Legislature(2021 - 2022)BARNES 124

04/14/2022 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 349 HEARING ESTABLISH DRILLING UNITS/SPACING TELECONFERENCED
Heard & Held
+= HB 402 IDENTIFICATION OF CONTRACTOR IN ADS TELECONFERENCED
Heard & Held
+= HB 411 MUNICIPAL TAX EXEMPTIONS/DEFERRALS TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         April 14, 2022                                                                                         
                           8:06 a.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Sara Hannan, Co-Chair                                                                                            
Representative Calvin Schrage, Co-Chair                                                                                         
Representative Harriet Drummond                                                                                                 
Representative Mike Prax                                                                                                        
Representative Ken McCarty                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Josiah Patkotak, Vice Chair                                                                                      
Representative Kevin McCabe                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 349                                                                                                              
"An Act relating to the establishment of oil and gas drilling                                                                   
units and patterns."                                                                                                            
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 411                                                                                                              
"An Act relating to municipal tax exemptions and deferrals on                                                                   
economic development property."                                                                                                 
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 402                                                                                                              
"An Act relating to identification requirements for contractors                                                                 
and home inspectors."                                                                                                           
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 349                                                                                                                  
SHORT TITLE: HEARING ESTABLISH DRILLING UNITS/SPACING                                                                           
SPONSOR(s): REPRESENTATIVE(s) RAUSCHER                                                                                          
                                                                                                                                
02/22/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/22/22       (H)       CRA, RES                                                                                               
03/29/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/29/22       (H)       -- MEETING CANCELED --                                                                                 
04/05/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/05/22       (H)       -- MEETING CANCELED --                                                                                 
04/07/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/07/22       (H)       -- MEETING CANCELED --                                                                                 
04/12/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/12/22       (H)       Heard & Held                                                                                           
04/12/22       (H)       MINUTE(CRA)                                                                                            
04/14/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
                                                                                                                                
BILL: HB 411                                                                                                                  
SHORT TITLE: MUNICIPAL TAX EXEMPTIONS/DEFERRALS                                                                                 
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
04/04/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/22       (H)       CRA, L&C                                                                                               
04/05/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/05/22       (H)       -- MEETING CANCELED --                                                                                 
04/07/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/07/22       (H)       -- MEETING CANCELED --                                                                                 
04/12/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/12/22       (H)       Heard & Held                                                                                           
04/12/22       (H)       MINUTE(CRA)                                                                                            
04/14/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
                                                                                                                                
BILL: HB 402                                                                                                                  
SHORT TITLE: IDENTIFICATION OF CONTRACTOR IN ADS                                                                                
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
                                                                                                                                
03/18/22       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/18/22       (H)       CRA, L&C                                                                                               
03/29/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
03/29/22       (H)       -- MEETING CANCELED --                                                                                 
04/05/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/05/22       (H)       -- MEETING CANCELED --                                                                                 
04/07/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/07/22       (H)       -- MEETING CANCELED --                                                                                 
04/12/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/12/22       (H)       Heard & Held                                                                                           
04/12/22       (H)       MINUTE(CRA)                                                                                            
04/14/22       (H)       CRA AT 8:00 AM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
RYAN MCKEE, Staff                                                                                                               
Representative George Rauscher                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf  of Representative Rauscher, prime                                                             
sponsor, noted those who would  be giving invited testimony on HB
349.                                                                                                                            
                                                                                                                                
JEREMY PRICE, Public Commissioner                                                                                               
Alaska Oil and Gas Conservation Commission                                                                                      
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Described the intent and purpose  of HB 349                                                             
and responded to questions.                                                                                                     
                                                                                                                                
JESSIE CHMIELOWSKI, Engineering Commissioner                                                                                    
Alaska Oil and Gas Conservation Commission                                                                                      
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Presented   historical  and   technical                                                             
information and answered questions during the hearing on HB 349.                                                                
                                                                                                                                
GRAHAM SMITH, Petroleum Land Manager                                                                                            
Division of Oil and Gas                                                                                                         
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Discussed  the issue  of public  notice and                                                             
answered questions during the hearing on HB 349.                                                                                
                                                                                                                                
EMILY NAUMAN, Deputy Director                                                                                                   
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Responded to a question  during the hearing                                                             
on HB 349.                                                                                                                      
                                                                                                                                
