Legislature(1999 - 2000)
05/05/1999 01:23 PM House RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE May 5, 1999 1:23 p.m. MEMBERS PRESENT Representative Scott Ogan, Co-Chair Representative Jerry Sanders, Co-Chair Representative Beverly Masek, Vice Chair Representative John Harris Representative Carl Morgan Representative Ramona Barnes Representative Jim Whitaker Representative Reggie Joule MEMBERS ABSENT Representative Mary Kapsner COMMITTEE CALENDAR CS FOR SENATE BILL NO. 134(RLS) "An Act authorizing the Alaska Oil and Gas Conservation Commission to determine the amount of and to collect a charge for operating wells subject to the commission's jurisdiction, and to allocate expenses of investigation and hearing; authorizing the commission to employ additional professional staff; repealing the oil and gas conservation tax; and providing for an effective date." - MOVED CSSB 134(RLS) OUT OF COMMITTEE HOUSE BILL NO. 194 "An Act correcting, in the Alaska Disaster Act, a reference to the former oil and hazardous substance release response fund to describe that fund by its correct name." - MOVED HB 194 OUT OF COMMITTEE HOUSE CONCURRENT RESOLUTION NO. 2 Relating to the sovereignty of the State of Alaska and the sovereign right of the State of Alaska to manage the natural resources of Alaska. - HEARD AND HELD * HOUSE CONCURRENT RESOLUTION NO. 9 Relating to Take a Kid Hunting Weekend. - MOVED CSHCR 9(RES) OUT OF COMMITTEE HOUSE BILL NO. 104 "An Act revising the procedures and authority of the Alaska Commercial Fisheries Entry Commission, the Board of Fisheries, and the Department of Fish and Game to establish a moratorium on participants or vessels, or both, participating in certain fisheries; and providing for an effective date." - MOVED CSHB 104(FSH) OUT OF COMMITTEE * HOUSE BILL NO. 23 "An Act classifying anadromous streams and tributaries; relating to the designation of riparian areas; establishing buffers on certain streams and relating to slope stability standards on certain streams; and requiring retention of low value timber along certain water bodies where prudent." - BILL HEARING CANCELED (* First public hearing) PREVIOUS ACTION BILL: SB 134 SHORT TITLE: WELL REGULATORY COST CHARGE/CONS. TAX SPONSOR(S): SENATOR(S) PEARCE, Halford Jrn-Date Jrn-Page Action 4/01/99 771 (S) READ THE FIRST TIME - REFERRAL(S) 4/01/99 771 (S) RES, FIN 4/12/99 (S) RES AT 3:00 PM BUTROVICH 205 4/13/99 899 (S) RES RPT CS 4DP 1NR NEW TITLE 4/13/99 900 (S) DP: HALFORD, PETE KELLY, GREEN, TAYLOR; 4/13/99 900 (S) NR: MACKIE 4/13/99 900 (S) FISCAL NOTE (ADM) 4/23/99 (S) FIN AT 8:00 AM SENATE FINANCE 532 4/23/99 (S) MOVED CS(FIN) OUT OF COMMITTEE 4/23/99 (S) RLS AT 12:25 PM FAHRENKAMP 203 4/23/99 (S) MINUTE(RLS) 4/23/99 1062 (S) FIN RPT CS 4DP 3NR 1DNP NEW TITLE 4/23/99 1062 (S) DP: TORGERSON, GREEN, PETE KELLY, 4/23/99 1062 (S) WILKEN; NR: PHILLIPS, LEMAN, DONLEY; 4/23/99 1062 (S) DNP: ADAMS 4/23/99 1062 (S) PREVIOUS FISCAL NOTE (ADM) 4/23/99 1062 (S) FISCAL NOTE (REV) 4/27/99 (S) RLS AT 12:00 PM FAHRENKAMP 203 4/27/99 (S) MINUTE(RLS) 4/28/99 1150 (S) RULES TO CALENDAR W/CS NEW TITLE 4/28/99 4/28/99 1150 (S) DP: TIM KELLY, MILLER, LEMAN, 4/28/99 1150 (S) PEARCE, ELLIS 4/28/99 1150 (S) FISCAL NOTE TO CS (ADM) 4/28/99 1153 (S) READ THE SECOND TIME 4/28/99 1153 (S) RLS CS ADOPTED UNAN CONSENT 4/28/99 1153 (S) ADVANCED TO THIRD READING UNAN CONSENT 4/28/99 1153 (S) READ THE THIRD TIME CSSB 134(RLS) 4/28/99 1153 (S) COSPONSOR(S): HALFORD 4/28/99 1154 (S) PASSED Y16 N1 E2 A1 4/28/99 1154 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 4/28/99 1154 (S) ADAMS NOTICE OF RECONSIDERATION 4/29/99 1174 (S) RECONSIDERATION NOT TAKEN UP 4/29/99 1175 (S) TRANSMITTED TO (H) 4/30/99 1102 (H) READ THE FIRST TIME - REFERRAL(S) 4/30/99 1102 (H) RES, FIN 5/05/99 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 194 SHORT TITLE: DISASTER ASSISTANCE SPONSOR(S): REPRESENTATIVES(S) WHITAKER Jrn-Date Jrn-Page Action 4/13/99 795 (H) READ THE FIRST TIME - REFERRAL(S) 4/13/99 795 (H) O&G, RES 4/20/99 (H) O&G AT 5:00 PM CAPITOL 17 4/20/99 (H) <BILL POSTPONED TO 4/29> 4/22/99 (H) O&G AT 5:00 PM CAPITOL 17 4/22/99 (H) MOVED OUT OF COMMITTEE 4/22/99 (H) MINUTE(O&G) 4/23/99 944 (H) O&G RPT 6DP 2NR 4/23/99 944 (H) DP: KEMPLEN, PHILLIPS, PORTER, SMALLEY, 4/23/99 944 (H) HARRIS, WHITAKER; NR: OGAN, BRICE 4/23/99 944 (H) 2 ZERO FISCAL NOTES (DEC, DMVA) 4/23/99 944 (H) REFERRED TO RESOURCES 5/05/99 (H) RES AT 1:00 PM CAPITOL 124 BILL: HCR 2 SHORT TITLE: SOVEREIGNTY OF THE STATE; RESOURCES SPONSOR(S): REPRESENTATIVES(S) COGHILL, Barnes, Green Jrn-Date Jrn-Page Action 2/24/99 300 (H) READ THE FIRST TIME - REFERRAL(S) 2/24/99 300 (H) WTR, FSH, RESOURCES 3/16/99 (H) WTR AT 5:00 PM CAPITOL 124 3/16/99 (H) MOVED OUT OF COMMITTEE 3/16/99 (H) MINUTE(WTR) 3/17/99 490 (H) WTR RPT 4DP 2DNP 3/17/99 490 (H) DP: MASEK, GREEN, COWDERY, BARNES; 3/17/99 490 (H) DNP: BERKOWITZ, JOULE 3/17/99 490 (H) ZERO FISCAL NOTE (H.WTR) 3/17/99 497 (H) COSPONSOR(S): GREEN 4/12/99 (H) FSH AT 5:00 PM CAPITOL 124 4/12/99 (H) <BILL POSTPONED TO 4/19> 4/19/99 (H) FSH AT 5:00 PM CAPITOL 124 4/19/99 (H) HEARD AND HELD 4/19/99 (H) MINUTE(FSH) 4/26/99 (H) FSH AT 5:00 PM CAPITOL 124 4/26/99 (H) SCHEDULED BUT NOT HEARD 5/03/99 (H) FSH AT 5:00 PM CAPITOL 124 5/03/99 (H) MOVED CSHCR 2(FSH) OUT OF COMMITTEE 5/03/99 (H) MINUTE(FSH) 5/05/99 1177 (H) FSH RPT CS(FSH) 1DNP 3NR 5/05/99 1178 (H) DNP: MORGAN; NR: WHITAKER, HUDSON, 5/05/99 1178 (H) SMALLEY 5/05/99 1178 (H) ZERO FISCAL NOTE (H.WTR) 3/17/99 5/05/99 1178 (H) REFERRED