Legislature(1993 - 1994)
03/04/1994 08:15 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 4, 1994
8:15 a.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Pat Carney
Representative John Davies
Representative David Finkelstein
Representative Joe Green
Representative Jeannette James
MEMBERS ABSENT
Representative Bill Hudson, Vice Chairman
Representative Con Bunde
Representative Eldon Mulder
COMMITTEE CALENDAR
HCR 12 Relating to the use of natural gas as a motor
vehicle fuel in Alaska.
CS HCR 12(O&G) MOVED OUT OF COMMITTEE WITH
INDIVIDUAL RECOMMENDATIONS
SB 238 "An Act establishing a procedure for review of
proposed projects under the Alaska coastal
management program, and relating to petitions
for compliance with and enforcement of district
coastal management programs under that program
and to the disposition of those petitions."
CSSB 238(FIN) MOVED OUT OF COMMITTEE WITH
INDIVIDUAL RECOMMENDATIONS
SB 151 "An Act providing for oil and gas exploration
incentive credits for certain activities on
certain land in the state; and providing for
an effective date."
HCS SB 151(RES) MOVED OUT OF COMMITTEE WITH
INDIVIDUAL RECOMMENDATIONS
WITNESS REGISTER
REPRESENTATIVE DAVID FINKELSTEIN
Alaska State Legislature
State Capitol, Room 424
Juneau, Alaska 99801-1182
Phone: 465-2435
POSITION STATEMENT: Prime Sponsor HCR 12
CHUCK LANDERS, Member
Anchorage Assembly
P.O. Box 196650
Anchorage, Alaska 99503
Phone: 562-6050
POSITION STATEMENT: Supported HCR 12
RON COLLINS, Principal Administrative Officer
Fleet Service Division
Municipality of Anchorage
4333 Bering Street
Anchorage, Alaska 99503
Phone: 562-0632
POSITION STATEMENT: Supported HCR 12
JEFF OTTESEN, Chief
Right-of-Way & Environment
Division of Engineering and Operations
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Phone: 465-2985
POSITION STATEMENT: Answered questions relating to HCR 12
KEN ERICKSON, Aide
Senator Drue Pearce
State Capitol, Room 508
Juneau, Alaska 99801-1182
Phone: 465-4993
POSITION STATEMENT: Provided sponsor statement on SB 238
STEVEN PORTER
ARCO Alaska
P.O. Box 100360
Anchorage, Alaska 99510
Phone: 265-6269
POSITION STATEMENT: Supported SB 238
PAUL RUSANOWSKI, Director
Division of Governmental Coordination
Office of the Governor
P.O. Box 110030
Juneau, Alaska 99811-0030
Phone: 465-3562
POSITION STATEMENT: Supported SB 238
BETH KERTTULA, Assistant Attorney General
General Civil Section
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Phone: 465-3600
POSITION STATEMENT: Answered questions
TOM LOHMAN, Representative
North Slope Borough
P.O. Box 642
Barrow, Alaska 99723
Phone: 852-0350
POSITION STATEMENT: Supported SB 238
ROGER ALLINGTON, Director
Statewide Planning
Department Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Phone: 465-4070
POSITION STATEMENT: Offered an amendment for SB 238
DREW SCALZI, Member
Alaska Coastal Policy Council
41685 Redoubt Circle
Homer, Alaska 99603
Phone: 235-6359
POSITION STATEMENT: Passed on giving testimony
JIM HAYNES
Division of Oil and Gas
Department of Natural Resources
P.O. Box 107034
Anchorage, Alaska 99510
Phone: 762-2592
POSITION STATEMENT: Gave overview on SB 151 and answered
questions
KEN FREEMAN, Project Coordinator
Resource Development Council
121 W. Fireweed, #250
Anchorage, Alaska 99502
Phone: 276-0700
POSITION STATEMENT: Supported SB 151
WALT FURNACE, General Manager
Alaska Support Industry Alliance
4220 B Street
Anchorage, Alaska 99503
Phone: 563-2226
POSITION STATEMENT: Supported SB 151
PREVIOUS ACTION
BILL: HCR 12
SHORT TITLE: USE OF NATURAL GAS IN MOTOR VEHICLES
SPONSOR(S): REPRESENTATIVE(S) FINKELSTEIN
JRN-DATE JRN-PG ACTION
03/01/93 485 (H) READ THE FIRST TIME/REFERRAL(S)
03/01/93 485 (H) O&G, RESOURCES, TRA, FINANCE
04/06/93 (H) O&G AT 05:00 PM CAPITOL 124
