Legislature(1995 - 1996)
03/24/1995 08:05 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 24, 1995
8:05 a.m.
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative Bill Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative Alan Austerman
Representative Ramona Barnes
Representative John Davies
Representative Pete Kott
MEMBERS ABSENT
Representative Irene Nicholia
Representative Eileen MacLean
COMMITTEE CALENDAR
HB 207: "An Act relating to adjustments to royalty reserved to
the state to encourage otherwise uneconomic production of
oil and gas; relating to the depositing of royalties and
royalty sale proceeds in the Alaska permanent fund; and
providing for an effective date."
HEARD AND HELD
WITNESS REGISTER
JOHN SHIVELY, Commissioner
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801
Phone: 465-2400
POSITION STATEMENT: Commented on HB 207
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
State Capitol, Room 110
Juneau, AK 99801
Phone: 465-4968
POSITION STATEMENT: Provided overview on CSHB 207(O&G) and
answered questions
TIMOTHY WAGNER
P.O. Box 100078
Fairbanks, AK 99510
Phone: 248-0597
POSITION STATEMENT: Provided information on an invention
RICHARD FINEBERG, Representative
Research Associates
P.O. Box 416
Ester, AK 99725
Phone: 479-7778
POSITION STATEMENT: Voiced concerns regarding HB 207
PREVIOUS ACTION
BILL: HB 207
SHORT TITLE: ADJUSTMENTS TO OIL AND GAS ROYALTIES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
02/27/95 501 (H) READ THE FIRST TIME - REFERRAL(S)
02/27/95 501 (H) OIL & GAS, RESOURCES, FINANCE
02/27/95 501 (H) FISCAL NOTE (DNR)
02/27/95 501 (H) 2 ZERO FISCAL NOTES (DNR, REV)
02/27/95 501 (H) GOVERNOR'S TRANSMITTAL LETTER
03/08/95 665 (H) CORRECTED FISCAL NOTE (DNR)
03/09/95 (H) O&G AT 12:00 PM CAPITOL 17
03/09/95 (H) MINUTE(O&G)
03/14/95 (H) O&G AT 10:00 AM CAPITOL 124
03/14/95 (H) MINUTE(O&G)
03/15/95 (H) O&G AT 05:00 PM BELTZ ROOM 211
03/15/95 (H) MINUTE(O&G)
03/16/95 (H) O&G AT 10:00 AM CAPITOL 124
03/16/95 (H) MINUTE(O&G)
03/17/95 (H) O&G AT 05:00 PM CAPITOL 124
03/17/95 (H) MINUTE(O&G)
03/20/95 (H) O&G AT 05:00 PM CAPITOL 106
03/21/95 (H) O&G AT 10:00 AM CAPITOL 124
03/22/95 848 (H) O&G RPT CS(O&G) NT 4DP 1NR 2AM
03/22/95 849 (H) DP: OGAN,BRICE,ROKEBERG,B.DAVIS
03/22/95 849 (H) NR: G.DAVIS
03/22/95 849 (H) AM: WILLIAMS, FINKELSTEIN
03/22/95 849 (H) 0&G LETTER OF INTENT
03/22/95 849 (H) INDETERMINATE FISCAL NOTE (REV)
03/22/95 850 (H) FISCAL NOTE (DNR) 3/8/95
03/22/95 850 (H) ZERO FISCAL NOTE (REV) 2/27/95
03/22/95 850 (H) REFERRED TO RESOURCES
03/22/95 (H) RES AT 08:00 AM CAPITOL 124
03/22/95 (H) MINUTE(RES)
03/24/95 (H) RES AT 08:00 AM CAPITOL 124
ACTION NARRATIVE
TAPE 95-39, SIDE A
Number 000
The House Resources Committee was called to order by Co-Chairman
Green at 8:05 a.m. Members present at the call to order were
Representatives Green, Ogan, Austerman, Davies and Kott. Members
absent were Representatives Williams, Barnes, MacLean and Nicholia.
CO-CHAIRMAN JOE GREEN announced the committee would hear HB 207.
He said it was not his intent to move the bill today, but rather
have the committee become familiar with the bill.
HRES - 03/24/95
HB 207 - ADJUSTMENTS TO OIL AND GAS ROYALTIES
JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES (DNR),
testified via teleconference and stated the Governor has tried to
develop the impression with the oil industry and others that Alaska
is a good place to do business, because there are some people who
do not believe that. He said the Administration believes there are
a number of things which can be done, both in the state's best
interest and in the oil industry's best interest, to help encourage
greater oil development. He noted part of that may be done now but
the bulk of that will be done through the study the Governor's Oil
and Gas Policy Council will be conducting over the next several
months.
MR. SHIVELY said in discussing with industry the changes which
might be done immediately, it was felt that amending the existing
law which allows royalty reductions, to increase the flexibility,
particularly to add marginal fields, and to allow a system where
the commissioner could make a reasonable determination is something
which could be done this year. He stated the Administration worked
with industry to develop the original draft. The Administration
then worked with Chairman Norman Rokeberg, Oil and Gas Committee
(OGC), to come up with the committee substitute (CS). He
complimented Representative Rokeberg on his excellent work on a
very complex piece of legislation. He added, although the
department would like to make a few changes to the OGC CS, he felt
the OGC did a lot of work.
