Legislature(2021 - 2022)BARNES 124

04/23/2021 10:30 AM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Uniform Rule 23(a) Waived
+= HB 98 FOREST LAND USE PLANS; TIMBER SALES TELECONFERENCED
Heard & Held
*+ HB 135 GEOTHERMAL RESOURCES TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 23, 2021                                                                                         
                           10:34 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Josiah Patkotak, Chair                                                                                           
Representative Grier Hopkins, Vice Chair                                                                                        
Representative Zack Fields                                                                                                      
Representative Calvin Schrage                                                                                                   
Representative Sara Hannan                                                                                                      
Representative George Rauscher                                                                                                  
Representative Mike Cronk                                                                                                       
Representative Ronald Gillham                                                                                                   
Representative Tom McKay                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 98                                                                                                               
"An Act relating to forest land use plans; relating to forest                                                                   
land use plan appeals; relating to negotiated timber sales; and                                                                 
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 135                                                                                                              
"An Act relating to geothermal resources; relating to the                                                                       
definition of 'geothermal resources'; and providing for an                                                                      
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 98                                                                                                                   
SHORT TITLE: FOREST LAND USE PLANS; TIMBER SALES                                                                                
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/18/21       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/21       (H)       RES, FIN                                                                                               
03/12/21       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/12/21       (H)       Heard & Held                                                                                           
03/12/21       (H)       MINUTE(RES)                                                                                            
03/19/21       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/19/21       (H)       <Bill Hearing Canceled>                                                                                
04/14/21       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/14/21       (H)       Heard & Held                                                                                           
04/14/21       (H)       MINUTE(RES)                                                                                            
04/19/21       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/19/21       (H)       Heard & Held                                                                                           
04/19/21       (H)       MINUTE(RES)                                                                                            
04/22/21       (H)       RES WAIVED PUBLIC HEARING NOTICE, RULE                                                                 
                         23(A) UC                                                                                               
04/23/21       (H)       RES AT 10:30 AM BARNES 124                                                                             
                                                                                                                                
BILL: HB 135                                                                                                                  
SHORT TITLE: GEOTHERMAL RESOURCES                                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
03/10/21       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/21       (H)       RES, FIN                                                                                               
04/22/21       (H)       RES WAIVED PUBLIC HEARING NOTICE, RULE                                                                 
                         23(A) UC                                                                                               
04/23/21       (H)       RES AT 10:30 AM BARNES 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TIM DABNEY, Acting State Forester, Acting Director                                                                              
Division of Forestry (DOF)                                                                                                      
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided information and answered questions                                                              
during the hearing on HB 98.                                                                                                    
                                                                                                                                
CHRISTOPHER ORMAN, Assistant Attorney General                                                                                   
Natural Resources Section                                                                                                       
Civil Division (Juneau)                                                                                                         
Department of Law (DOL)                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided information and answered questions                                                              
during the hearing on HB 98.                                                                                                    
                                                                                                                                
CLAIR RADFORD, Legislative Counsel                                                                                              
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided information and answered questions                                                              
during the hearing on HB 98.                                                                                                    
                                                                                                                                
STEVE MASTERMAN, Director                                                                                                       
Division of Geological and Geophysical Surveys (DGGS)                                                                           
Department of Natural Resources (DNR)                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   Presented  a PowerPoint during  the hearing                                                             
on HB 135.                                                                                                                      
                                                                                                                                
CHARLES MCKEE                                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Provided comments  not on  topic with  the                                                             
published agenda during the hearing on HB 135.                                                                                  
                                                                                                                                
HALEY PAINE, Deputy Director                                                                                                    
Division of Oil and Gas (DOG)                                                                                                   
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Co-presented   a  PowerPoint  during  the                                                             
hearing on HB 135.                                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:34:51 AM                                                                                                                   
                                                                                                                                
CHAIR  JOSIAH  PATKOTAK  called   the  House  Resources  Standing                                                             
Committee meeting to order at  10:34 a.m.  Representatives McKay,                                                               
Fields, Cronk,  Hopkins, Schrage, Gillham, Hannan,  Rauscher, and                                                               
Patkotak were present at the call to order.                                                                                     
                                                                                                                                
           HB 98-FOREST LAND USE PLANS; TIMBER SALES                                                                        
                                                                                                                                
10:35:46 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK announced  that the first order  of business would                                                               
be HOUSE BILL NO. 98, "An  Act relating to forest land use plans;                                                               
relating to forest land use  plan appeals; relating to negotiated                                                               
timber sales; and providing for an effective date."                                                                             
                                                                                                                                
10:36:35 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HOPKINS, who had  previously withdrawn Amendment 4                                                               
during  the   House  Resources  Standing  Committee   meeting  on                                                               
4/19/21,  said that  he wasn't  able to  find a  way to  work the                                                               
amendment through and restated that he withdrew Amendment 4.                                                                    
                                                                                                                                
10:37:01 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS, who had moved  to adopt Amendment 6 during                                                               
the House  Resources Standing Committee meeting  on 4/19/21, when                                                               
it was subsequently set aside,  moved again to adopt Amendment 6,                                                               
labeled 32-GH1607\A.17, Radford, 4/27/21, which read as follows:                                                                
                                                                                                                                
     Page 7, lines 17 - 18:                                                                                                     
          Delete "[TO A LOCAL MANUFACTURER OF WOOD PRODUCTS                                                                     
     OR A USER OF WOOD FIBER]"                                                                                                  
     Insert "to a local manufacturer of wood products or a                                                                      
     user of wood fiber"                                                                                                        
                                                                                                                                
10:37:03 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK  restated his objection from  4/19/21 for purposes                                                               
of discussion.                                                                                                                  
                                                                                                                                
REPRESENTATIVE FIELDS explained that  his amendments emerged from                                                               
a  desire to  maximize  local benefit;  should natural  resources                                                               
related to fisheries or tourism,  for example, be damaged through                                                               
timber harvesting  activities, support  for local jobs  and local                                                               
manufacturers should be  prioritized.  He said  Amendment 6 would                                                               
limit  the sale  of timber  to a  local manufacturer,  maximizing                                                               
local economic benefits.                                                                                                        
                                                                                                                                
10:38:37 AM                                                                                                                   
                                                                                                                                
TIM DABNEY,  Acting State Forester, Acting  Director, Division of                                                               
Forestry (DOF),  Department of Natural Resources  (DNR), directed                                                               
attention to  a letter from  the Alaska Forest  Association (AFA)                                                               
[included  in  the  committee  packet],  which  read  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     In   light  of   recent  amendments   that  are   under                                                                    
     consideration  to  the  Bill regarding  limitations  on                                                                    
     exports and  local hire requirements, AFA  is concerned                                                                    
     that   the   Bill   will   have   negative   unintended                                                                    
     consequences  on the  timber  industry  and our  member                                                                    
     operators.                                                                                                                 
                                                                                                                                