RYAN JOHNSTON, Staff                                                                                                            
Representative Calvin Schrage                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   On behalf of  Representative Schrage, prime                                                             
sponsor, noted those who would  give invited testimony during the                                                               
hearing on HB 411 and provided brief comment on HB 402.                                                                         
                                                                                                                                
MIKE EDGINGTON, representing self                                                                                               
Girdwood, Alaska                                                                                                                
POSITION  STATEMENT:    Provided  invited  testimony  during  the                                                             
hearing on HB 422.                                                                                                              
                                                                                                                                
WILLIAM "BILL" FALSEY, representing self                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 411.                                                                          
                                                                                                                                
GLENN HOSKINSON, Deputy Director                                                                                                
Division of Corporations, Business, and Professional Licensing                                                                  
Department of Commerce, Community & Economic Development                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the hearing on HB
402.                                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:06:38 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  SARA HANNAN  called the  House  Community and  Regional                                                             
Affairs  Standing  Committee  meeting   to  order  at  8:06  a.m.                                                               
Representatives Prax,  McCarty, Schrage, and Hannan  were present                                                               
at the  call to  order.  Representative  Drummond arrived  as the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
        HB 349-HEARING ESTABLISH DRILLING UNITS/SPACING                                                                     
                                                                                                                                
8:07:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that the  first order of business would                                                               
be HOUSE BILL  NO. 349, "An Act relating to  the establishment of                                                               
oil and gas drilling units and patterns."                                                                                       
                                                                                                                                
8:07:43 AM                                                                                                                    
                                                                                                                                
RYAN MCKEE,  Staff, Representative George Rauscher,  Alaska State                                                               
Legislature,   on  behalf   of  Representative   Rauscher,  prime                                                               
sponsor, noted those who would  be giving invited testimony on HB
349.                                                                                                                            
                                                                                                                                
8:08:54 AM                                                                                                                    
                                                                                                                                
JEREMY   PRICE,  Public   Commissioner,   Alaska   Oil  and   Gas                                                               
Conservation  Commission,  Department  of Commerce,  Community  &                                                               
Economic  Development, described  the  intent and  purpose of  HB
349.   He  said HB  349 would  reduce administrative  barriers by                                                               
removing the requirement  under AS 31.05.100(a) and  (b) that the                                                               
Alaska  Oil and  Gas  Conservation Commission  (AOGCC) must  hold                                                               
hearings for any  changes to oil and gas  pool unit designations,                                                               
rules, or  spacing patterns, even  where all  relevant properties                                                               
within a  given pool belong to  a single owner.   He advised that                                                               
the  requirement  causes unnecessary  delay  to  pool owners  and                                                               
generates unnecessary cost to the  state.  He explained that this                                                               
change  is necessary  because the  concept of  only one  vertical                                                               
well in  a box on  the map has  been made obsolete  by horizontal                                                               
drilling.                                                                                                                       
                                                                                                                                
MR. PRICE said  Section 2 would amend AS 31.05.100(e)  to make it                                                               
discretionary  rather than  mandatory for  AOGCC to  issue notice                                                               
and  hold  a hearing  in  each  instance  where an  exception  is                                                               
granted  to  the   rule  or  spacing  pattern   proscribed  to  a                                                               
particular pool.   With the proposed change,  he explained, AOGCC                                                               
could allow  the operator  to drill  additional wells  within the                                                               
same pool  without going through  30 days of notice  and comments                                                               
followed by  the issuance of  a conservation order.   He reported                                                               
that  from  2016-2020,  AOGCC publicly  noticed  47  hearings  on                                                               
noncontroversial  well spacing  exceptions;  these hearings  were                                                               
not  requested by  the public,  and no  testimony was  submitted.                                                               
Mr.  Price pointed  to  a resolution  [20  AAC 25.055,  regarding                                                               
drilling  units  and  well  spacing,   shown  on  slide  1  of  a                                                               
PowerPoint  in the  committee packet],  and  he highlighted  that                                                               
there would  be protection from draining  resources from adjacent                                                               
owners.                                                                                                                         
                                                                                                                                