TO RESOURCES 5/05/99 (H) RES AT 1:00 PM CAPITOL 124 BILL: HCR 9 SHORT TITLE: TAKE A KID HUNTING WEEK SPONSOR(S): REPRESENTATIVES(S) PHILLIPS Jrn-Date Jrn-Page Action 4/21/99 899 (H) READ THE FIRST TIME - REFERRAL(S) 4/21/99 899 (H) RESOURCES 5/05/99 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 104 SHORT TITLE: ENTRY MORATORIA ON PARTICIPANTS/VESSELS SPONSOR(S): REPRESENTATIVES(S) HUDSON, Austerman Jrn-Date Jrn-Page Action 2/19/99 260 (H) READ THE FIRST TIME - REFERRAL(S) 2/19/99 260 (H) FSH, RES 3/08/99 (H) FSH AT 5:00 PM CAPITOL 124 3/08/99 (H) MOVED CSHB 104(FSH) 3/08/99 (H) MINUTE(FSH) 3/10/99 408 (H) FSH RPT CS(FSH) NT 4DP 3/10/99 408 (H) DP: KAPSNER, MORGAN, WHITAKER, HUDSON 3/10/99 408 (H) ZERO FISCAL NOTE (F&G) 3/10/99 408 (H) REFERRED TO RES 4/14/99 (H) RES AT 1:00 PM CAPITOL 124 4/14/99 (H) HEARD AND HELD 4/14/99 (H) MINUTE(RES) 4/21/99 (H) RES AT 1:00 PM CAPITOL 124 4/21/99 (H) HEARD AND HELD 4/21/99 (H) MINUTE(RES) 4/28/99 (H) RES AT 1:00 PM CAPITOL 124 4/28/99 (H) HEARD AND HELD 5/05/99 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER PATRICK CARTER, Legislative Assistant to Senator Drue Pearce Alaska State Legislature Capitol Building, Room 111 Juneau, Alaska 99801 Telephone: (907) 465-4993 POSITION STATEMENT: Presented SB 134 on behalf of sponsor. JUDY BRADY, Executive Director Alaska Oil and Gas Association 221 West Fireweed Lane Anchorage, Alaska 99503 Telephone: (907) 272-1481 POSITION STATEMENT: Testified on SB 134; expressed concerns. MARK WORCESTER, Counsel ARCO Alaska, Incorporated P.O. Box 100360 Anchorage, Alaska 99510 Telephone: (907) 265-6544 POSITION STATEMENT: Testified on SB 134; shared AOGA's concerns. REPRESENTATIVE JOHN COGHILL, JR. Alaska State Legislature Capitol Building, Room 416 Juneau, Alaska 99801 Telephone: (907) 465-3719 POSITION STATEMENT: Testified as sponsor of HCR 2. DICK BISHOP Alaska Outdoor Council P.O. Box 73902 Fairbanks, Alaska 99707 Telephone: (907) 463-3830 (Juneau) (907) 455-4262 (Fairbanks) POSITION STATEMENT: Testified in support of HCR 2 and HCR 9. JOANNE GRACE, Assistant Attorney General Natural Resources Section Civil Division (Anchorage) Department of Law 1031 West 4th Avenue, Suite 200 Anchorage, Alaska 99501-1994 Telephone: (907) 269-5100 POSITION STATEMENT: Testified on HCR 2. JUDITH JORDAN, Legislative Assistant to Representative Gail Phillips Alaska State Legislature Capitol Building, Room 411 Juneau, Alaska 99801 Telephone: (907) 465-2646 POSITION STATEMENT: Presented HCR 9 on behalf of Representative Phillips. ACTION NARRATIVE TAPE 99-30, SIDE A Number 0001 CO-CHAIR SCOTT OGAN called the House Resources Standing Committee meeting to order at 1:23 p.m. Members present at the call to order were Representatives Ogan, Sanders, Masek, Harris, Morgan and Barnes. Representatives Joule and Whitaker arrived at 1:24 p.m. and 1:26 p.m., respectively. CSSB 134(RLS) - WELL REGULATORY COST CHARGE/CONS. TAX CO-CHAIR OGAN announced that the first item of business would be CS for Senate Bill No. 134(RLS), "An Act authorizing the Alaska Oil and Gas Conservation Commission to determine the amount of and to collect a charge for operating wells subject to the commission's jurisdiction, and to allocate expenses of investigation and hearing; authorizing the commission to employ additional professional staff; repealing the oil and gas conservation tax; and providing for an effective date." Number 0105 PATRICK CARTER, Legislative Assistant to Senator Drue Pearce, Alaska State Legislature, came forward on behalf of the sponsor. He explained that SB 134 repeals the existing oil and gas conservation tax, and it institutes a more stable funding source, to ensure that the Alaska Oil and Gas Conservation Commission (AOGCC) is capable of carrying out its objective of protecting the public interest. The primary goal of the AOGCC is to ensure that no hydrocarbons are wasted, he noted, and that operations are conducted in a manner that provides maximum recovery of the resource. MR. CARTER advised members that the original intent of the legislature was to have the oil and gas industry pay for regulatory cost oversight through the oil and gas conservation tax; that tax is directly proportional to production, with a four-mills-per-barrel fee rate. Although production is declining, the workload of the AOGCC is not, and the system is no longer sufficient to cover the costs associated with its operation. Therefore, SB 134 creates a program-receipt-type system in which the regulatory cost charge is directly associated with the total volume of liquids produced or injected, to more accurately reflect factors directly associated with AOGCC's workload. Furthermore, SB 134 provides for recovery of costs associated with an investigation or hearing, which would be allocated to the parties involved if there were a unitization dispute on the North Slope, for example. MR. CARTER reported that the AOGCC had experienced budget difficulties in the past; even when tax proceeds exceeded annual appropriations, those weren't always appropriated to the AOGCC. Certain members of the oil and gas industry have raised concerns that this type of program receipt system wouldn't receive the same level of scrutiny during budgetary oversight by the legislature. However, he said, Senator Pearce believes that the oil and gas industry is quite capable of bringing to the legislature's attention any excessive budget requests by the AOGCC. MR. CARTER pointed out that SB  also strengthens the AOGCC by adding four