MR. DABNEY  said that HB 98  designed to allow local  industry to                                                               
sell the timber harvested and to  find a market for types of wood                                                               
that  can't   be  manufactured  locally.     While  AS  38.05.118                                                               
currently gives DOF the authority  to negotiate a timber sale, it                                                               
doesn't  clearly state  that the  local business  may export  the                                                               
timber after the work has been  done to build roads and transport                                                               
the  logs.   He explained  that  local mills  aren't equipped  to                                                               
process young  growth, there is a  lack of local demand  for wood                                                               
products from small  logs, and the only market for  hemlock is in                                                               
the Pacific Northwest.                                                                                                          
                                                                                                                                
10:41:59 AM                                                                                                                   
                                                                                                                                
CHRISTOPHER ORMAN, Assistant  Attorney General, Natural Resources                                                               
Section,  Civil  Division  (Juneau),  Department  of  Law  (DOL),                                                               
explained that  Amendment 6 would  be returning to that  which is                                                               
in current statute  in AS 38.05.118.  The  problem, he explained,                                                               
is that the  timber sale provisions regarding  500,000 board feet                                                               
specified in current AS 38.05.115  would be moved to AS 38.05.118                                                               
under HB 98.                                                                                                                    
                                                                                                                                
10:44:53 AM                                                                                                                   
                                                                                                                                
CLAIR RADFORD,  Legislative Counsel, Legislative  Legal Services,                                                               
Legislative Affairs  Agency, said  that Mr. Orman  summarized the                                                               
possible effects of Amendment 6 very well.                                                                                      
                                                                                                                                
10:45:16 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HANNAN asked Mr. Dabney  whether the sales of less                                                               
than 500,000  board feet  are the  same as  those of  hemlock and                                                               
other timber that can't be processed locally.                                                                                   
                                                                                                                                
MR. DABNEY  replied that both  AS 38.05.115 and AS  38.05.118 can                                                               
have an export component.                                                                                                       
                                                                                                                                
REPRESENTATIVE   HANNAN   spoke   of  the   protectionist   views                                                               
concerning  the benefits  of local  manufacturing and  noted that                                                               
simply selling  timber to local  manufacturers may not be  in the                                                               
best  interest of  the  state.   Of there  not  being a  domestic                                                               
market for a  certain type of timber, she asked,  "Is that reason                                                               
enough to negotiate a sale?"                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS  responded that  the  lack  of a  domestic                                                               
market is  the reason  for including an  amendment to  push local                                                               
industry towards stability and job creation.                                                                                    
                                                                                                                                
10:49:05 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MCKAY  expressed that  while he sees  the benefits                                                               
of driving  local industries,  he would prefer  to "let  the free                                                               
market prevail"  because the  state needs the  revenue.   He then                                                               
asked Mr.  Dabney whether selling timber  overseas would generate                                                               
more revenue than using it for firewood.                                                                                        
                                                                                                                                
MR.  DABNEY said  that in  a competitive  bid sale,  the contract                                                               
goes to the  highest bidder; for material desirable  as an export                                                               
product,  the   out-of-state  companies  can  outbid   the  local                                                               
companies.    This  is  one  of the  reasons,  he  said,  that  a                                                               
negotiated   timber  sale   with  domestic   business  would   be                                                               
preferable.                                                                                                                     
                                                                                                                                
REPRESENTATIVE MCKAY  said that  trees are a  renewable resource,                                                               
and  more value  could  be obtained  by  selling to  out-of-state                                                               
buyers.                                                                                                                         
                                                                                                                                
MR. DABNEY replied  that balance is important, which  is why it's                                                               
important to have  multiple mechanisms for entering  into a sale.                                                               
As  far  as   trees  growing  back,  he   said,  harvested  areas                                                               
previously  populated with  old-growth  trees  now contain  young                                                               
growth, which  is a desirable  commodity overseas.  He  said that                                                               
taking  advantage of  overseas markets  and  allowing export  for                                                               
negotiated sales is the point of HB 98.                                                                                         
                                                                                                                                
10:54:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HANNAN asked  Mr. Dabney  to clarify  whether, if                                                               
Amendment 6 were  to be adopted, the statute would  then say that                                                               
the  sale cannot  be negotiated.    She then  asked whether  that                                                               
means  a  competitive bid  process  involving  either foreign  or                                                               
domestic companies would be possible.                                                                                           
                                                                                                                                
MR.  DABNEY  reiterated  that  if a  negotiated  timber  sale  is                                                               
disallowed,  a  competitive bid  process  could  take place,  and                                                               
foreign companies have  a competitive advantage in  being able to                                                               
outbid domestic  companies.  He  noted that a foreign  or out-of-                                                               
state purchaser would  use local equipment and  labor rather than                                                               
sending their own employees and equipment to Alaska.                                                                            
                                                                                                                                
10:56:55 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK withdrew his objection to Amendment 6.                                                                           
                                                                                                                                
10:57:01 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRONK objected.                                                                                                  
                                                                                                                                
10:57:03 AM                                                                                                                   
                                                                                                                                
A roll  call vote  was taken.   Representatives  Hannan, Hopkins,                                                               
and  Fields  voted in  favor  of  Amendment 6.    Representatives                                                               
Schrage,  Gillham, Rauscher,  Cronk,  McKay,  and Patkotak  voted                                                               
against it.   Therefore, Amendment  6 failed  to be adopted  by a                                                               
vote of 3-6.                                                                                                                    
                                                                                                                                
10:58:03 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS  said  that   Amendment  7  would  not  be                                                               
offered.                                                                                                                        
                                                                                                                                
CHAIR PATKOTAK clarified that Representative  Fields would not be                                                               
[re]offering  Amendment  7,  which  was  labeled  32-GH1607\A.16,                                                               
Radford,  4/17/21.    [Amendment  7   -  moved  for  adoption  by                                                               
Representative  Fields   on  4/19/21,   with  an   objection  for                                                               
discussion purposes  stated by  Chair Patkotak,  and subsequently                                                               
tabled - remained tabled.]                                                                                                      
                                                                                                                                
10:58:33 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
10:59:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS moved  to adopt  Amendment 8,  labeled 32-                                                               
GH1607\A.15, Radford, 4/17/21, which read as follows:                                                                           
                                                                                                                                
