr.
Norman if the language designating the three positions was
established in 1979.
MR. NORMAN said yes; Legislator Irene Ryan, a geologist,
inserted that language. At Statehood the commission had a
petroleum engineer a geologist and a third member from Union Oil
management. Reflecting on the 40-year history, he said the
commissioners have typically had experience in the industry.
However, the appointees without experience in the industry have
not been a problem, he said.
CHAIR THERRIAULT expressed interest in when the designations for
the positions were made.
MR. NORMAN said he would provide the specific dates, but he
recalled that sometime in the mid 1960s it was recognized that a
certain level of expertise was important. The majority of past
commissioners had training in the industry and that is what
industry expects, he asserted.
CHAIR THERRIAULT said he would ask his staff to work with the
sponsor to find out why the policy call was made requiring no
specific training, experience or knowledge before making the
suggested change.
REPRESENTATIVE KOHRING said he would help gather the history.
CHAIR THERRIAULT held HB 300 in committee.
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