staff. Currently, the level of institutional knowledge at the commission is one person deep, including one petroleum engineer, one reservoir engineer and one petroleum geologist. "Right now, also, they feel that the inspection program is lacking one inspector," he advised the committee. "We've added one additional person to each one of those positions." Mr. Carter concluded by saying SB 134 will create a more stable funding source, enabling the AOGCC to provide the monitoring services necessary to protect Alaskan interests into the future. Number 0426 CO-CHAIR OGAN referred to page 2, line 18, which says, "The commission shall annually determine regulatory cost charges under this section." He noted that it goes on to describe that the amount being collected approximates the appropriations made for the commission's operating costs. He suggested that some would argue this gives carte blanche authority to the AOGCC, what he calls the "Chilkoot Charlie syndrome," cheating the other guy and passing the savings on. He referred to Mr. Carter's opening remarks, suggesting the oil companies would have the ability to hold the legislature's feet to the fire because they have lobbyists representing them, and they scrutinize the budget closely. He then asked Mr. Carter to talk about the safeguards. Number 0582 MR. CARTER explained that under the current system, the budget would still have to go through the Office of Management and Budget (OMB), then through the budgetary considerations by the legislature. He stated, "A good 'for instance' on why Senator Pearce doesn't share their concerns ... that it won't receive budget oversight is the APUC [Alaska Public Utilities Commission], as most people are well-aware, has an enormous backlog of cases. They came before the legislature recently and requested twelve additional personnel. The legislature did not approve that; they approved four personnel, even with the current backlog that they have. Senator Pearce doesn't share their concerns ... that it won't have legislative oversight, or the legislative oversight will be somehow weakened by moving it to a program receipt system, as opposed to a general fund receipt system." Number 0680 CO-CHAIR OGAN asked whether the APUC has this type of funding source. MR. CARTER replied, "Regulatory cost charge. And the oil and gas industry pays that regulatory cost charge based on tariffs for the pipeline right now, and they don't currently have that problem. But we've never heard a concern expressed about the APUC type of funding system." CO-CHAIR OGAN noted that on page 3, lines 11-13, it says, "The legislature may appropriate to the commission for its operating costs under this chapter for the next fiscal year an amount that is at least equal to the lapsed amount." On line 15, it further says that "the commission shall reduce the total regulatory [cost] charge collected" after they do that. Emphasizing the word "shall," and noting that leftover receipts could be rolled forward, he asked for confirmation that the legislature can do that already. MR. CARTER explained that under the current system, with the conservation tax, it is actually general fund monies; it is up to the legislature whether or not to appropriate those monies in their entirety. Under the system proposed in SB 134, in contrast, if there were $300,000 left over at the end of the year, that money would be rolled into the next year's budget. Under the formula, they take the total volume of liquids produced or injected, as well as the cost associated with the AOGCC's monitoring of those fluids. For instance, if the total fluids under last year's operations were 3.3 billion, and Badami made up 1.2 million of that, then 1.2 million would be divided [into] 3.3 billion; that fraction would be multiplied by the approved budget, and that would be Badami's share of that budget. If it were rolled into the next year, each person would receive a percentage of that deducted from the regulatory cost charge associated with the current year. To remove any guesswork about current-year production levels for this year's budget, Mr. Carter explained, Senator Pearce had felt it would be easier to use the volumes produced last year. Number 0892 REPRESENTATIVE BARNES commented that the system in place for the APUC has worked very well. Noting the AOGCC's $200,000 budget shortfall this year, as yet unaddressed by the legislature, she expressed belief that this is a good bill; she doesn't see it as a tax on the oil and gas industry, she said, as it is a service provided to them. Reminding members of the proposed oil company merger, she stressed the importance of having the AOGCC continue. Number 0998 CO-CHAIR OGAN concurred that the AOGCC is important because of the merger, and he characterized the commission as the policemen of the field, with quasi-judicial powers. He then asked Mr. Carter if Section 3 is simply the program receipt authorization. MR. CARTER affirmed that. CO-CHAIR OGAN noted that AS 43.57 is the section on the oil and gas conservation tax. He stated his understanding that Section 4 eliminates those two taxes, and that the rest of the bill replaces it with program receipts. MR. CARTER affirmed that, also. Number 1101 CO-CHAIR OGAN called upon Bob Christenson, chairman of the AOGCC, who informed members via teleconference from Anchorage that he was available to answer questions. Number 1160 JUDY BRADY, Executive Director, Alaska Oil and Gas Association (AOGA), testified via teleconference from