     Page 7, following line 13:                                                                                                 
          Insert a new bill section to read:                                                                                    
       "* Sec. 6. AS 38.05.115 is amended by adding a new                                                                   
     subsection to read:                                                                                                        
          (d)  The commissioner may negotiate a sale of                                                                         
        timber under AS 38.05.110 - 38.05.123 only to a                                                                         
    prospective    purchaser   whose    main   office    or                                                                     
     headquarters is located in the state."                                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
CHAIR PATKOTAK objected for purposes of discussion.                                                                             
                                                                                                                                
REPRESENTATIVE FIELDS said that,  like Amendment 6, the intention                                                               
of Amendment  8 is  to support  local businesses.   He  asked Ms.                                                               
Radford to explain the differences between the two.                                                                             
                                                                                                                                
11:00:25 AM                                                                                                                   
                                                                                                                                
MS.  RADFORD  explained that  Amendment  8  would allow  the  DNR                                                               
commissioner to negotiate a timber  sale only to a purchaser with                                                               
a head office or headquarters within the state.                                                                                 
                                                                                                                                
11:00:58 AM                                                                                                                   
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
11:01:41 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS  said that milling jobs  have declined over                                                               
the  past  30  years  due  to management  of  federal  lands  and                                                               
international  dynamics in  the  marketplace, but  that there  is                                                               
expansive  authority to  create local  jobs on  state lands.   He                                                               
said  that Alaska  has historically  had  policies regarding  in-                                                               
state hiring.                                                                                                                   
                                                                                                                                
11:03:05 AM                                                                                                                   
                                                                                                                                
CHAIR  PATKOTAK  asked  to have  someone  address  the  potential                                                               
constitutional concerns with Amendment 8.                                                                                       
                                                                                                                                
11:04:05 AM                                                                                                                   
                                                                                                                                
MS.  RADFORD said  that Amendment  8  raises some  constitutional                                                               
issues  under  the  Privileges and  Immunities  Clause,  Commerce                                                               
Clause, and  Equal Protection Clause;  she said that she  has not                                                               
done  an in-depth  analysis, but  the  Privileges and  Immunities                                                               
Clause  restrains efforts  to  discriminate against  out-of-state                                                               
citizens.                                                                                                                       
                                                                                                                                
REPRESENTATIVE FIELDS  said that the issue  of restricting hiring                                                               
to  Alaska  residents in  terms  of  state lands  and  resources,                                                               
versus private  or federal lands,  goes back decades to  when the                                                               
State   originally  tried   to   mandate   in-state  hiring   for                                                               
development on the North Slope;  the legislature gradually passed                                                               
a  series of  laws, he  said, "eventually  arriving at  an Alaska                                                               
hire  requirement  statute  called the  Zone  of  Underemployment                                                               
statute."    He  characterized  the policy  as  permissible  when                                                               
certain  economic decisions  related  to high  unemployment.   He                                                               
said  that the  current administration  was the  first one  in 30                                                               
years  to   stop  pursuing   in-state  hiring,   "departing  from                                                               
longstanding bipartisan support for Alaska hire."                                                                               
                                                                                                                                
11:07:24 AM                                                                                                                   
                                                                                                                                
MR. ORMAN  expressed his agreement with  Ms. Radford's assessment                                                               
of  which constitutional  clauses  could affect  Amendment 8  and                                                               
listed  several  specific  statutes  that would  apply  to  cases                                                               
involving  the Equal  Protection  Clause and  the Privileges  and                                                               
Immunities Clause.   He said that they key issue  when looking at                                                               
Amendment  8 is  identifying the  rational basis  for restricting                                                               
timber  sales  to only  include  businesses  with a  main  office                                                               
located inside the  state; when considering Amendment  8 in terms                                                               
of  the Equal  Protection  Clause, he  explained  that there  has                                                               
historically  been  legislative  intent language  explaining  the                                                               
rational basis.   When considering the  Privileges and Immunities                                                               
Clause, he  said, the question is,  "Does the law place  a burden                                                               
on   the  privileges   or  immunities   protected  by   the  U.S.                                                               
Constitution, and if  a burden does exist, can  the state provide                                                               
a substantial reason for the  discrimination?"  He then explained                                                               
that  the  Dormant Commerce  Clause  should  also be  considered,                                                               
citing  South-Central Timber  Development v.  Wunnicke, 467  U.S.                                                               
82, 104 S. Ct. 2237 (1984).   In response to a follow-up question                                                               
by Chair  Patkotak, Mr.  Orman clarified  that Amendment  8 would                                                               
cause redundancy in AS 38.05.                                                                                                   
                                                                                                                                
11:17:22 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS  noted the  need  for  rational basis  and                                                               
discussed  the  tendencies  of local  companies  to  hire  local,                                                               
support local  charities, pay  into the local  tax base,  and are                                                               
attuned to the products that local people need.                                                                                 
                                                                                                                                
11:18:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  MCKAY said  that  sometimes  business can't  find                                                               
qualified employees and  that others can't pass a drug  test.  He                                                               
characterized  Amendment 8  as  trying to  solve  a problem  that                                                               
doesn't exist and  said that DOF is tasked with  getting the most                                                               
revenue for the timber.                                                                                                         
                                                                                                                                
11:20:14 AM                                                                                                                   
                                                                                                                                
MR. DABNEY  noted that  negotiated sales  under AS  38.05.123 are                                                               
already allowed only for local  manufacturers.  He also said that                                                               
the six  factors of determination  under AS  38.05.110(c) contain                                                               
provisions for local benefits.   Regarding Representative McKay's                                                               
assertions,  he  explained  that  timber harvests  tend  to  have                                                               
predominately  local  hires in  all  aspects,  and he  said  that                                                               
maximizing  revenue  isn't the  goal  of  DOF.   While  price  is                                                               
important,  he said,  he could  foresee  a situation  in which  a                                                               
proposal with the  highest price would fail to a  proposal with a                                                               
lower price but more local benefits.                                                                                            
                                                                                                                                
11:25:29 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE RAUSCHER opined that  needed labor can't always be                                                               
supplied locally,  but that  a company with  a bottom  line won't                                                               
want to  pay for plane tickets.   He expressed that  he does want                                                               
HB 98 to pass and that he does not support Amendment 8.                                                                         
                                                                                                                                