8:12:57 AM                                                                                                                    
                                                                                                                                
JESSIE CHMIELOWSKI, Engineering Commissioner,  Alaska Oil and Gas                                                               
Conservation  Commission,  Department  of Commerce,  Community  &                                                               
Economic Development, stated  that HB 349 would  change a statute                                                               
that has  not been  changed since  its adoption  in 1955,  and it                                                               
would not  affect AOGCC's  ability to fulfill  its mission.   She                                                               
said  the legislation  addresses how  far one  well must  be from                                                               
another   in  the   subsurface,  in   the  targeted,   productive                                                               
reservoirs.  She explained the  history of vertical wells and how                                                               
pressure  would  drop when  people  drilled  too close  to  other                                                               
wells.    She mentioned  a  Conservation  Act  of the  1930s  and                                                               
prevention  of  waste  through  default  drilling  units.    With                                                               
today's  geology, it  is common  for  wells to  drill closer  for                                                               
greater recovery.   When  Prudhoe Bay started  44 years  ago, the                                                               
estimated  recoverable reserve  was  about 9  billion barrels  of                                                               
oil;  today,   with  advancements   in  drilling   and  reservoir                                                               
management,  recoverable reserves  are  an  estimated 14  billion                                                               
barrels.                                                                                                                        
                                                                                                                                
MS.  CHMIELOWSKI  referred  to  the PowerPoint  utilized  by  Mr.                                                               
Price.   She explained that  the reference to "sections"  have to                                                               
do  with governmental  grids.   She showed  how drilling  is down                                                               
from land  and going offshore.   She showed "a  colorful drawing"                                                               
[slide 2  of the PowerPoint]  depicting the  side view of  one of                                                               
the  wells in  the Cosmopolitan  Unit,  and she  pointed to  "the                                                               
mother board."  She talked  about lateral drilling and echoed the                                                               
remarks of Mr.  Price about the administrative burden  of so many                                                               
notifications.                                                                                                                  
                                                                                                                                
8:19:03 AM                                                                                                                    
                                                                                                                                
MS. CHMIELOWSKI, in response to  a question from Co-Chair Hannan,                                                               
clarified  that  in   a  case  where  there   are  seven  spacing                                                               
exceptions  on  one  well,  each  would  require  a  [notice  of]                                                               
hearing, because  each is  considered a separate  well bore.   In                                                               
response to follow-up  questions, she said the  hearings could be                                                               
scheduled on  one day.  The  area that would benefit  from HB 349                                                               
would be  Cook Inlet because  the fields  on the North  Slope are                                                               
much larger.  She offered  her understanding that AOGCC has never                                                               
turned down a  request for an exception.  She  added that careful                                                               
review  is always  done,  and she  noted that  the  cost to  well                                                               
owners  is  significant,  thus,   they  are  careful  about  [the                                                               
drilling exception they seek].                                                                                                  
                                                                                                                                
8:24:03 AM                                                                                                                    
                                                                                                                                
MS.  CHMIELOWSKI  returned  to her  presentation,  directing  the                                                               
committee's attention to slide 4,  which showed a bird's eye view                                                               
of the  Rendezvous oil pool  development plan, and she  noted the                                                               
grid pattern and  indicator of oil pool in the  subsurface.  Also                                                               
shown are  planned wells to  be drilled; every well  has multiple                                                               
sections.   She talked about  using reservoir  characteristics to                                                               
plan a well.   She referred to  a drill pad.   She drew attention                                                               
to slide 5,  which shows a zoomed in view  [of the Rendezvous oil                                                               
pool  development plan]  and the  alternating of  "injectors" and                                                               
"producers," which is a method of  recovering more oil.  She said                                                               
this is another  example of the administrative burden.   She said                                                               
with  passage of  HB 349,  AOGCC  would continue  its mission  to                                                               
prevent  waste  of  hydrocarbon  resources.    She  then  offered                                                               
feedback from a presentation given at a prior meeting.                                                                          
                                                                                                                                