Anchorage, noting that AOGA is a trade association whose 18 members account for the majority of oil and gas exploration, production, transportation, refining and marketing activities in Alaska. She said AOGA had testified before the Senate Finance Committee regarding concerns about SB 134, and she indicated she would express continuing points of concern. Ms. Brady stated: AOGA supports adequate funding for the AOGCC, and for as long as AOGCC has been in place, the oil and gas industry has paid, through a tax, ... for its performance. And, as was pointed out, for years that tax was more than the legislature appropriated to the AOGCC. And so, we have always supported adequate funding for the AOGCC. It is an important organization for us. We were concerned when the Senate ... did not appropriate money for it this year. We were concerned when the Governor's office didn't appropriate the money that they needed. But we're also concerned that SB 134 creates a virtually unlimited funding taxing mechanism. The commission is a regulatory agency which oversees the underground operations of the oil industry on private and public lands and waters in Alaska. It is the agency which regulates drilling and production of oil and gas, to ensure that physical waste does not occur, to ensure maximum ultimate recovery of oil and gas resources, and to protect the correlative rights of all oil and gas interest owners. It is also the agency authorized by the EPA [Environmental Protection Agency] to manage the state's underground injection control program, which is a very important program to the AOGA members, and for which AOGCC receives, I believe, $100,000 a year. It's critical to the oil and gas industry in Alaska that the AOGCC maintain a continuous ability to issue permits and decisions that are required for ongoing oil field explorations. We realize the AOGCC needs adequate funding, and would remain interested in discussing options that will assure the AOGCC's budget is appropriate for the work they are required to do. Some options ... might include a budget cap, a budget review committee comprised of members of the AOGCC, the legislature, the industry and the public, or some other mechanisms. And I believe if 133 passes, then ... there is an oversight by Legislative Budget and Audit in this next summer about the functions of the AOGCC, along with the functions of the APUC, that the question of what the agency does or does not spend its time on ... will become clear to everybody. We're concerned that the funding mechanism embodied in [SB] 134 charges an assessment on oil, gas and water which is injected, as well as oil and gas produced. AOGA would propose that a fee be assessed on revenue-generating production of oil and gas, and that the funding mechanism be less complicated and, therefore, less subject to controversy. Assessing a fee based on the volume of production also would be more equitable to the industry, as it would not overburden low-volume fields. We are very interested in working on an acceptable proposal in the next few days, which would provide funding certainty for the AOGCC and would also provide a level of equity and certainty for the industry. We reiterate our continuing support for a fully functional, adequately funded, independent AOGCC. We remain committed to working with the legislature and the Administration to develop an appropriate and accountable way to fund the AOGCC. Number 1414 CO-CHAIR OGAN declared that the committee's purview is to make sure that bills are in the best interests of resource development in the state. He suggested that funding questions and sources might be better handled by the House Finance Committee. REPRESENTATIVE BARNES commented that the legislature is under tremendous pressure to get their fiscal house in order, and she looks upon this bill as one way to do that. She expressed dissatisfaction with hearing that this bill needs to be rewritten at this late date. She pointed out that there would be oversight because the legislature oversees all state agencies. Furthermore, she said, she believes that the legislature would be the first to step in, if there were exorbitant fees or no justification for what was being charged. Number 1516 MS. BRADY reported that AOGA is trying to discuss with the bill sponsor another approach to the funding mechanism. If they are able to work out a compromise on that, it will be presented to the House Finance Committee. CO-CHAIR OGAN restated his belief that the House Finance Committee is the appropriate venue for the funding sources. Number 1585 MARK WORCESTER, Counsel, ARCO Alaska, Incorporated (ARCO), testified via teleconference from Anchorage, stating that generally ARCO supports, and obviously is a supporter of, AOGA, and they endorse the statement that Judy Brady gave. Emphasizing a few points, he told members: We, as AOGA, support full and adequate funding for the AOGCC, ... and it seems to be a consensus on the committee, as well, that this is an important agency, and it should have adequate funding. We share the concerns articulated by AOGA about the funding sources, and how the appropriation process works. We believe that there are a number of ways that could potentially address our concerns. One would be ... if we used a tax on production, putting a ... per-mill limit, with a cap. ... Another way would be some sort of oversight committee, comprised of a variety of input sources - from the Administration, legislature, industry, public, or whatever