04/07/93 (H) O&G AT 05:00 PM CAPITOL 124
04/07/93 (H) MINUTE(O&G)
02/14/94 (H) O&G AT 05:00 PM CAPITOL 124
02/18/94 2455 (H) O&G RPT CS(O&G) 2DP 1DNP 1NR
02/18/94 2456 (H) DP: KOTT, GREEN
02/18/94 2456 (H) DNP: OLBERG
02/18/94 2456 (H) NR: G.DAVIS
02/18/94 2456 (H) -ZERO FISCAL NOTE (DEC) 2/18/94
03/04/94 (H) RES AT 08:15 AM CAPITOL 124
BILL: SB 238
SHORT TITLE: COASTAL ZONE MANAGEMENT PROCEDURES
SPONSOR(S): SENATOR(S) PEARCE
JRN-DATE JRN-PG ACTION
01/07/94 2456 (S) PREFILE RELEASED 1/7/94
01/10/94 2456 (S) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2457 (S) RES, FIN
01/24/94 (S) RES AT 3:30 PM BUTRVICH RM 205
01/24/94 (S) MINUTE(RES)
01/28/94 (S) MINUTE(RES)
02/02/94 2657 (S) RES RPT 4DP
02/02/94 2657 (S) FISCAL NOTE PUBLISHED (GOV)
02/11/94 2783 (S) FIN RPT CS 4DP 2NR SAME TITLE
02/11/94 2784 (S) FISCAL NOTE TO CS PUBLISHED
(GOV)
02/11/94 (S) FIN AT 09:00 AM SENATE FIN 518
02/14/94 (S) RLS AT 03:00 PM FAHRENKAMP ROOM
203
02/14/94 (S) MINUTE(RLS)
02/15/94 2860 (S) RLS RPT 4 CAL 1NR 2/15/94
02/15/94 2861 (S) READ THE SECOND TIME
02/15/94 2861 (S) FIN CS ADOPTED UNAN CONSENT
02/15/94 2861 (S) ADVANCED TO THIRD READING
UNAN CONSENT
02/15/94 2861 (S) READ THE THIRD TIME
CSSB 238(FIN)
02/15/94 2862 (S) PASSED Y19 N- A1
02/15/94 2862 (S) Ellis NOTICE OF RECONSIDERATION
02/22/94 2920 (S) RECONSIDERATION NOT TAKEN UP
02/22/94 2920 (S) TRANSMITTED TO (H)
02/23/94 2490 (H) READ THE FIRST TIME/REFERRAL(S)
02/23/94 2490 (H) RESOURCES
03/04/94 (H) RES AT 08:15 AM CAPITOL 124
BILL: SB 151
SHORT TITLE: OIL & GAS EXPLORATION INCENTIVE CREDITS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
03/05/93 618 (S) READ THE FIRST TIME/REFERRAL(S)
03/05/93 618 (S) OIL & GAS, JUDICIARY, FINANCE
03/05/93 618 (S) ZERO FISCAL NOTES (DNR, REV)
03/05/93 619 (S) GOVERNOR'S TRANSMITTAL LETTER
03/16/93 (S) O&G AT 08:00 AM
03/16/93 (H) MINUTE(O&G)
03/16/93 (S) MINUTE(O&G)
03/23/93 (S) O&G AT 5:00 PM BUTRVICH RM 205
03/23/93 (S) MINUTE(O&G)
03/30/93 (S) MINUTE(O&G)
03/31/93 1002 (S) O&G RPT 3DP 1DNP/AM
03/31/93 1002 (S) PREVIOUS ZERO FNS (DNR, REV)
04/15/93 1418 (S) JUD REFERRAL WAIVED Y11 N9
04/18/93 1468 (S) FIN RPT 6DP 1DNP
04/18/93 1468 (S) PREVIOUS ZERO FNS (DNR, REV)
04/18/93 (S) FIN AT 01:00 PM SENATE FIN 518
04/18/93 (S) MINUTE(FIN)
04/18/93 (S) MINUTE(RLS)
04/21/93 1613 (S) RULES 3CAL 1NR 4/21/93
04/21/93 1620 (S) MOVED TO BOTTOM OF CALENDAR
04/21/93 1633 (S) READ THE SECOND TIME
04/21/93 1633 (S) AM NO 1 FAILED Y9 N11
04/21/93 1634 (S) AM NO 2 FAILED Y7 N13
04/21/93 1634 (S) ADVANCE TO THIRD READING FAILED
Y11 N9
04/21/93 1634 (S) THIRD READING 4/22 CALENDAR
04/22/93 1675 (S) READ THE THIRD TIME SB 151
04/22/93 1675 (S) PASSED Y14 N6
04/22/93 1675 (S) EFFECTIVE DATES SAME AS PASSAGE
04/22/93 1675 (S) JACKO NOTICE OF RECONSIDERATION
04/23/93 1714 (S) RECON TAKEN UP-IN THIRD READING
04/23/93 1715 (S) PASSED ON RECONSIDERATION
Y14 N6
04/23/93 1715 (S) EFFECTIVE DATES SAME AS PASSAGE
04/23/93 1717 (S) TRANSMITTED TO (H)
04/24/93 1508 (H) READ THE FIRST TIME/REFERRAL(S)
04/24/93 1508 (H) OIL & GAS, RESOURCES, FINANCE
01/31/94 (H) O&G AT 05:00 PM CAPITOL 124
01/31/94 (H) MINUTE(O&G)
02/02/94 2215 (H) ADOPT AMENDMENT
02/02/94 2215 (H) O&G RPT 3DP 2NR
02/02/94 2215 (H) DP: KOTT, G. DAVIS, GREEN
02/02/94 2215 (H) NR: SITTON, OLBERG
02/02/94 2215 (H) -ZERO FISCAL NOTE (DNR) 2/2/94
02/02/94 2216 (H) JUD REFERRAL ADDED
02/23/94 (H) MINUTE(ECO)
03/04/94 (H) RES AT 08:15 AM CAPITOL 124
ACTION NARRATIVE
TAPE 94-25, SIDE A
Number 000
The House Resources Committee was called to order by
Chairman Bill Williams at 8:25 a.m. Members present at the
call to order were Representatives Williams, Carney, Davies,
Finkelstein, Green, and James. Members absent were
Representatives Hudson, Bunde and Mulder.