8:30:57 AM                                                                                                                    
                                                                                                                                
MS. CHMIELOWSKI, in response to  Co-Chair Schrage, confirmed that                                                               
HB 349 would  pertain to all other areas beside  Cook Inlet; Cook                                                               
Inlet happens to  be the primary location  where [the requirement                                                               
for  hearings] is  causing an  issue.   She mentioned  that AOGCC                                                               
sometimes issues guidelines for how best  to use a reservoir.  In                                                               
response  to   another  question   from  Co-Chair   Schrage,  she                                                               
confirmed that there  is a separate section  pertaining to public                                                               
notice  that  is  being  addressed.    In  response  to  a  third                                                               
question, she said  it is unlikely that someone would  use an old                                                               
method of drilling many vertical  wells, and she pointed out that                                                               
AOGCC  has the  option to  notice  a hearing  at any  time.   She                                                               
assured Co-Chair Schrage  that even with Sections 3  and 4 struck                                                               
from  HB 349,  AOGCC  would  still have  the  right  to notice  a                                                               
hearing at its  discretion.  She echoed Mr.  Price's comment that                                                               
the  bill  changes  the  notice from  being  mandatory  to  being                                                               
discretionary.                                                                                                                  
                                                                                                                                
8:36:29 AM                                                                                                                    
                                                                                                                                
MR. PRICE added  that AS 31.05.060 states that any  member of the                                                               
public can request  a hearing.  He noted the  technical aspect of                                                               
having  a  hearing  on  spacing  issues.    He  stated  that  the                                                               
Department of Natural Resources (DNR)  has "a very robust process                                                               
and  multiple opportunities  for public  comment long  before the                                                               
issue comes before the AOGCC."                                                                                                  
                                                                                                                                
8:38:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR   HANNAN,  to   clarify   discussion   on  statute   and                                                               
regulation, asked for confirmation that  the handout given by Mr.                                                               
Price [shown on slide 1] relates to regulation.                                                                                 
                                                                                                                                
MR. PRICE  answered that's correct.   In response to  a follow-up                                                               
question,  he indicated  that [the  language  of the  resolution]                                                               
offers what  the language might  look like [in statute,  under HB
349].                                                                                                                           
                                                                                                                                
CO-CHAIR HANNAN pointed out that "this  is not an absolute."  She                                                               
requested a citation  from Mr. Price, and she  explained that she                                                               
wants  to  ensure the  committee  understands  the regulation  in                                                               
relation to the statute that would be changed under HB 349.                                                                     
                                                                                                                                
8:40:50 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN  asked Graham  Smith, from  DNR, to  describe the                                                               
public notice requirements  as they stand currently  and under HB
349, and to address any concerns DNR has regarding well spacing.                                                                
                                                                                                                                
8:41:38 AM                                                                                                                    
                                                                                                                                
GRAHAM SMITH,  Petroleum Land Manager,  Division of Oil  and Gas,                                                               
Department of Natural Resources,  replied that the constitutional                                                               
obligation under Article  8, Section 10, states  that no disposal                                                               
to state interest  shall be made without public notice.   He said                                                               
DNR  has a  robust  public notice  process  before beginning  the                                                               
leasing process.   He said  the public notice requirements  in AS                                                               
38.05 are  "fairly prescriptive" on  the issue of  public notice.                                                               
Further, each  phase of development  has a public notice,  and he                                                               
described  actions  within  those  phases  that  would  also  get                                                               
publicly noticed.   He  mentioned Sullivan v.  Red, a  2013 court                                                             
decision  that  determined that  each  phase  must have  its  own                                                               
assessment.  He offered further  details regarding public notice,                                                               
explaining that  DNR, in addition to  statutorily mandated public                                                               
notice, also gives discretionary public notice when warranted.                                                                  
                                                                                                                                
8:46:05 AM                                                                                                                    
                                                                                                                                
MR. SMITH, in response to  a question from Representative McCarty                                                               
about possible overlap in public  notice topics between AOGCC and                                                               
DNR, explained  that AOGCC is primarily  interested in subsurface                                                               
issues,  while DNR  focuses on  surface issues.   To  a follow-up                                                               
question, he  indicated that the  proposed legislation  would not                                                               
adversely affect  DNR's process.   He opined that the  bill makes                                                               
sense, because  "a lot of  things can  be more onerous  in nature                                                               
than  [is] proportional  to the  value that  they provide  to the                                                               
public."                                                                                                                        
                                                                                                                                
8:48:16 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN  inquired whether  DNR held an  official position                                                               
on HB 349.                                                                                                                      
                                                                                                                                
MR.  SMITH  answered  that  he  was not  aware  of  a  formulated                                                               
position;  however, he  offered  to  check and  get  back to  the                                                               
committee with an answer.                                                                                                       
                                                                                                                                