11:27:36 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HANNAN noted  that Amendment  8 does  not specify                                                               
hiring Alaska  residents, it says  that the business needs  to be                                                               
headquartered  in Alaska  in  order to  take  part in  negotiated                                                               
sales;  there is  nothing in  Amendment 8  restricting a  company                                                               
from bringing  staff from elsewhere.   She said that most  of the                                                               
old-growth has been  harvested in the last 40 years,  and that in                                                               
southeast  Alaska the  few remaining  areas of  old-growth adjoin                                                               
university  or tribal  land.   She  said that  one  of her  prime                                                               
concerns with HB 98 overall  is the difference between negotiated                                                               
sales and competitive bid sales.   It's clear, she said, that the                                                               
goal of bid sales is to  give the contract to the highest bidder;                                                               
however,  negotiated sales  are  intended to  address local  need                                                               
and, she said, "Asking for the  business to be located here seems                                                               
like a fairly low bar."  She said  that it would be ideal for the                                                               
business  to  either be,  or  intent  to remain,  a  longstanding                                                               
member of the  community, but that it's not difficult  to start a                                                               
business in Alaska.                                                                                                             
                                                                                                                                
11:30:09 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK removed his objection to Amendment 8.                                                                            
                                                                                                                                
11:30:10 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRONK objected.                                                                                                  
                                                                                                                                
11:30:16 AM                                                                                                                   
                                                                                                                                
A roll  call vote  was taken.   Representatives  Fields, Hopkins,                                                               
and  Hannan  voted in  favor  of  Amendment 8.    Representatives                                                               
McKay,  Cronk, Rauscher,  Gillham,  Schrage,  and Patkotak  voted                                                               
against it.  Therefore, Amendment 8 failed by a vote of 3-6.                                                                    
                                                                                                                                
11:30:55 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS moved  to adopt  Amendment 9,  labeled 32-                                                               
GH1607\A.14, Radford, 4/17/21, which read as follows:                                                                           
                                                                                                                                
     Page 7, following line 13:                                                                                                 
     Insert a new bill section to read:                                                                                         
       "* Sec. 6. AS 38.05.115 is amended by adding a new                                                                   
     subsection to read:                                                                                                        
          (d)  A timber sale contract entered into under                                                                        
     AS 38.05.117, 38.05.118, or 38.05.123 must require the                                                                     
     purchaser to hire only resident workers."                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
11:30:58 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK objected for purposes of discussion.                                                                             
                                                                                                                                
REPRESENTATIVE FIELDS  pointed out  that workers have  often been                                                               
brought in  from out of  state, and  that as timber  sales become                                                               
increasingly  international,  there  becomes less  incentive  for                                                               
multinational corporations to hire local  workers.  As the timber                                                               
will be  harvested on state  lands, he said, the  legislature has                                                               
the authority to  mandate local hiring.  He recounted  a story of                                                               
a  federal  logging  job  in   which  the  purchaser  brought  in                                                               
undocumented  immigrants  from  Mexico  and  classified  them  as                                                               
independent  contractors in  order  to defraud  them of  workers'                                                               
compensation,  minimum wage,  and  insurance benefits.   He  said                                                               
that the  situation was noticed  only because one of  the workers                                                               
was killed by  a bear, largely due to  insufficient equipment and                                                               
safety measures which would have otherwise been obligatory.                                                                     
                                                                                                                                
11:33:54 AM                                                                                                                   
                                                                                                                                
MR. DABNEY  said that the  industry will not survive  much longer                                                               
if  it  is  not  provided  with  adequate  timber  and  with  the                                                               
flexibility  to export  and  that the  collapse  of the  industry                                                               
would affect  local workers.  He  opined that the problem  is the                                                               
lack  of  available  timber, not  competition  from  outside  the                                                               
state.    He  said  that  HB   98  is  intended  to  create  more                                                               
flexibility for  the next few  years, since the supply  of timber                                                               
from the  U.S. Forest Service  lands is severely  limited, young-                                                               
growth timber  has not yet  reached an amount sufficient  to feed                                                               
the industry, and DOF is  already providing the maximum amount of                                                               
timber available  on state lands.   He said that if  a company is                                                               
required  to hire  only local  workers,  the contract  may be  at                                                               
risk.  He stated that DOF opposes Amendment 9.                                                                                  
                                                                                                                                
11:36:11 AM                                                                                                                   
                                                                                                                                
MR. ORMAN said  that the same legal issues  as described earlier,                                                               
concerning  the Equal  Protection Clause  and the  Privileges and                                                               
Immunities Clause, are also issues with Amendment 9.                                                                            
                                                                                                                                
11:36:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SCHRAGE  asked what  kind of training  is required                                                               
for the jobs in question.                                                                                                       
                                                                                                                                
MR. DABNEY said  there are multiple types of  workers involved in                                                               
the industry  and listed chainsaw,  heavy equipment,  dump truck,                                                               
and logging  truck operators.   He said that high-skill  labor is                                                               
required   for   the   mechanized  equipment,   and   noted   the                                                               
administrative staff  required for  the clerical  work.   He said                                                               
that they're living-wage jobs that are important to the economy.                                                                
                                                                                                                                
REPRESENTATIVE SCHRAGE  asked whether Amendment 9  would apply to                                                               
all staff, or  only those actively involved in  the harvesting of                                                               
the timber.                                                                                                                     
                                                                                                                                
11:39:06 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS responded  that the  intent is  to specify                                                               
local  hires  for the  harvest  of  the  lumber, not  the  entire                                                               
company.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  SCHRAGE  noted  his  discomfort  with  the  prior                                                               
amendments  addressing  related issues  but  said  that he  could                                                               
support Amendment  9 after hearing  descriptions of  the hands-on                                                               
jobs.  He referenced Representative  Cronk's notes about the many                                                               
firefighters  who possess  the specialized  skills that  would be                                                               
transferable to the timber industry.                                                                                            
                                                                                                                                
11:39:55 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRONK recalled that  Southeast Alaska used to have                                                               
a  thriving  timber  industry  and  opined  that  development  of                                                               
resources is being  hampered by the federal government.   He then                                                               
characterized  Alaska as  having the  best-managed resources  and                                                               
best environmental protections in the world.                                                                                    
                                                                                                                                
11:43:06 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GILLHAM said  that he  agrees with  hiring local,                                                               
but  there are  times  when qualified  local  employees can't  be                                                               
found.                                                                                                                          
                                                                                                                                
11:43:56 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HOPKINS  expressed  that revenue  being  funneled                                                               
into the general fund is not  the only way to increase the wealth                                                               
of the state.   He characterized local hire  amendments as having                                                               
a "snowball effect" on local and regional well-being.                                                                           
                                                                                                                                
11:45:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAUSCHER  opined  that  over 90  percent  of  the                                                               
committee  members  agree  with  the  benefits  of  hiring  local                                                               
residents, but that  it should not be mandated.   He said that he                                                               
would not support Amendment 9.                                                                                                  
                                                                                                                                