CHAIRMAN WILLIAMS announced there is a quorum present. He
noted the meeting is on teleconference with Anchorage,
Barrow, Cordova, Fairbanks, Homer, and Kenai/Soldotna.
HCR 12 - USE OF NATURAL GAS IN MOTOR VEHICLES
REPRESENTATIVE DAVID FINKELSTEIN, PRIME SPONSOR, stated the
move to get natural gas vehicles in Alaska has been slow
going, but added there are many positive elements ongoing.
The federal government has renewed interest, the state is
making initial efforts converting its fleet, and the
municipality of Anchorage recently put a couple of vehicles
on line and has requested $500,000 in their capital request
for a pilot project to expand the use of natural gas
vehicles. He felt it was appropriate to have a resolution
such as HCR 12 showing the legislature's support for
expanding natural gas vehicle use in Alaska.
CHUCK LANDERS, MEMBER, ANCHORAGE ASSEMBLY, testified via
teleconference, and said the Anchorage assembly recently
passed a legislative program which addresses this type of
issue. In the program, the assembly has a grant request to
buy a large compressor for approximately $500,000. He
stressed the assembly believes there is a need to get into
the Compressed Natural Gas (CNG) program. He said the
assembly has one CNG car on line and added they are in the
process of acquiring two CNG vans.
MR. LANDERS stated Anchorage has many mandates due to the
Clean Air Act and carbon monoxide (CO) nonattainment status.
The assembly believes the CNG program is one of the answers
and is willing to take the necessary steps to convert their
fleet to CNG. The problem is the city has no fueling
stations. He noted the one fueling station is a privately
owned fuel station and is of the old technology, delivering
CNG at 2,400 pounds per square inch (PSI). The latest
equipment delivers CNG at 3,600 PSI.
MR. LANDERS stated HCR 12 addresses many of the issues
facing Anchorage currently. He added Anchorage is blessed
in that it has natural gas and the CNG program is an
excellent way for the city to use one of the state's
resources.
RON COLLINS, PRINCIPLE ADMINISTRATIVE OFFICER, FLEET SERVICE
DIVISION, MUNICIPALITY OF ANCHORAGE, testified via
teleconference, and stated CNG is the fuel of the future.
He said the abundance of CNG in Alaska is well known. The
problems mentioned earlier are being dealt with on a daily
basis. He remarked it is inconvenient for a large fleet to
deal with refueling problems currently existing in
Anchorage. He stressed a new refueling station would help
achieve the CO attainment goals. In addition to the two
CNG vehicles the municipality is attempting to purchase
currently, he said the municipality also has ten vehicles
which were converted after their arrival in Anchorage and
stressed those vehicles will work in the application.
(CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE
HUDSON joined the committee at 8:30 a.m.)
Number 118
JEFF OTTESEN, CHIEF, RIGHT-OF-WAY & ENVIRONMENT, DIVISION OF
ENGINEERING AND OPERATIONS, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, stated he is available for questions.
REPRESENTATIVE JOHN DAVIES requested Mr. Ottesen to review
the state's activity using CNG vehicles and asked if
nonattainment areas such as Anchorage and Fairbanks will be
helped through the use of CNG vehicles.
MR. OTTESEN replied the state is currently using six
vehicles with CNG capability and he verified the refueling
problems expressed earlier. He said the technology is
straightforward, with the capability of switching from CNG
with the vehicle running to gasoline. However, he stressed
there is a need for refueling stations. In regard to
solving the CO problem, he stated CNG vehicles are much
cleaner so they are a potential solution, particularly in
the Anchorage and the greater Anchorage area where there is
natural gas available. He noted the only way to get natural
gas to Fairbanks is by pipeline or by transporting liquid
natural gas by tanker to Fairbanks where it can then be used
in a compressed form.
REPRESENTATIVE PAT CARNEY asked what a compressor costs.
MR. OTTESEN responded compressors range from the small home
appliance which costs a few thousand dollars to a large-
scale, three or four stage compressor providing rapid
filling which costs $300,000 to $500,000.
REPRESENTATIVE CARNEY inquired if the large compressor is
needed to reach the 3,600 PSI.
MR. OTTESEN said the large compressor refuels a large number
of vehicles on a fast fuel basis, meaning a vehicle will be
filled in three to four minutes. He stated the slow fill
appliance takes six to eight hours to fill.