CO-CHAIR HANNAN indicated  she would be asking  the same question                                                               
of AOGCC.   She  then noted that  Emily Nauman,  from Legislative                                                               
Legal Services, was available for questions.                                                                                    
                                                                                                                                
8:49:22 AM                                                                                                                    
                                                                                                                                
EMILY  NAUMAN,  Deputy   Director,  Legislative  Legal  Services,                                                               
Legislative  Affairs  Agency,  in  response to  a  question  from                                                               
Representative  McCarty,  explained  that  the  changes  proposed                                                               
under  HB  349  from  "that"  to "which"  are  to  modernize  the                                                               
language according to the drafting manual.                                                                                      
                                                                                                                                
8:51:07 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  opened  public  testimony on  HB  349.    After                                                               
ascertaining there was  no one who wished to  testify, she closed                                                               
public testimony.                                                                                                               
                                                                                                                                
8:51:44 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced HB 349 was held over.                                                                                 
                                                                                                                                
8:52:33 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 8:52 a.m. to 8:53 a.m.                                                                       
                                                                                                                                
           HB 411-MUNICIPAL TAX EXEMPTIONS/DEFERRALS                                                                        
                                                                                                                                
8:53:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced  that the next order  of business would                                                               
be  HOUSE  BILL  NO.  411,  "An Act  relating  to  municipal  tax                                                               
exemptions and deferrals on economic development property."                                                                     
                                                                                                                                
8:53:39 AM                                                                                                                    
                                                                                                                                
RYAN  JOHNSTON,  Staff,  Representative  Calvin  Schrage,  Alaska                                                               
State  Legislature, on  behalf of  Representative Schrage,  prime                                                               
sponsor, noted those who would  give invited testimony during the                                                               
hearing on HB 411.                                                                                                              
                                                                                                                                
8:54:14 AM                                                                                                                    
                                                                                                                                
MIKE EDGINGTON, representing self, noted  that he is the co-chair                                                               
of the Girdwood  Board of Supervisors, which had  not developed a                                                               
position on HB 411; therefore, he  is speaking on his own behalf.                                                               
He said  under current law,  some communities are unable  to make                                                               
full  use  of  municipal  tax  exemptions  [related  to  economic                                                               
development property].   He said although Girdwood  is a separate                                                               
community  in  terms of  government,  it  is within  the  Unified                                                               
Municipality  of Anchorage.   Girdwood  addresses this  by having                                                               
its  own   service  area,  including  police,   fire,  roads  and                                                               
drainage, and parks and recreation.   He said about 40 percent of                                                               
Girdwood's  taxes  fund  these  services,  and  the  rest  go  to                                                               
schools.  He reviewed that  in 2007, the legislature expanded the                                                               
ability  of municipalities  to provide  tax incentives  for local                                                               
economic  development  but  excluded  service  areas  run  by  an                                                               
elected board.   He noted that  Girdwood is affected by  the high                                                               
cost  and low  availability of  housing.   He stated  that he  is                                                               
asking  for  a  small,  targeted  change  [to  statute]  so  that                                                               
Girdwood can  qualify to  offer the tax  exemptions.   He pointed                                                               
out  that there  are a  number  of other  communities across  the                                                               
state that would also benefit from this change.                                                                                 
                                                                                                                                
8:58:20 AM                                                                                                                    
                                                                                                                                
MR.  EDGINGTON, in  response to  a  question from  Representative                                                               
McCarty,   explained   that   the    Girdwood   Board   gives   a                                                               
recommendation  for   the  tax  level  to   the  Municipality  of                                                               
Anchorage, which then  approves it.  He said  his recollection is                                                               
that the  Municipality of Anchorage  has never disapproved  a tax                                                               
submitted by Girdwood.   In response to a  follow-up question, he                                                               
said the  Municipality of  Anchorage is  bound by  state statute,                                                               
and  it has  taken  the  language of  the  statute  to apply  the                                                               
restrictions on taxes being imposed in service areas.                                                                           
                                                                                                                                
REPRESENTATIVE  MCCARTY expressed  concern  that  a service  area                                                               
will come to  the state because it does not  like the decision of                                                               
the local home-rule [municipality].                                                                                             
                                                                                                                                