11:46:33 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HANNAN said that the  goal should be to create the                                                               
biggest  economic  impact  possible  when it  comes  to  resource                                                               
extraction.  She discussed the  possibility of having taxation on                                                               
income earned  in Alaska.   Noting that Amendment 9  would likely                                                               
not  be adopted,  she  said  that she  would  support it  because                                                               
hiring local workers keeps money in the local economy.                                                                          
                                                                                                                                
11:47:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   FIELDS  reminded   committee   members  of   the                                                               
constitutional mandate  to provide  Alaska residents  the maximum                                                               
benefit from  resource development on  state lands and  said that                                                               
one of  the most  basic benefits  is job  production.   He opined                                                               
that, without  mandates, the  state would  not achieve  the local                                                               
hire rates it needs.                                                                                                            
                                                                                                                                
11:48:11 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK removed his objection to Amendment 9.                                                                            
                                                                                                                                
11:48:14 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CRONK objected.                                                                                                  
                                                                                                                                
11:48:19 AM                                                                                                                   
                                                                                                                                
A roll  call vote  was taken.   Representatives  Schrage, Hannan,                                                               
Hopkins,   and   Fields   voted   in  favor   of   Amendment   9.                                                               
Representatives  Gillham, Rauscher,  Cronk,  McKay, and  Patkotak                                                               
voted against  it.  Therefore,  Amendment 9 failed to  be adopted                                                               
by a vote of 4-5.                                                                                                               
                                                                                                                                
11:49:25 AM                                                                                                                   
                                                                                                                                
CHAIR  PATKOTAK  stated  that a  committee  substitute  would  be                                                               
drafted  to incorporate  the  amendments adopted  thus  far.   He                                                               
announced that HB 98, as amended, was held over.                                                                                
                                                                                                                                
                  HB 135-GEOTHERMAL RESOURCES                                                                               
                                                                                                                                
11:49:49 AM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK announced  that the final order  of business would                                                               
be HOUSE BILL NO. 135,  "An Act relating to geothermal resources;                                                               
relating  to  the  definition   of  'geothermal  resources';  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
11:50:31 AM                                                                                                                   
                                                                                                                                
STEVE   MASTERMAN,   Director,   Division   of   Geological   and                                                               
Geophysical  Surveys  (DGGS),  Department  of  Natural  Resources                                                               
(DNR), presented  a PowerPoint on  HB 135, beginning on  slide 2,                                                               
"Agenda," which read as follows [original punctuation provided]:                                                                
                                                                                                                                
     ? DGGS: Introduction to geothermal energy                                                                                  
          ? Fundamentals of geothermal systems                                                                                  
          ? Geothermal systems of Alaska                                                                                        
     ? DOG: Overview of HB 135                                                                                                  
          ? Purpose of HB 135                                                                                                   
            DNR geothermal leasing history                                                                                      
          ? Sectional analysis summary                                                                                          
          ? Sectional analysis details                                                                                          
     ? DGGS: Examples of geothermal system                                                                                      
     ? Supplemental Information                                                                                                 
          ? AGILE Act                                                                                                           
          ? Drilling regulations                                                                                                
                                                                                                                                
MR. MASTERMAN  proceeded to slide 5,  "Fundamental Ingredients of                                                               
Useable  Geothermal Energy,  which displayed  a cross-section  of                                                               
the well  depths of a power  plant and read as  follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     ? Elevated geothermal gradient                                                                                             
        ? Porosity and permeability for the migration of                                                                        
     fluids                                                                                                                     
     ? Surface access                                                                                                           
       Sufficiently large thermal System                                                                                        
     ? Customers for energy                                                                                                     
                                                                                                                                
MR. MASTERMAN  explained that geothermal  energy comes  from heat                                                               
generated  within  the  earth, either  by  volcanic  activity  or                                                               
radioactive  decay,  and  that where  there  exists  an  elevated                                                               
geothermal gradient there  is hotter rock closer  to the surface.                                                               
Harvesting geothermal  power requires  hot rocks that  are highly                                                               
water-permeable,  as well  as surface  access  to the  geothermal                                                               
system,  which  must  be  large  enough  to  generate  meaningful                                                               
amounts  of energy.    He continued  to slide  6,  "Heat Flow  in                                                               
Alaska," which  showed the  parts of  Alaska and  the surrounding                                                               
oceans where  it's easier  to find geothermal  energy.   He noted                                                               
that the area around Anchorage  and Kenai Peninsula has less heat                                                               
flow.   Slide  7,  "North Slope  Geothermal  Gradient," showed  a                                                               
contour  map  of  the  North  Slope  generated  from  the  bottom                                                               
temperatures of  oil and  gas wells.   He  explained that  on the                                                               
North Slope, in order to reach  a rock temperature of 100 degrees                                                               
centigrade, a hole  would have to be drilled to  3,000 meters.  A                                                               
higher geothermal  gradient would  necessitate a  shallower well.                                                               
Slide   8,   "Geothermal   Gradients,"   provided   a   graphical                                                               
representation with depth  in feet on the  y-axis and temperature                                                               
in degrees  centigrade on the x-axis.   He noted the  plot points                                                               
of Chena production  wells and the Makushin  test well, producing                                                               
noticeably higher temperatures at  shallower depths, and stressed                                                               
that more energy is obtained from a higher-temperature system.                                                                  
                                                                                                                                
11:58:05 AM                                                                                                                   
                                                                                                                                
MR.  MASTERMAN  continued on  to  slide  9, "Geothermal  Resource                                                               
Quality, which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
      Generation capacity per unit cost depends on several                                                                      
     geologic and economic factors:                                                                                             
                                                                                                                                
     ? Temperature (hotter is better)                                                                                           
     ? Flow rate (higher flow rates are better)                                                                                 
      ? Reservoir Framework (uniform porosity better than                                                                       
     fractures)                                                                                                                 
         ? Recharge (partially natural better than all                                                                          
     artificial)                                                                                                                
     ? Depth (shallower is less expensive, thus better)                                                                         
        ? Location, location,? (relative to population,                                                                         
     transmission system, development costs, etc.)                                                                              
                                                                                                                                
MR.  MASTERMAN presented  slide 10,  "Introduction to  Geothermal                                                               
Resources,"   which  read   as   follows  [original   punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     ? Geothermal  heat, where technically  and economically                                                                    
     accessible, is an excellent form of sustainable energy                                                                     
     ?  Hydrothermal systems  are the  most  common form  of                                                                    
     energy extraction from geothermal heat                                                                                     
     ? Complex  geologic parameters  necessary for  a viable                                                                    
     geothermal resource,  all present  at one  location, is                                                                    
     rare                                                                                                                       
         Alaska   contains  several   potential   geothermal                                                                    
     resources                                                                                                                  
     ?  New technologies  that will  help expand  geothermal                                                                    
     development  into less  favorable  geology  are on  the                                                                    
     horizon                                                                                                                    
                                                                                                                                