REPRESENTATIVE CARNEY said he is trying to determine the
differences in pressure.
MR. OTTESEN stated the storage systems in the vehicles
themselves have moved up from 2,400 PSI, to 3,000 PSI, and
currently the storage technologies are moving toward 3,600
PSI. He added there is also new technology being explored
which relies upon carbon absorption, which goes back down to
1,000 PSI, but relies upon an absorption principle as
opposed to straight compression. He stressed storage is
clearly the problem and added that when the fuel is
compressed, it is no where as dense as gasoline.
REPRESENTATIVE BILL HUDSON asked how CNG is sold and asked
if it is taxed.
MR. OTTESEN replied CNG is not taxed as an automotive or
motor fuel. He said natural gas is sold on the basis of
therms or BTU's, but added that most natural gas retail
outlets are converting to what is considered a gallon
equivalent. He explained a price is received based on
therms, but the price looked at is considered to be a gallon
of fuel or its equivalent energy content.
Number 196
REPRESENTATIVE HUDSON asked if the tanks in a typical
fueling station are large.
MR. OTTESEN said the service stations he has seen in the
lower 48 include a pressure station located somewhere on the
property of a conventional gas station and the tanks are the
size of the committee table but ten feet tall. He stated
the cascade principle is usually used meaning there are
tanks at different pressures.
REPRESENTATIVE JOE GREEN stated he has a bill requiring the
use of natural gas as a fuel. He said an organization
recently formed in Anchorage is looking at the wide scope of
uses of natural gas including use in locomotives. He felt
one of the problems for widespread use of CNG is that it is
compressed, except for home use. If distance is to be
achieved, liquified natural gas (LNG) will need to be used
since it has more BTU's per gallon than gasoline. For a
given amount of energy derived from the thermal aspect of
ombustion, further distances can be attained on LNG.
Number 240
MR. OTTESEN noted that the state of New Mexico has just
mandated the state's fleet be 100 percent converted to
natural gas and at the same time, the public utility which
sells natural gas is adding a small surcharge to all natural
gas customers. He stated the surcharge money is going to be
used to install a network of over twenty refueling stations
throughout the state and at the same time, will provide
rebates to people who convert their vehicles to natural gas.
Number 259
(CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVES
MULDER AND BUNDE joined the committee at 8:40 a.m. and 8:43
a.m. respectively.)
REPRESENTATIVE ELDON MULDER stated the Chairman of the
Anchorage Assembly had impressed upon him the need for an
appropriation for their project. They are hoping to put a
pump in Anchorage which will be a cooperative effort between
the municipality, MAPCO and another entity. He felt HCR 12
is worthwhile as there are few industries in Alaska with
value added products and this is one of them.
REPRESENTATIVE CARNEY asked if LNG is the way of the future,
will CNG compressors eventually become obsolete.
MR. OTTESEN replied the industry is still focusing on CNG
except for certain major industrial users. Recently, the
Seattle Metropolitan bus fleet opted to go to LNG as opposed
to CNG. He added that the two fuels are identical and said
the only difference between the two is storage. He said CNG
is the general method being sold currently. LNG is best for
locomotives, large diesel trucks which are going to be
converted, or bus systems and is a specialized niche at this
time.
REPRESENTATIVE CARNEY asked if the Japanese are using LNG in
ordinary vehicles.
MR. OTTESEN replied that worldwide, the U.S. is behind in
the use of all types of alternative fuels and in particular,
natural gas which is used widely. The Japanese are using
LNG for heavy industrial uses, but CNG seems to be the
preferred method. He added that LNG is stored in a vacuum
insulated tank which keeps it cold. If a vehicle is being
used daily, LNG is fine but if the vehicle is not used
daily, a certain amount of boil off has to take place in the
tank and that fuel is wasted to the atmosphere.
Number 320
REPRESENTATIVE JEANNETTE JAMES made a MOTION to ADOPT the
Oil and Gas committee substitute for HCR 12.
CHAIRMAN WILLIAMS asked if there were any objections.
Hearing none, the MOTION PASSED.
REPRESENTATIVE JAMES made a MOTION to MOVE CSHCR 12(O&G) out
of committee with INDIVIDUAL RECOMMENDATIONS.
REPRESENTATIVE HUDSON asked if the additional WHEREAS clause
recommended by the Department of Transportation (DOT) is
embodied in the committee substitute.
REPRESENTATIVE FINKELSTEIN stated the position paper had
been submitted last year and the first recommended WHEREAS
clause was not included based on discussions held in the Oil
and Gas Committee.
REPRESENTATIVE HUDSON asked if it was the resolution
sponsor's view that the first WHEREAS clause would enhance
the resolution.
REPRESENTATIVE FINKELSTEIN said there had been a lot of
discussion on the uses of LNG versus CNG and it was felt the
first WHEREAS clause was not needed.
CHAIRMAN WILLIAMS asked if there were any objections to the
motion. Hearing none, the MOTION PASSED.