MR. EDGINGTON clarified  that the situation at hand  is that both                                                               
the service  area of Girdwood  and the Municipality  of Anchorage                                                               
are  in agreement  but cannot  do  anything about  it because  of                                                               
statute.                                                                                                                        
                                                                                                                                
9:03:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN noted there was a lawyer on line to testify.                                                                    
                                                                                                                                
9:03:24 AM                                                                                                                    
                                                                                                                                
MR.  EDGINGTON, in  response  to  Representative Prax,  confirmed                                                               
that a service area cannot  exempt general taxation.  In response                                                               
to  a follow-up  question, he  maintained his  understanding that                                                               
the assembly  has veto power over  a service area's desire  for a                                                               
tax exemption.                                                                                                                  
                                                                                                                                
9:06:14 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  SCHRAGE  clarified   the  issue  is  that   even  if  a                                                               
municipality wishes  to allow  the tax  exemption to  the service                                                               
area, it is prohibited from doing so by statute.                                                                                
                                                                                                                                
9:06:46 AM                                                                                                                    
                                                                                                                                
MR. EDGINGTON, in response  to Representative Drummond, confirmed                                                               
there  is  not  a  current   project  being  considered  for  tax                                                               
exemption, but  if there  were, both the  Girdwood Board  and the                                                               
Municipality of Anchorage  would have to approve it for  it to be                                                               
allowed,  provided  HB 411  is  passed  in  order to  change  the                                                               
statute.                                                                                                                        
                                                                                                                                
9:07:46 AM                                                                                                                    
                                                                                                                                
MR. EDGINGTON,  in response to Representative  McCarty, clarified                                                               
that  the  limitation  is  on elected  boards;  there  are  other                                                               
service areas in  Anchorage that do not have  elected boards, and                                                               
the restriction on tax exemption does not apply to them.                                                                        
                                                                                                                                
9:09:09 AM                                                                                                                    
                                                                                                                                
WILLIAM "BILL"  FALSEY, representing  self, stated  that he  is a                                                               
private  practice  attorney  testifying  today  in  his  personal                                                               
capacity.   He specified that  the limitation being  discussed is                                                               
found  in AS  29.45.50(m).   He noted  that service  areas are  a                                                               
concept authorized by Article 10,  Section 5, of the Constitution                                                               
of the  State of Alaska, and  they are common.   He confirmed the                                                               
information  about  the  board operated  service  areas  and  the                                                               
exclusion added  in 2017 and the  concern behind it.   He said HB
411 is particularly meaningful in  places like Girdwood; it would                                                               
allow the  Girdwood Board to opt  out by passing a  resolution of                                                               
objection no  later than 30 days  after the local ordinance.   He                                                               
emphasized the 30-day  window would come after  all public notice                                                               
requirements were made.   He expressed his strong  support of the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
9:14:59 AM                                                                                                                    
                                                                                                                                
CO-CHAIR SCHRAGE noted that at  the last committee hearing, there                                                               
had  been  discussion  about the  notice  requirement.  He  asked                                                               
whether there  would be a problem  if the notice were  changed to                                                               
60 days.                                                                                                                        
                                                                                                                                
MR. FALSEY described  the process to illustrate  the ample public                                                               
notice that would  occur prior to the 30-day window.   That said,                                                               
he remarked  that he did  not see any  reason to oppose  a 60-day                                                               
notice.                                                                                                                         
                                                                                                                                
9:17:00 AM                                                                                                                    
                                                                                                                                
MR.  FALSEY,  in  response  to  a  question  from  Representative                                                               
McCarty  as to  whether there  are things  that state  law should                                                               
preclude local  governments from doing  in terms of  taxation and                                                               
exemption,  said  philosophically he  is  "more  in the  camp  of                                                               
trusting  the local  elected officials."   He  said he  thinks if                                                               
there  were no  state  restrictions, then  the local  governments                                                               
would work those issues out appropriately.                                                                                      
                                                                                                                                
9:19:07 AM                                                                                                                    
                                                                                                                                
MR.  FALSEY,  in  response  to  a  question  from  Representative                                                               
Drummond   regarding   other   service   areas,   explained   the                                                               
differences  between Girdwood's  board-operated service  area and                                                               
others in terms of tax exemptions.                                                                                              
                                                                                                                                