MR.  MASTERMAN noted  the importance  of location  and said  that                                                               
research is being done to  develop new technologies to expand the                                                               
capacity  to produce  geothermal  energy from  lower-temperature,                                                               
drier systems,  which would expand  the use of  geothermal energy                                                               
as well as  allow the development of smaller systems  in areas of                                                               
lower  temperatures,  potentially  allowing  smaller  communities                                                               
with  lower energy  needs to  develop geothermal  resources.   He                                                               
moved  on to  slide 11,  "Geothermal Systems:  Fairbanks Region,"                                                               
which  showed  a map  of  several  geothermal systems  that  have                                                               
reached the surface.   A similar map was displayed  on slides 13,                                                               
14,  and   15,  titled  "Geothermal  Systems:   Seward  Peninsula                                                               
Region,"  "Geothermal  Systems:  Alaska  Peninsula  Region,"  and                                                               
"Geothermal Systems: Southeast Region."                                                                                         
                                                                                                                                
12:08:30 PM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK opened public testimony on HB 135.                                                                               
                                                                                                                                
12:09:14 PM                                                                                                                   
                                                                                                                                
CHARLES MCKEE provided  comments not on topic  with the published                                                               
agenda.                                                                                                                         
                                                                                                                                
12:12:48 PM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK,  after ascertaining  that no  one else  wished to                                                               
testify, closed public testimony on HB 135.                                                                                     
                                                                                                                                
12:13:27 PM                                                                                                                   
                                                                                                                                
HALEY  PAINE, Deputy  Director, Division  of Oil  and Gas  (DOG),                                                               
Department  of  Natural  Resources (DNR),  began  her  PowerPoint                                                               
presentation [hard  copy included  in the committee  packet] with                                                               
slide 17, "Purpose of HB 135," which read as follows [original                                                                  
punctuation provided]:                                                                                                          
                                                                                                                                
     ? Modernize Alaska's geothermal exploration program                                                                      
          ?  Greater  potential  for  providing  affordable,                                                                    
     renewable  energy  to   rural  communities  and  remote                                                                    
     natural resource extraction projects                                                                                       
          ? Promote clean energy industry job creation                                                                          
     ?  Align  geothermal licensing  with  the  oil and  gas                                                                  
     exploration   license   program,   thereby   increasing                                                                  
     feasibility for companies to develop resources                                                                           
          ? More  time for a  company to identify  and prove                                                                    
     resource to convert to leases                                                                                              
          ?  Conversion to  leases  based  on completion  of                                                                    
     work  commitment  and  submission of  exploration  plan                                                                    
     instead of proving discovery of commercial resource                                                                        
          ? Doubles maximum acreage allowed for exploration                                                                     
     ?  Reforms  definitions  for  geothermal  resources  to                                                                  
     focus on Commercial Use                                                                                                  
          ? Explicitly excludes  domestic, noncommercial, or                                                                    
     small-scale  industrial   use  from  the  need   for  a                                                                    
     geothermal license or lease                                                                                                
                                                                                                                                
MS. PAINE stressed  that there are "vast,  untapped resources" in                                                               
the  state.   She  then  paraphrased  slide 18,  "DNR  Geothermal                                                               
Leasing/Permitting  History,"  which  read as  follows  [original                                                               
punctuation provided but formatting changed]:                                                                                   
                                                                                                                                
     Present                                                                                                                    
     Mount   Spurr   Currently   there   are   two   pending                                                                
     applications  for  geothermal  exploration  prospecting                                                                    
     permits  in  the  Mount  Spurr  area.  The  final  Best                                                                    
     Interest Findings  for the first  was issued  March 12,                                                                    
     2021 and the preliminary  Best Interest Finding for the                                                                    
     second was issued March 26, 2021.                                                                                          
                                                                                                                                
     2013                                                                                                                       
     Augustine  Island  26  tracts were  offered.  Only  one                                                                  
     tract  was  leased  to  a  private  individual  and  no                                                                    
     exploration  work was  conducted  as a  result of  that                                                                    
     lease sale.                                                                                                                
                                                                                                                                
     2008                                                                                                                       
     Mount Spurr 16  tracts leased to Ormat  and one private                                                                  
     individual. Ormat purchased 15  leases in the 2008 sale                                                                    
     and drilled  on southern flank of  volcano. They didn't                                                                    
     find  adequate  temperatures  in wells  to  pursue  the                                                                    
     project.  The state  has the  data available  on DO&G's                                                                    
     website.                                                                                                                   
                                                                                                                                
     1986                                                                                                                       
     Mount Spurr On  June 24, 1986, DNR  offered 2,640 acres                                                                  
     in  two tracts.  Both tracts  received bids.  The lease                                                                    
     for Tract 1 expired in 1996,  and the lease for Tract 2                                                                    
     was terminated in 1990.                                                                                                    
                                                                                                                                
     1983                                                                                                                       
     Mount Spurr  DNR held its  first geothermal  lease sale                                                                  
     in the Mount  Spurr area on May 17,  1983. 10,240 acres                                                                    
     in  16 tracts  were offered  in Competitive  Geothermal                                                                    
     Lease Sale 1.  One tract received a bid.  The lease for                                                                    
     that tract was terminated in 1992                                                                                          
                                                                                                                                
MS. PAINE  explained that  the sales described  in slide  18 were                                                               
held because  the DNR commissioner  had designated  those regions                                                               
as  having significant  potential  for  geothermal resources,  so                                                               
they were put out for competitive  bid.  She stressed that HB 135                                                               
would  not  change the  competitive  bid  program, so  DNR  would                                                               
retain the  right to offer  geothermal leases; however,  it would                                                               
change  the process  by  which the  prospecting  permit would  be                                                               
administered.   She  explained that  the  prospecting permit  has                                                               
only  two years  in which  to discover  and prove  a commercially                                                               
viable resource, whereas the competitive  leasing program gives a                                                               
permit holder 10 years.                                                                                                         
                                                                                                                                
MS. PAINE continued  to slide 19, "Sectional  Summary, which read                                                               
as   follows  [original   punctuation  provided   but  formatting                                                               
changed]:                                                                                                                       
                                                                                                                                