Number 370
SB 238 - COASTAL ZONE MANAGEMENT PROCEDURES
KEN ERICKSON, AIDE, SENATOR DRUE PEARCE, stated the Coastal
Policy Council coordinates state agencies and local coastal
districts in reviewing and issuing state permits for
proposed development projects affecting natural resources in
Alaska's coastal zones. SB 238 clarifies when and how
certain parties can petition the Coastal Policy Council
during an Alaska Coastal Management Program consistency
review.
MR. ERICKSON said this bill corrects a problem which occurs
when a petition is brought before the council after a final
commissioner level decision on a consistency review has been
made. Under current Alaska Coastal Management Program
statutes and regulations the state's resource commissioners
cannot delegate their responsibility to participate in an
elevation of a consistency determination to the commissioner
level, nor may they delegate their authority to decide a
petition in the final consistency determination. However,
as noted in the included informal Attorney General's
opinion, the commissioners cannot sit in both capacities.
Number 395
MR. ERICKSON stated the clarifications embodied in SB 238
will ensure that complaints are heard and addressed in a
timely manner. This bill will ensure that citizens, state
agencies, and affected projects have a voice in the
development policies of the state's coastal areas. He
stressed SB 238, as proposed, is the result of intensive
collaboration between Senator Pearce, an Alaska Coastal
Policy Subcommittee, the Alaska Department of Law, and other
interested parties. He told committee members that in their
folders they will find a negative fiscal note, a sectional
analysis, an analysis from Paul Rusanowski, a summary of the
Attorney General's opinion, and a summary of the Alaska
Coastal Management Policy's review process.
Number 407
REPRESENTATIVE GREEN said the committee has heard
essentially the same bill as a house version and it was
passed.
CHAIRMAN WILLIAMS stated SB 238 had not been heard in the
House Resources Committee, but had been heard in the Oil and
Gas Committee.
STEVEN PORTER, ARCO ALASKA, testified via teleconference,
and expressed support of SB 238, a good consensus bill.
PAUL RUSANOWSKI, DIRECTOR, DIVISION OF GOVERNMENTAL
COORDINATION, OFFICE OF THE GOVERNOR, stated SB 238 is
identical to HB 401 and emphasized SB 238 is a consensus
bill which was developed over a period of almost two years,
involving many members of coastal districts, interested
industries, and state representatives and added that the
bill has been endorsed in concept by the Coastal Policy
Council for moving forward in the legislative process. He
said the Coastal Policy Council contains nine
representatives from different districts around the state
and seven representatives from state departments.
Therefore, SB 238 has broad support within the
Administration, within the coastal program and within the
constituents of the coastal program represented by the
districts.
MR. RUSANOWSKI stressed SB 238 does resolve a problem of due
process in which currently the commissioners are charged
with hearing elevations on disputed projects and are also
charged with sitting on the Coastal Policy Council to hear
petitions. He noted that committee members have in their
folders a diagram illustrating the due process problem. He
stated SB 238 is one solution which solves the problem.
Number 475
CHAIRMAN WILLIAMS noted the Bering Straits Coastal Resource
Service Area Board has concerns and asked Mr. Rusanowski to
address those concerns.
MR. RUSANOWSKI said the concern which the Bering Straits
Coastal Resource Service Area Board has is that the public
which will participate in the process and will have the
ability to petition the Coastal Policy Council to ensure
their comments are fairly considered has to participate in
the review itself; that is they have to actively comment
during the consistency review. If a person has not
commented during that review, that person does not have the
right to petition to ensure their comments were fairly
considered. He stated the Bering Straits Coastal Resource
Service Area Board feels SB 238 will diminish the ability of
the public or other groups to participate in the process and
that any individual should have the ability to petition that
their comments are fairly considered.
Number 500
MR. RUSANOWSKI said the issue is best stated as if you have
not participated in the process and are unaware of the
project, you only have a five day window in which to respond
to request a petition to the Coastal Policy Council. It
would be difficult to conceive of a circumstance where
someone would become aware of a project who had not
commented and would have a grievance that could be resolved.
He noted that the coastal district has the ability to
petition. He stressed the coastal district is the
representative group, at the local level, for all of the
citizens of that district and already perform that function.
MR. RUSANOWSKI stated what is being added to that function
is the ability of a citizen who chooses individually to
participate to ensure that not only the agencies have
performed properly but that the district has performed
properly. If in that individual's opinion, this has not
happened with respect to his/her comments, that individual
can go to the Coastal Policy Council and make sure the
Council does take action with respect to their concern. He
stated the department does not view the Bering Straits
Board's concern as appropriate to SB 238.
Number 536
REPRESENTATIVE DAVIES posed a hypothetical situation where a
process was going forward and an individual had made
comments that a third party agreed with, but for expediency
purposes decided not to duplicate the comments but rather
just monitor the process. Then the decision is made and it
is the third party's opinion that those comments which
represented their own were not fairly dealt with and for
some reason, the second party decided not to appeal. He
stated what SB 238 forces is that in order for people to
keep their opportunity to elevate the issue, many people
will be commenting just to keep their oar in the water. He
said he can envision a number of circumstances where people
might want to just watch and see what happens and then
choose to be concerned at the last minute.