is deemed appropriate - to review the budget before it's submitted. And we're prepared to consider any other options, and to work cooperatively and constructively to get something that serves everyone's interests and meets all the concerns. And, finally, ARCO supports these comments that were made just in recent discussions that this is an appropriate issue for the Finance Committee. And we are quite committed to working with the sponsor, interested members of the legislature, the commission, and the Finance Committee to find an appropriate resolution to everyone's concerns. Number 1697 CO-CHAIR OGAN asked if anyone else wished to testify, then closed public testimony. REPRESENTATIVE BARNES indicated her belief that whatever work a committee feels is necessary, including work on financial issues, should be addressed before moving a bill forward. Having said that, she stated that she believes SB 134 is technically correct and fiscally relevant. Number 1779 REPRESENTATIVE BARNES made a motion to move CSSB 134(RLS) from the committee with individual recommendations and accompanying fiscal notes; she asked unanimous consent. CO-CHAIR OGAN clarified that his own statements about the funding didn't reflect a belief that the bill is flawed. However, people had testified to the contrary, and he believes it is appropriate that the House Finance Committee look at it. Co-Chair Ogan asked if there was any objection to moving the bill. There being no objection, he announced that CSSB 134(RLS) was moved from the House Resources Standing Committee. HB 194 - DISASTER ASSISTANCE CO-CHAIR OGAN announced that the next item of business would be House Bill No. 194, "An Act correcting, in the Alaska Disaster Act, a reference to the former oil and hazardous substance release response fund to describe that fund by its correct name." Number 1920 REPRESENTATIVE WHITAKER, sponsor, advised fellow members that HB 194 is a housekeeping bill. As noted in the sponsor statement, the language change has no effect other than ensuring that the statutes read as they should. CO-CHAIR OGAN asked if anyone had questions or wished to testify; there was no response. Number 1934 REPRESENTATIVE BARNES made a motion to move HB 194 out of committee with individual recommendations and attached [zero] fiscal notes; she asked unanimous consent. There being no objection, HB 194 moved from the House Resources Standing Committee. HCR 2 - SOVEREIGNTY OF THE STATE; RESOURCES CO-CHAIR OGAN announced that the next item of business would be House Concurrent Resolution No. 2, relating to the sovereignty of the State of Alaska and the sovereign right of the State of Alaska to manage the natural resources of Alaska. Before the committee was CSHCR 2(FSH). Number 1971 REPRESENTATIVE JOHN COGHILL, JR., Alaska State Legislature, prime sponsor, explained that HCR 2 calls for this legislature to ask the Governor to appeal to the United States Supreme Court for resolution of an issue about which there is strong disagreement in Alaska. He suggested that many hard feelings in Alaska may have been stirred up by an impasse caused by the federal government. REPRESENTATIVE COGHILL noted that HCR 2 begins with a short history of Alaska's admission to the Union under the Equal Footing Doctrine, and mentions how the submerged lands give the state the exclusive right to manage its fisheries. It also talks about the state constitution in several places, including that the resources are for the common use of the people. REPRESENTATIVE COGHILL explained that the legitimate dispute now between Congress and the state is because Title VIII of the Alaska National Interest Lands Conservation Act (ANILCA) causes the state to manage resources against its own constitution. The state cannot simply amend the constitution to get out of it. Rather, it would require revising the entire constitution, which would necessitate calling for a constitutional convention. Therefore, he believes the state has legitimate grounds to appeal to the U.S. Supreme Court, based on original jurisdiction. Number 2104 REPRESENTATIVE JOULE requested clarification about the need for a constitutional convention. REPRESENTATIVE COGHILL replied that the changes that would be demanded of Alaska right now would change the constitution in several places, constituting a revision. The Alaska Supreme Court decision in the Bess case says that the state cannot just amend the constitution in one area, but that it would constitute a revision. Even without that, however, it would have to be amended in no less than eight different places, he noted, in order to conform with what is being required. REPRESENTATIVE COGHILL pointed out that the Alaska Supreme Court and Congress have already spoken on the matter. "We have a real problem in Alaska trying to decide how we're going to answer that," he added. Noting that this deals with rights guaranteed by our constitution, which the people formed, he said Alaska entered in good faith into the United States under the Equal Footing Doctrine, and signed off on the requirements to become a state. There is a legitimate appeal, therefore, and the revision of the state constitution mandated by congressional action needs to be reviewed by the U.S. Supreme Court. Number 2203 REPRESENTATIVE JOULE asked if Representative Coghill thinks Governor Knowles would do this, when he has said he wouldn't. REPRESENTATIVE COGHILL replied, "That is not for me to decide. He may or may not. ... That's his response. Our response should