     1  (AOGCC) Removes  unnecessary reference  to AS  41.06                                                                  
     from  AS  31.05.030(m)  because   of  changes  made  by                                                                    
     Section 9.                                                                                                                 
     2   (DNR)  Changes   permits   to  licenses.   Explicit                                                                  
     exemption   for  geothermal   resources  intended   for                                                                    
     domestic, noncommercial, or  small-scale industrial use                                                                    
     (See  also  Section  9).  Removes  preferential  rights                                                                    
     clause.   This  provision   is   not  appropriate   for                                                                    
     commercial development of State resources.                                                                                 
     3  (DNR) Changes  permit to  license.  Extends term  of                                                                  
     licenses  (formerly permits)  from two  to five  years.                                                                    
     Replaces  lease  conversion requirement  of  commercial                                                                    
     discovery  and development  plan  with work  commitment                                                                    
     and exploration plan.                                                                                                      
     4 (DNR) Changes permit to license.                                                                                       
     5 (DNR) Changes permits  to licenses. Increases maximum                                                                  
     acreage  from 51,200  to  100,000.  Adds provision  for                                                                    
     rental fees  to be  defined in regulation,  rather than                                                                    
     statute (easier to update).                                                                                                
     6  (DNR)  Adds  new  subsections  to  AS  38.05.181  to                                                                  
     modernize unitization statute  for geothermal leases to                                                                    
     match  the  model  we  use  for  oil  &  gas  under  AS                                                                    
     38.05.180.                                                                                                                 
     7   (DNR)  Replaces   AS  38.05.965(6)   definition  of                                                                  
     geothermal resources (Same as Section 11).                                                                                 
     8  (AOGCC) Amends  AS 41.06.020(e),  clarifies that  AS                                                                  
     41.06 does  not limit  DNR's authority  over geothermal                                                                    
     resource management on state land.                                                                                         
     9  (AOGCC)  Amends  AS  41.06.020(f)  to  add  explicit                                                                  
     exemption   for  geothermal   resources  intended   for                                                                    
     domestic, noncommercial, or  small-scale industrial use                                                                    
     (See also Section 2).                                                                                                      
     10  (AOGCC)   Amends  AS  41.06.060(4)   definition  of                                                                  
     geothermal fluid  to remove temperature  references and                                                                    
     better conform with other changes in this bill.                                                                            
     11  (AOGCC)  Replaces  AS  41.06.060(5)  definition  of                                                                  
     geothermal resources (Same as Section 7).                                                                                  
     12 (AOGCC)  Repeals AS  41.06.005(b) and  AS 41.06.030,                                                                  
     since geothermal units are managed by DNR.                                                                                 
     1316    General   provisions  for   applicability   and                                                                  
     effective dates.  Includes applicability  provision for                                                                    
     prospecting permits currently being processed.                                                                             
                                                                                                                                
MS. PAINE noted  HB 135 would address several areas  for a change                                                               
in  the terminology  from "permit"  to "license"  in order  to be                                                               
consistent with  the language  used in  oil and  gas exploration.                                                               
She also  explained that applicants operating  under a geothermal                                                               
license  would  have  five  years, instead  of  two,  to  conduct                                                               
reconnaissance, secure  permits, and identify the  resource.  She                                                               
said that the  permit requirement would change  from "the proving                                                               
of  a  commercial   resource"  to  "the  completion   of  a  work                                                               
commitment" to  be consistent  with the  oil and  gas exploration                                                               
license program.   She noted  that there are  specific exemptions                                                               
for non-commercial,  industrial, small-scale  home use  for which                                                               
an operator would not need to pursue a permit.                                                                                  
                                                                                                                                
12:18:50 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HOPKINS  asked Ms. Paine  for more details  on the                                                               
private use exemption.                                                                                                          
                                                                                                                                
MS. PAINE said  that an exclusion could be for  domestic use such                                                               
as a  heat pump for  a home,  or for small-scale  industrial use.                                                               
She  said  that  anything  that  isn't  intended  for  a  broader                                                               
commercial  application or  large-scale  development intended  to                                                               
sell power  to multiple parties  would fall under  the exemption.                                                               
She  said  that  there  is  no specific  threshold  in  terms  of                                                               
megawatt-hour  or kilowatt-hour  in order  to keep  the focus  on                                                               
use.                                                                                                                            
                                                                                                                                
REPRESENTATIVE HOPKINS  asked whether geothermal energy  would be                                                               
the only subsurface  resource that wouldn't require  a license or                                                               
permit.                                                                                                                         
                                                                                                                                
MS. PAINE indicated that she would research that question.                                                                      
                                                                                                                                
12:20:44 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HANNAN asked  whether the  geothermal development                                                               
processes would  be changed for administrative  purposes only, or                                                               
if similar companies would be pursuing those resources.                                                                         
                                                                                                                                
MS. PAINE  replied that  it would  be the  process that  would be                                                               
modified  to  align with  the  state's  oil and  gas  exploration                                                               
license program.   She explained that the  geothermal standard is                                                               
currently higher than that of  oil and gas exploration licensing,                                                               
and that  by modifying the  terms of geothermal  exploration, the                                                               
goal is  to make production of  undiscovered geothermal resources                                                               
possible.                                                                                                                       
                                                                                                                                
12:22:50 PM                                                                                                                   
                                                                                                                                
MS. PAINE  resumed her  presentation with  slide 21,  "Section 2:                                                               
Private  Use   Exemption,"  which   read  as   follows  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
       New language added:                                                                                                    
          A  prospecting license  or lease  is not  required                                                                    
     under  this section  to explore  for,  develop, or  use                                                                    
     geothermal  resources  if  the geothermal  resource  is                                                                    
     intended  for domestic,  noncommercial, or  small-scale                                                                    
     industrial use.                                                                                                            
                                                                                                                                
      ? This explicitly excludes private geothermal users                                                                     
     from a requirement to apply for a license or lease.                                                                      
                                                                                                                                