Number 555
MR. RUSANOWSKI explained the present process addresses that
situation. A citizen of a district is represented by the
district's participation and has no rights currently to any
petition or elevation status in the present review process.
He said if a person has a grievance with how the process is
being handled, they must go to the district representative,
make their case known, and the district supports their
position in the process. The district is the entry point
for the public.
Number 580
MR. RUSANOWSKI stressed SB 238 expands that participation by
the public so if they chose to participate themselves, they
have a right to make sure they are heard. If they have not
participated themselves, they still have the same right to
go to their district and say the process is not working
correctly and the district needs to represent them and move
forward. He felt the present status has not been
diminished, but rather the ability has been added for a
member of the public who chooses to participate, to have the
same rights as the district.
Number 597
REPRESENTATIVE JAMES stated in her experience with the
public and planning process, in order to be available to
participate in the objection process, a person has to have
been available in the beginning. She felt that was a good
way to guarantee that people do not come in out of the
woodwork and get involved.
BETH KERTTULA, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, stated she is available to answer questions.
Number 637
TOM LOHMAN, REPRESENTATIVE, NORTH SLOPE BOROUGH, testified
via teleconference, and expressed support of SB 238. He
said all of the good things in SB 238 stand in contrast to
the Administration's introduction of HB 474 which also
addresses coastal management issues.
ROGER ALLINGTON, DIRECTOR, STATEWIDE PLANNING, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES (PF), stated the
department does not have a problem with SB 238, but does
have a problem with the coastal management procedures. He
said on January 31, the department communicated with Senator
Pearce's office suggesting language be added to SB 238 to
correct the problem. The problem is that currently all DOT
and PF projects are required by federal law to have a
minimum of three public involvement processes. A statewide
transportation plan is required which goes through a public
process; a three year state transportation improvement
program is developed which goes through a public process;
and then each project has to go through an environmental
process. At that time, the department has to go through
the Division of Governmental Coordination consistency
determination which adds about 30-50 days to the project
time period which gives the opportunity for an opponent of
the project to get a second bite of the apple.
MR. ALLINGTON stated DOT suggests the Coastal Management Act
be amended to provide that in AS 44.19.145, which involves
the functions of the office of the Governor, in subsection
11 which addresses determining federal consistencies, an
additional clause be added which would state, "provided
however that if a project has been developed in such a
manner that the requirements of AS 46.40.096 are met, the
state agency proposing the project shall make the conclusive
state consistency determination."
MR. ALLINGTON said this amendment will allow DOT or any
other agency which goes through the process outlined for the
Coastal Management determination program will be able to
make a consistency determination. He stated DOT feels this
change will serve the public process required. He added
that DOT does get local government concurrence on projects.
TAPE 94-25, SIDE B
Number 000
REPRESENTATIVE FINKELSTEIN felt the procedure used to
proposed the amendment is strange and felt the proposed
amendment does not relate directly to SB 238. He wondered
why the Administration did not introduce a bill on the
subject.
MR. ALLINGTON responded they could but since SB 238 was at
hand, the procedure could be included in the bill.
REPRESENTATIVE FINKELSTEIN said this is not how the
Administration usually operates.
REPRESENTATIVE DAVIES commented this amendment will affect
all agencies in their review process and will need a lot of
consideration.
Number 020
CHAIRMAN WILLIAMS asked the view of the sponsor in regard to
the suggested amendment.
MR. ERICKSON said Senator Pearce defers to the will of the
committee.
REPRESENTATIVE HUDSON asked if the amendment fits within the
title.
MS. KERTTULA stated she had not seen the amendment
previously. She was not sure about the single subject rule
in the title and said conceivably it would not be under the
same subject, especially given the general thrust of the
bill. She said it is not an easy suggestion to simply say
that if the state agency has been meeting with the process,
then it will not have to go through a consistency review.
It would create many legal issues and there is a need for
the Department of Law to take another look at the bill and
the proposed amendment. In her opinion, given the lateness
in the session, the proposed amendment needs to be taken up
as a separate topic.
REPRESENTATIVE CON BUNDE felt the amendment should not be
considered.
REPRESENTATIVE JAMES agreed.
Number 056
DREW SCALZI, MEMBER, ALASKA COASTAL POLICY COUNCIL,
testified via teleconference, and passed on giving
testimony.
REPRESENTATIVE GREEN made a MOTION to pass CSSB 238(FIN)
with the fiscal note out of committee with INDIVIDUAL
RECOMMENDATIONS.
CHAIRMAN WILLIAMS asked if there were any objections to the
motion. Hearing none, the MOTION PASSED.
SB 151 - OIL & GAS EXPLORATION INCENTIVE CREDITS
REPRESENTATIVE BUNDE made a MOTION to ADOPT HCS SB 151(RES).
CHAIRMAN WILLIAMS asked if there were any objections to the
motion. Hearing none, the MOTION PASSED.