be to uphold our constitution, defend it as best we can, and, at this particular point, I think an appeal to the [U.S.] Supreme Court is probably one of our last places of appeal. I think we need to do it. We have a jurisdictional ground, based on original jurisdiction. I think we're well within our grounds on a constitutional basis." Number 2249 REPRESENTATIVE JOULE commented that the objection to conforming to Title VIII [of ANILCA] seems to do with equality, common use and people in some parts of Alaska wanting to be equal to others in rural parts of the state. He sometimes gets a little frustrated that that equality seems to be a one-way street in the larger scheme of legislative appropriations and policy, he said, when other parts of the state are crying out for equity in other kinds of state policies that the legislature passes. He finds that to be an interesting argument. REPRESENTATIVE COGHILL suggested the question of how to equitably take care of the urban versus rural areas is a frustration that everyone feels. However, this particular resolution deals not with that, but with the Department of the Interior's mandate that Alaska revise its constitution. He added, "To me, at this point, the only answer that we can give is 'no,' and we take it to the supreme court for the answer to that. That really doesn't have to do with the equality of the citizens within Alaska. It has more to do with the equality of Alaska within the 50 United States." Number 2360 CO-CHAIR OGAN indicated he would be interested in somebody doing a study about per capita expenditures by region, to perhaps settle some of the arguments. Number 2386 REPRESENTATIVE HARRIS noted that he'd heard HCR 2 in the House Special Committee on Fisheries, as well. He asked if it is Representative Coghill's intention to ask Governor Knowles to bring the state back "to where we were when Governor Hickel was here and had actually filed the lawsuit and asked that the supreme court hear this, and then the present Governor removed that." REPRESENTATIVE COGHILL said no, the intention is to use original jurisdiction as the basis for appeal. During the days Representative Harris mentioned, it was in a circuit court. Because there is a time line mandate, he believes this is a legitimate appeal, he added. REPRESENTATIVE HARRIS responded that he believes it was the intention in that previous case to have it go through the system, to the U.S. Supreme Court, if it went that far. REPRESENTATIVE COGHILL stated his belief that the appeal for original jurisdiction puts the U.S. Supreme Court in a position where it has to respond. Number 2458 CO-CHAIR OGAN commented that the Bess case certainly got his interest. He noted that the amendment drafted last year, for example, which the Department of the Interior requested, on its surface affected just one area of the constitution, Article VIII, Section 3, the common use provision, by adding a rural preference. When he had asked the legislative drafters to draft an amendment and show him the different areas of the constitution that it actually affected, however, they drafted a conservative amendment of five sections affected: common use, equal protection, no exclusive right to a fishery, uniform application and one other, as well as possibly sustained yield. Co-Chair Ogan asked what eight areas Representative Coghill believes would be affected. Number 2518 REPRESENTATIVE COGHILL acknowledged that some may be open to interpretation, then said the eight areas are: Article I, Section 1, which talks about equal rights; Article I, Section 15, "no law making any irrevocable grant of special privileges or immunities"; Article VIII, Section 3, "reserved for common use"; Article VIII, Section 4, "subject to preferences among the beneficial users," which he said may be a stretch; Article VIII, Section 13, "all surface and subsurface waters reserved to the people for common use"; Article VIII, Section 14, "free access to navigable waters or public [waters] of the state of Alaska, as defined by the legislature, shall not be denied any citizen"; [Article VIII, Section 15], "no exclusive right of fishery ... shall be created"; and Article VIII, Section 17, "laws and regulations governing use [or] disposal of natural resources shall apply equally to all persons." Number 2595 CO-CHAIR OGAN asked whether Representative Coghill has legal documentation backing up the fact that there would probably be a revision required. REPRESENTATIVE COGHILL answered that it is the Alaska Supreme Court case, Bess. CO-CHAIR OGAN clarified that he was asking about what is being requested by the Department of the Interior. REPRESENTATIVE COGHILL replied, "Just the supreme court, Bess. And with regard to the Governor making the case, he was also asked to uphold this constitution. ... If he calls for a constitutional convention, that's within his right. But in this particular case, to amend our constitution, to acquiesce to Title VIII, I think we would be out of bounds." Number 2629 CO-CHAIR OGAN said he doesn't mean to impugn the Governor's intentions here at all. He then expressed hope that if this resolution is successful and the Governor decides to litigate, it would be done correctly, so as not to establish poor case law, especially in the U.S. Supreme Court. REPRESENTATIVE COGHILL remarked that he himself hasn't been taught to do what is right based on what other people will do. He restated his belief that the appeal is legitimate, expressing hope that the legislature