9:22:39 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  opened  public  testimony on  HB  411.    After                                                               
ascertaining  no  one  wished  to   testify,  she  closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
9:23:52 AM                                                                                                                    
                                                                                                                                
MR. JOHNSTON, in response to  Co-Chair Hannan, concluded, "As the                                                               
municipality  might have  a veto,  the service  area boards  also                                                               
still retain the ability to opt  out, and we think that addresses                                                               
the issue of the 2017 concerns."                                                                                                
                                                                                                                                
9:24:18 AM                                                                                                                    
                                                                                                                                
CO-CHAIR   HANNAN  expressed   her   understanding  of   Juneau's                                                               
government,  saying that  she does  not think  there are  elected                                                               
boards in any of the borough's service areas.                                                                                   
                                                                                                                                
9:25:45 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that HB 411 was held over.                                                                            
                                                                                                                                
9:25:50 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:26 a.m. to 9:27 a.m.                                                                       
                                                                                                                                
           HB 402-IDENTIFICATION OF CONTRACTOR IN ADS                                                                       
                                                                                                                                
9:27:12 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced that the  final order of business would                                                               
be  HOUSE  BILL  NO.  402, "An  Act  relating  to  identification                                                               
requirements for contractors and home inspectors."                                                                              
                                                                                                                                
9:27:29 AM                                                                                                                    
                                                                                                                                
RYAN  JOHNSTON,  Staff,  Representative  Calvin  Schrage,  Alaska                                                               
State  Legislature, on  behalf of  Representative Schrage,  prime                                                               
sponsor  of HB  402, noted  that  the bill  sponsor's office  had                                                               
reached  out  to the  Associated  General  Contractors of  Alaska                                                               
(AGCA)  to  testify,  but  AGCA  members  are  at  a  conference.                                                               
Notwithstanding that,  he pointed  out that  AGCA had  provided a                                                               
letter of support  for the Senate companion bill  and had written                                                               
a letter requesting that [HB 402] be introduced.                                                                                
                                                                                                                                
9:28:28 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  sought to  find  out  whether the  Division  of                                                               
Corporations,  Business,  and   Professional  Licensing  had  any                                                               
concerns regarding  the proposed change  under HB 402  that would                                                               
allow contractors  to be  directed to  a web  site as  opposed to                                                               
being   required   to   display    their   license   numbers   on                                                               
advertisements.                                                                                                                 
                                                                                                                                
9:29:16 AM                                                                                                                    
                                                                                                                                
GLENN  HOSKINSON,  Deputy  Director,  Division  of  Corporations,                                                               
Business,  and Professional  Licensing,  Department of  Commerce,                                                               
Community  & Economic  Development, responded  that the  division                                                               
has no concerns with  HB 402,  which she described  as "kind of a                                                               
modernization  that makes  a lot  of sense."   In  response to  a                                                               
follow-up   question,   she   estimated   that   6,270   licensed                                                               
contractors in Alaska would be affected by HB 402.                                                                              
                                                                                                                                
9:30:21 AM                                                                                                                    
                                                                                                                                
MR. JOHNSTON,  in response to Representative  McCarty, said there                                                               
is no difference between HB 402 and the Senate companion bill.                                                                  
                                                                                                                                
9:30:59 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  HANNAN  opened  public  testimony on  HB  402.    After                                                               
ascertaining there was  no one who wished to  testify, she closed                                                               
public testimony.                                                                                                               
                                                                                                                                
9:31:33 AM                                                                                                                    
                                                                                                                                
CO-CHAIR HANNAN announced HB 402 was held over.                                                                                 
                                                                                                                                
9:32:14 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Community and Regional Affairs Standing Committee meeting was                                                                   
adjourned at 9:32 a.m.                                                                                                          

Document Name Date/Time Subjects
HB 411 Back up Service Area Statute.pdf HCRA 4/14/2022 8:00:00 AM
HB 411
HB 349 Sectional analysis.pdf HCRA 4/14/2022 8:00:00 AM
HB 349
HB 349 Supporting Document - Image.pdf HCRA 4/14/2022 8:00:00 AM
HRES 4/27/2022 1:00:00 PM
HB 349
HB 349 Examples of well spacing issues 4.14.22.pdf HCRA 4/14/2022 8:00:00 AM
HB 349