Number 098
JIM HAYNES, DIVISION OF OIL AND GAS, DEPARTMENT OF NATURAL
RESOURCES (DNR), testified via teleconference, and gave an
overview of SB 151. He said the objective of the bill is to
provide an incentive for oil and gas exploration by
extending credits for certain activities. Subsection 100
clarifies that the incentive program is separate and
distinct from the existing exploration incentive credits.
He stated that particular statute applies to lessees on
state-owned land and SB 151 applies to all land within the
state for the purposes of geophysical work, stratigraphic
test wells and exploration wells.
MR. HAYNES said the primary thrust of SB 151 is to extend
existing incentive credits to lands other than state leased
lands; credits will go to private and federal lands as well.
In subsection (b), the credits can currently be applied
against oil and gas bonus payments, royalty and rental
payments and a change with the existing statute
(indiscernible) applied against income taxes as well as
severance taxes. He explained there are conditions on the
(indiscernible) credit in subsection (c), where a credit
must be preapproved by the commissioner. It is not
automatic but has to be of some benefit to the state. All
of the work must be completed within a ten year period and
within 30 days of the completion of the work, all raw data
must be submitted to the commissioner for broad review.
Number 125
MR. HAYNES said subsection (d) addresses the confidentiality
provisions. Data from any wells is kept confidential for 24
months which conforms to current statute. A change in the
geophysical data is that the data may be shown, but not
distributed to interested third parties if the commissioner
determines it to be in the best interest of the state. He
explained there are limiting factors which are covered under
(e), (f), (g), and (h) which states allowable credits can be
based on eligible costs, which may not exceed 50 percent of
those costs on state land or 25 percent of the costs on land
not owned by the state. The incentive credit may not exceed
$5 million per any one project and there is an additional
cap in that the entire program may not exceed a cost of
$50 million.
MR. HAYNES continued that any credits received must be used
within five years and credits may be assigned to a third
party. The amounts due the permanent fund must be
calculated before the application of any credit. He stated
subsection 170 is the normal language authorizing the
commissioner to adopt regulations enabling the
implementation of the act. Subsection 180 clarifies the
intent of the act be distinct and separate from the
exploration incentive credits in AS 38.05.180(i).
Subsection 190 provides definitions to conform this
particular act with other existing (indiscernible) in other
regulations.
MR. HAYNES said Section 2 contains technical language which
authorizes the commissioner to adopt regulations that will
take effect under the Administrative Procedure Act. Section
3 contains language which allows Section 2 to take effect
immediately so the commissioner can proceed.
Number 168
REPRESENTATIVE BUNDE asked someone to speak on the fiscal
note. He said if there is a decreased flow of money into
the general fund, there should be a negative impact to the
state. He felt there should be an acknowledgement that the
general fund is going to receive less money.
REPRESENTATIVE DAVIES clarified that the intent of SB 151 is
to induce additional exploration and the rational is the
benefit accrued to the state if that exploration goes on.
He asked for comments on the distinction between state land,
federal land and private land regarding benefits to the
state.
MR. HAYNES replied on state owned land, the state receives
100 percent of the royalties and 100 percent of the
severance taxes. A good portion of federal lands is in
conservation units of which the state receives royalties of
90 percent and 100 percent of the severance taxes. On other
private lands in the state, the majority of which are Native
owned, the state receives 100 percent of the severance taxes
and a royalty on all lands under navigable waters. He
stressed in all three situations, the state receives the
benefit of employment as well as the value added
infrastructure. He continued with examples.
Number 214
REPRESENTATIVE DAVIES asked what the advantage is under
section (g) which allows the assignment of the credit to a
third person.
MR. HAYNES responded that a (indiscernible) conforms to the
existing language in the (inaudible) current credit, but if
it were to move to private lands, the intent was to allow a
geophysical company to come into the state, do work on
speculation and not have a severance tax or an income tax
(inaudible). They then could assign or sell that credit to
someone who has a direct use for it.
REPRESENTATIVE FINKELSTEIN asked what the current
exploration incentive credit system is under AS 38.05.180(i)
and how it differs from SB 151.
MR. HAYNES stated under 180(i), the credit is limited to
state land under lease and credits may be given up to 50
percent of the cost of the project itself. There is a
difference in that the existing law has (inaudible) either
in a cap on dollars or on years of work. The credits can be
applied against royalty and (indiscernible) payments as
contained in SB 151, but taxes are limited to AS 43.55,
which limits severance taxes and excludes income taxes.
REPRESENTATIVE FINKELSTEIN asked why that program is not
being eliminated and replaced by SB 151.
MR. HAYNES responded he did not know.
REPRESENTATIVE FINKELSTEIN felt it is confusing to have
programs covering the same area.
MR. HAYNES said another change under 180(i) is that
geophysical work must be done a minimum of two seasons
preceding any lease sale and the data must be made public
following a lease sale. That differs from SB 151. He
explained the reason for the change is that DNR has never
had a geophysical application for exploration incentive
credits under 180(i).
REPRESENTATIVE GREEN stated another benefit not mentioned is
when a well is drilled and a $5 million tax incentive is
given, if the information is there and no discovery is made,
that information is still beneficial to the state because it
is a data point which is certain, as opposed to geophysics
which is more speculative.