could change Governor Knowles' mind, as he believes this is one of the best answers coming forward now. CO-CHAIR OGAN commented, "Regardless of which side of the issue you fall on, on the subsistence issue, I think if we did get our day in the supreme court, it would settle it. It may settle it in one party's favor over another, but it would certainly bring closure to it." Number 2871 JOANNE GRACE, Assistant Attorney General, Natural Resources Section, Civil Division (Anchorage), Department of Law, testified via teleconference from Anchorage. She emphasized that she doesn't believe that Governor Knowles will follow the resolution's suggestion to file an original action in the U.S. Supreme Court, challenging the constitutionality of Title VIII of ANILCA. She reminded members that Governor Knowles has consistently stated, since taking office, that he doesn't believe litigation is the answer to Alaska's subsistence dilemma. MS. GRACE cautioned that even in the unlikely event that the Governor were to change his mind, this case would face insurmountable jurisdictional problems, such as res judicata and the running of the statute of limitations. The U.S. Supreme Court doesn't have to take an original action, she pointed out. The state would have to petition the court, and the United States would unquestionably raise the jurisdictional problems and the statute of limitations, which was the basis of the court's dismissal of the Legislative Council's lawsuit on Title VIII of ANILCA. Therefore, she doesn't believe that the court would take the case. However, if the legislature wants to pass the resolution anyway, she believes there are problems with some of its supporting language. She asked if the committee wanted to hear testimony on that. Number 2808 REPRESENTATIVE BARNES stated that she feels personally offended that a member of the Administration would come forward on a resolution and testify that the Governor absolutely won't do this, even before the legislation wings it way through. She next referred to the question raised about the Legislative Council lawsuit and stated that she doesn't believe Judge Robinson's (ph) ruling was correct, or else the legislature wouldn't have appealed. She disagreed that the statute of limitations has run, saying that otherwise the Department of the Interior wouldn't still be implementing regulations. She proposed that it is fluid and changing. Number 2871 MS. GRACE responded that she hadn't meant to offend, but she believes it is her responsibility to reiterate the Governor's position on litigating this issue. However, her main purpose is to testify about the legal basis of the lawsuit and the supporting language in the resolution. She explained that the statute of limitations would depend on the basis of the challenge. As she understands the resolution, it would be a constitutional challenge to Title VIII [of ANILCA], which would be a facial challenge, essentially saying that Title VIII violates the U.S. constitution and therefore is invalid. Ms. Grace pointed out that the statute of limitations isn't fluid on such a challenge; it starts to run when the law takes effect and therefore would expire six years later. A different kind of challenge, such as a challenge to the regulations, however, wouldn't have that same rigid six-year statute of limitations. Number 2942 REPRESENTATIVE BARNES replied that we are just now feeling the most onerous effects of that regulatory scheme, and obviously there is a legal challenge that can still be taken before the courts. TAPE 99-30, SIDE B Number 2955 [Numbers run backwards because of tape machine] DICK BISHOP, Alaska Outdoor Council (AOC), came forward, advising committee members that the AOC supports HCR 2. He agreed that there is a real dispute over the respective jurisdiction and authority of the federal and state governments, which he believes is fundamental to a number of resource management issues. Unless and until it is resolved, he said, either politically or in the courts, it will be difficult - if not impossible - to reach a workable, long-lasting solution to Alaska's resource management questions, including conservation and allocation. He believes it is important for the legislature to highlight that controversy and to urge resolution of it, by whatever means is at its disposal. Certainly, one means is pressing for resolution in the courts, with the ultimate resolution being in the U.S. Supreme Court. MR. BISHOP recounted that the AOC was very disappointed when the lawsuit filed by then-Governor Hickel was dropped by the current Governor, who believed the case was counter to the interests of subsistence users and that it offended 15 percent of the people of Alaska. "He didn't at that time mention whether it was in the best interests of the 85 percent of ... the people of the state," Mr. Bishop added. He acknowledged that it is history now, but the controversy and conflict in interpretation of jurisdiction remain. MR. BISHOP referred to discussion of HCR 2 in the House Special Committee on Fisheries. There, he said, it was pointed out that there is a conflict between the Alaska Supreme Court ruling in the Totemoff case that the federal government had no authority in navigable waters, and, very shortly thereafter, the 9th Circuit Court of Appeals ruling in the Katie John case that the federal government did have authority in federal reserve waters. Mr. Bishop stated, "That case was appealed; it was not heard. So, that disagreement between