Legislature(2021 - 2022)BARNES 124
04/14/2022 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB349 | |
| HB411 | |
| HB402 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 349 | TELECONFERENCED | |
| += | HB 402 | TELECONFERENCED | |
| += | HB 411 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 14, 2022
8:06 a.m.
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 |