Number 295
REPRESENTATIVE DAVIES disagreed in that in SB 151, the data
does not become available.
MR. HAYNES stated the well data is the same; it becomes
public information after two years unless there are
extenuating circumstances which need to be scrutinized by
the commissioner.
REPRESENTATIVE DAVIES asked about the geophysical data.
MR. HAYNES stated the desire is to have the geophysical
company do work, which they often do on speculation, and
then become a salesman.
REPRESENTATIVE DAVIES asked if there is a difference between
the 180(i) program and the SB 151 program with respect to
geophysical data.
MR. HAYNES said under 180(i) the information must be made
public following a lease sale. Under SB 151, geophysical
work may be selectively shown to interested third parties
who the commissioner feels could use the data.
REPRESENTATIVE HUDSON said current law provides a lot of
discretion on the part of the commissioner in a normal
sense.
MR. HAYNES said that is correct.
REPRESENTATIVE HUDSON clarified that SB 151 will identify on
state and other lands, a percentage not to exceed $50
million and has to be used in five years. He asked if the
applications of the five years and the $50 million are after
the discovery comes into production.
MR. HAYNES stated not after a discovery but after the work
commitment is completed.
REPRESENTATIVE HUDSON asked if the credit is against the
royalty or the severance tax or both.
MR. HAYNES replied either/or and income taxes, as well.
Number 352
KEN FREEMAN, PROJECT COORDINATOR, RESOURCE DEVELOPMENT
COUNCIL, (RDC) testified via teleconference, and expressed
support of SB 151. He said SB 151 will encourage
exploration, broaden the scope of the present leasing
program, encourage initial prospecting and give a true
incentive to explore Alaska, including nonstate lands. Most
people think of oil and gas from a production or development
standpoint, but exploration is the lifeblood of the oil and
gas industry. He stressed exploration is the basis for
development, with huge up front costs, many unknowns and a
high risk of failure. Alaska, although considered a premier
oil and gas region, is still largely unexplored. He stated
acreage is increasingly off limits and not offered for
exploration.
MR. FREEMAN said RDC believes SB 151 encourages new players
in exploring for Alaska's oil and gas resources, encourages
prospecting for small, local targets such as natural gas,
enhances the value of nearby or adjacent state lands,
maximizes the odds of discovery, encourages exploration on
the best geological targets regardless of land ownership,
and provides a long-term economic strategy for more stable
resource development climate, making the state less
dependent on mega projects which is (indiscernible) policy.
He mentioned it should be noted the state will receive
severance taxes on developed (indiscernible), so the state
will benefit regardless of the location of any find.
MR. FREEMAN stated SB 151 sends a clear signal that oil and
gas is still viewed by many, including the legislature and
the Administration, as a key component to Alaska's long-term
future.
Number 397
WALT FURNACE, GENERAL MANAGER, ALASKA SUPPORT INDUSTRY
ALLIANCE, testified via teleconference, and stated although
the Alliance has not had the opportunity to review SB 151,
he did a cursory review and found it to be in consort with
the overall support factors of the Alliance. In reviewing
SB 151, he found the bill to be another tool to the
legislative process to encourage additional oil and gas
development within the state. He said the Alliance applauds
the legislature's efforts on SB 151 and recognizes it as a
valuable incentive. Hopefully, those companies requiring
leases on state land are those companies who may have
ownership in lands outside state ownership, and will take
advantage of SB 151 resulting in additional oil and gas
development. He said SB 151, coupled with the exploration
licensing bill, and the retooling of the 470 fund is a good
package coming out of the 18th Legislative Session.
REPRESENTATIVE FINKELSTEIN commented that Mr. Haynes had
stated under AS 38.05 there had never been an application
for an exploration incentive credit. He said if that is
true, thought should be given to eliminating the old
provision. If it has been used or has the potential to be
used, the two provisions should be combined.
MR. HAYNES stated the department has had approximately $41
million in exploration incentive credits applied for under
the old law. He said the credits were all for stratigraphic
test wells or exploration wells, never for the geophysical
program. He pointed out that even though the department can
go up to 50 percent, the commissioner has never allowed more
than 30 percent and in most cases, 20 percent is an average.
REPRESENTATIVE FINKELSTEIN felt there could be value in
looking at combining the two provisions and it would make
sense to have one provision in law which applies to
exploration incentive credits to stratigraphic wells.
REPRESENTATIVE HUDSON made a MOTION to ADOPT HCS SB
151(RES), the previous zero fiscal note from DNR and the new
zero fiscal note from the Department of Revenue and MOVE HCS
SB 151(RES) with fiscal notes out of committee with
INDIVIDUAL RECOMMENDATIONS.
CHAIRMAN WILLIAMS asked if there were any objections.
Hearing none, the MOTION PASSED.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced the committee will meet Monday,
March 7, at 8:15 a.m. to hear SB 77, HB 448, HJR 17, and HB
404. On Wednesday, March 9, the committee will hear HB 238.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 9:45 a.m.
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