MS.  PAINE   paraphrased  slide  22,  "Section   2:  Preferential                                                               
Rights," which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     ? The  preferential rights  provision is  being deleted                                                                  
     because  it is  inappropriate  to  the situation  (it's                                                                  
     more  relevant to  water rights  or  other surface  use                                                                  
     cases not associated with the mineral estate).                                                                           
     ?  Surface   owner  rights   are  protected   under  AS                                                                  
     38.05.130.                                                                                                               
          ?   If  conflict   arises,  DNR   ensures  private                                                                    
     landowners would not be left  without heat or power, or                                                                    
     otherwise damaged by commercial development.                                                                               
          ? Scenario is  unlikely because private landowners                                                                    
     usually  don't have  financial resources  to develop  a                                                                    
     commercially-viable geothermal resource.                                                                                   
     ?  Rights to  access  the mineral  estate are  reserved                                                                  
     under AS 38.05.125.                                                                                                      
          ?  Surface owners  must provide  reasonable access                                                                    
     to resource developers.                                                                                                    
             The same  condition  exists for  oil  & gas  or                                                                    
     mining.                                                                                                                    
     ?  If  a  surface   use  agreement  can't  be  reached,                                                                  
     resolution process is in 11 AAC 86.145.                                                                                  
            DNR  holds a hearing wherein  the developer must                                                                    
     prove there  is no  other alternative location  for the                                                                    
     well or data acquisition.                                                                                                  
          ? If  the Commissioner concurs, developer  posts a                                                                    
     bond to  compensate landowner for any  impacts and work                                                                    
     progresses.                                                                                                                
     ?  Public notice  is  a part  of  the license  issuance                                                                  
     process, and surface owners would be included.                                                                           
                                                                                                                                
12:24:40 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HANNAN asked  Ms.  Paine to  further explain  the                                                               
rights to access under AS 38.05.123.                                                                                            
                                                                                                                                
MS. PAINE said  that even if a company has  the rights to develop                                                               
geothermal  resources under  a  property  with different  surface                                                               
owners, the company  would be required to work with  the owner on                                                               
development  and payment.   She  said  that there  is a  "robust"                                                               
public notice process as a part  of license issuance and the best                                                               
interest finding  process, so there  would be no  infringement on                                                               
personal  property rights.   She  deferred to  Mr. Masterman  for                                                               
technical information.                                                                                                          
                                                                                                                                
12:27:34 PM                                                                                                                   
                                                                                                                                
MR. MASTERMAN explained that geothermal  systems are developed at                                                               
a  much shallower  depth than  oil  and gas  resources, so  there                                                               
won't be the need for horizontal wells.                                                                                         
                                                                                                                                
12:28:43 PM                                                                                                                   
                                                                                                                                
MS.  PAINE resumed  her presentation  by  paraphrasing slide  23,                                                               
"Section  3: Work  Commitment," which  read as  follows [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     ? Changes  prospecting permit to license  and increases                                                                  
     term from 2 to 5 years                                                                                                   
          ?  Creates  greater  opportunity  for  success  of                                                                    
     noncompetitive geothermal program                                                                                          
     ?   Conversion   to    noncompetitive   lease   through                                                                  
     completion of agreed upon work commitment                                                                                
          ?  Current process  for  oil  and gas  exploration                                                                    
     license                                                                                                                    
          ? Commitment  expressed in dollar figure  ? Annual                                                                    
     reporting and performance objectives                                                                                       
                                                                                                                                
MS. PAINE paraphrased slide 24,  "Section 10: Geothermal Fluids,"                                                               
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     AS 41.06.060(4) is amended to read:                                                                                      
                                                                                                                                
     (4)  "geothermal fluid"  means liquids,  brines, water,                                                                
     gases, or  and steam  at temperatures greater  than 120                                                            
     degrees celcius  or any commercial  use of  liquids and                                                                  
     steam   naturally   or   artificially  present   in   a                                                              
     geothermal system; "geothermal  fluid" does not include                                                                
     oil,   hydrocarbon   gases,    or   other   hydrocarbon                                                                
     substances  at  temperatures   less  than  120  degrees                                                              
     celsius                                                                                                                  
                                                                                                                                
          ?   Aligns   with    modernized   definition   for                                                                    
     geothermal resources.                                                                                                      
          ?  Not  limited  by  temperature  because  current                                                                    
     technology  enables  development of  cooler  geothermal                                                                    
     systems.                                                                                                                   
          ?    Distinguishes    geothermal    fluids    from                                                                    
     hydrocarbon resources.                                                                                                     
                                                                                                                                
MS. PAINE explained that slides 24  and 25, "Sections 7 & 11: New                                                               
Definition," change  language that specify  specific temperatures                                                               
which  are  no longer  relevant  due  to advances  in  geothermal                                                               
technology.  Slide 25 read as follows [original punctuation                                                                     
provided]:                                                                                                                      
                                                                                                                                
     "Geothermal resources"  means the  natural heat  of the                                                                  
     earth; the energy, in whatever  form, below the surface                                                                  
     of  the earth  present in,  resulting from,  or created                                                                  
     by, or which may be  extracted from, such natural heat;                                                                  
     and  all   minerals  in  solution  or   other  products                                                                  
     obtained   from   naturally  heated   fluids,   brines,                                                                  
     associated gases,  and steam,  in whatever  form, found                                                                  
     below  the surface  of the  earth;  but excluding  oil,                                                                  
     hydrocarbon gases, or other hydrocarbon substances.                                                                      
                                                                                                                                
     ? Modern definition for geothermal resources.                                                                              
     ?   Not   limited   by  temperature   because   current                                                                    
     technology  enables  development of  cooler  geothermal                                                                    
     systems.                                                                                                                   
     ? Ensures all the  State's mineral estate resources are                                                                    
     captured in definition.                                                                                                    
     ? Same  definition being  applied to  both DNR  & AOGCC                                                                    
     statutes.                                                                                                                  
                                                                                                                                
12:29:48 PM                                                                                                                   
                                                                                                                                
CHAIR PATKOTAK announced that HB 135 was held over.                                                                             
                                                                                                                                
12:30:41 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 12:31 p.m.                                                                

Document Name Date/Time Subjects
HB 98 DNR Response to Remaining Amendments 4.23.2021.pdf HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HB 98
HB 98 HRES Action on Amendments 4.19.2021.pdf HRES 4/19/2021 1:00:00 PM
HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HB 98
HB 98 Amendment Cronk A.24 4.19.2021.pdf HRES 4/19/2021 1:00:00 PM
HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HB 98
HB 98 Memo Amendment A.15 4.19.2021.pdf HRES 4/19/2021 1:00:00 PM
HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HB 98
HB 98 HRES Amendment Packet 1 4.19.2021.pdf HRES 4/19/2021 1:00:00 PM
HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HB 98
HB 135 Sponsor Statement 4.23.2021.pdf HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HRES 4/26/2021 1:00:00 PM
HB 135
HB 135 Sectional Analysis Version A 4.23.2021.pdf HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HRES 4/26/2021 1:00:00 PM
HB 135
HB 135 DNR Presentation 4.23.2021.pdf HRES 4/23/2021 10:30:00 AM
HRES 4/23/2021 1:00:00 PM
HRES 4/26/2021 1:00:00 PM
HB 135
HB 98 Letter Alaska Forest Association 4.23.2021.pdf HRES 4/23/2021 10:30:00 AM
HB 98