those two August bodies of legal interpretation still stands. ... It simply emphasizes the importance of continuing to seek resolution. So, we strongly support this. We think it is the appropriate thing to urge both the legislature and the Governor to carry forward with this." Number 2804 CO-CHAIR OGAN pointed out that he believes resolving this issue is in the best interests of 100 percent of the people of the state. He expressed hope that both equal protection and subsistence interests can be accommodated. MR. BISHOP agreed, indicating he wished the Governor had characterized the issue that way in the first place. Number 2716 REPRESENTATIVE BARNES made a motion to move CSHCR 2(FSH) from the committee with individual recommendations and accompanying fiscal note(s); she asked unanimous consent. CO-CHAIR OGAN announced that he would like to put off moving the resolution from committee until the end of the meeting. Number 2690 REPRESENTATIVE BARNES, without objection, withdrew her motion. CO-CHAIR OGAN turned the gavel over to Co-Chair Sanders. [End of this portion. At tape number 2142, Co-Chair Ogan announced that HCR 2 would be held over until Friday, May 7, 1999.] HCR 9 - TAKE A KID HUNTING WEEK CO-CHAIR SANDERS announced that the next item of business would be House Concurrent Resolution No. 9, relating to Take a Kid Hunting Weekend. Number 2639 JUDITH JORDAN, Legislative Assistant to Representative Gail Phillips, Alaska State Legislature, read the following sponsor statement: HCR 9 seeks to name the second weekend in September each year as "Take a Kid Hunting Weekend." Such an event would greatly assist in preserving our hunting heritage and to encourage Alaskan hunters to become knowledgeable in the areas of sportfishing and hunting. Naming a special weekend would complement the Hunter Education and Shooting Sports program funded last year by the legislature. Representative Phillips is hopeful that the members of this committee are willing to dedicate a special weekend where experienced hunters can pass along to our children hunting skills, gun safety awareness and the contributions of responsible and ethical hunter behavior. REPRESENTATIVE JOULE said he supports HCR 9 and wishes more people would be encouraged to follow the intent. He noted that one reason for wanting more adults to take children out is because Alaska has an abundance and variety of fish and wildlife resources; however, that is not referenced in HCR 9. Number 2411 REPRESENTATIVE JOULE made a motion to adopt Amendment 1, which adds the following language to line 3, and then renumbers accordingly: WHEREAS Alaska's abundance and variety of natural resources are unmatched in the United States; and There being no objection, Amendment 1 was adopted. Number 2452 REPRESENTATIVE MASEK made a motion to adopt Amendment 2 to page 1, line 1, which changes the title to "Take a Kid Hunting Week" and further reads: Page 2, line 2: delete "Weekend" after "Hunting" and insert week. Page 2, line 6: delete "Weekend" after "Hunting" and insert week. There being no objection, Amendment 2 was adopted. Number 2280 REPRESENTATIVE JOULE made a motion to adopt Amendment 3, which changes "kid" to "child" throughout. There being no objection, Amendment 3 was adopted. Number 2260 DICK BISHOP, Alaska Outdoor Council, came forward again to testify in support of HCR 9, noting that it is a step in the right direction. He said he also believes there is not enough emphasis on getting young people out to experience that, which certainly is the message. He also agrees with changing "weekend" to "week" because the children can get more out of it in the course of a week. He pointed out, technically and ecologically, that other states have a greater variety and abundance of wildlife and natural resources; however, Alaska's is still unmatched. Mr. Bishop urged the committee to move HCR 9. Number 2191 REPRESENTATIVE BARNES moved to report CSHCR 9 out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHCR 9(RES) moved from the House Resources Standing Committee. CO-CHAIR SANDERS called for an at-ease at 2:28 p.m. Upon the return of Co-Chair Ogan, he turned the gavel over to him. CO-CHAIR OGAN called the meeting back to order at 2:31 p.m. [He informed the committee that HCR 2 would be held over until Friday, May 7, 1999, as noted in the section on HCR 2.] HB 104 - ENTRY MORATORIA ON PARTICIPANTS/VESSELS CO-CHAIR OGAN announced that the final item of business would be House Bill No. 104, "An Act revising the procedures and authority of the Alaska Commercial Fisheries Entry Commission, the Board of Fisheries, and the Department of Fish and Game to establish a moratorium on participants or vessels, or both, participating in certain fisheries; and providing for an effective date." Before the committee was CSHB 104(FSH), heard by the committee previously. Number 2120 REPRESENTATIVE HARRIS made a motion to move [CSHB 104 (FSH)] out of committee with individual recommendations and any attached fiscal notes. CO-CHAIR SANDERS objected. CO-CHAIR OGAN requested a roll call vote. Voting to move the bill from committee were Representatives Whitaker, Joule, Harris, Morgan and Ogan. Voting against it was Representative Sanders. Representatives Kapsner, Masek and Barnes were absent. Therefore, CSHB 104(FSH) moved from the House Resources Standing Committee by a vote of 5-1. ADJOURNMENT There being no further business before the committee, the House Resources Standing Committee meeting was adjourned at 2:33 p.m.