MR. SHIVELY stated the Administration wanted certain principles in
the legislation. The driving force was to allow the department to
reduce royalties for marginal fields. The Administration did not
believe that was allowed under current law. He noted the
department could allow royalty reductions on shut-in fields or
fields which were about to be abandoned but not for marginal
fields. Therefore, the three were combined in HB 207. He
explained another concept desired, was having the ability to get an
expeditious decision, so a larger discretion was left in the hands
of the commissioner. That issue has generated a lot of discussion.
He thought the OGC ultimately decided there should be some review
by the Alaska Royalty Oil and Gas Development Advisory Board
(AROGDAB).
MR. SHIVELY stated the third principle important to the
Administration was that the state maintain some income from the
royalty reductions. Current law allows the commissioner to go down
to a zero royalty for shut-in or abandoned fields. The current CS
keeps that principle but has a floor for marginal fields. He said
the Administration had a slightly different approach, felt there
should be some floor for all three situations and agreed to go to
25 percent of the existing royalties.
Number 117
REPRESENTATIVE JOHN DAVIES recalled Mr. Shively had mentioned there
were some changes the department would like to see in CSHB
207(O&G). He wondered if the department had those changes in the
form of proposed amendments.
MR. SHIVELY stated he did not have actual language to propose. He
noted he is working off the Oil and Gas CS. He said the main
desire of the Administration is a floor, which is contained on page
2, lines 30 and 31, and confines the royalty reduction to only
section (1)(A), which is marginal fields. The Administration would
recommend deleting the words "under (1)(A) of this subsection". He
added the Administration felt the language on page 2, lines 16-29
was too cumbersome.
MR. SHIVELY said the Administration did not agree with the concept
of oversight by the AROGDAB. He stated the Administration felt the
discretion should remain with the commissioner. He noted the OGC
looked at several options. The OGC looked at oversight by the
Attorney General's office, the Alaska Oil and Gas Conservation
Commission (AOGCC), and the AROGDAB. He said the committee finally
chose the AROGDAB.
MR. SHIVELY stated there was intent language which the Co-Chairman
was going to work on but he did not know what the final result was.
He said many thought the intent language was much more restrictive
than the law and would ultimately cause some problems.
CO-CHAIRMAN GREEN asked Representative Rokeberg to overview HB 207.
REPRESENTATIVE NORMAN ROKEBERG asked Mr. Shively if he had received
the work draft CS, version K.
MR. SHIVELY responded he had received the work draft CS but added
he was working off CSHB 207(O&G) and his comments did not reflect
the work draft CS. He said the Administration would like to also
comment on the work draft CS at some point.
Number 187
REPRESENTATIVE ROKEBERG explained the OGC made adjustments to the
Governor's bill. He said the OGC removed the first section of the
Governor's first draft of the bill which related to the hold
harmless provision on the permanent fund. The rationale behind the
deletion was that section would be a change in the law and the
committee decided to keep the status quo. He noted the change in
the law would have held a percentage of either 25 or 50 percent of
the allocation to the permanent fund, as per the age of the leases.
REPRESENTATIVE ROKEBERG explained that the OGC felt this section
would have artificially set too high a floor on any type of sliding
scale computation the commissioner may do. For example, leases
made after 1980 would require a 50 percent floor. Therefore, the
commissioner's hands would be tied, particularly in regard to older
fields. For example, on a typical 12.5 percent royalty, if the
commissioner decided to set it at 8 percent, that would allocate
6.25 percent to the permanent fund and only 1.75 percent to the
general fund. Conceivably, the point could be reached where
nothing goes to the general fund and whatever is received would go
to the permanent fund. He said the committee felt that in light of
the concept behind HB 207, which is to open up fields that would
not otherwise be opened, both the general fund and the permanent
fund should benefit conceptually. Therefore, to maintain the
status quo on the allocation was the proper method. He added he
had discussed this issue with the Governor and commissioner and the
general consensus was that is the best way to go.
Number 270
REPRESENTATIVE ROKEBERG explained on page 1, the OGC decided to
break out and define the different types of areas which might be
looked at such as new fields, existing fields, and shut-in fields.
The committee added language to more clearly define what field
means like pool or portion of a field or pool. He said the
committee also added the language about sufficiently delineating a
field to the satisfaction of the commissioner.
REPRESENTATIVE ROKEBERG said subsection (3) on page 2 provides that
all components of the agreement would be made up-front in order to
recognize the prudence of the contract between the applicant and
the commissioner. He explained the OGC, in its draft of HB 207,
mandated that the commissioner and the applicant bargain up-front
for some provision to compensate for any increase or decrease in
the price of oil. The committee then went on to say the
commissioner would have the flexibility to consider other relevant
factors and stipulated such factors as proved reserves, well
productivity, or capital investment, just as a reminder to the
commissioner that he should consider those factors. He noted there
could be a list of 100 items.
REPRESENTATIVE ROKEBERG added that testimony from industry
indicated one of their concerns, particularly in older fields, is
if they were to make substantial investments in their fields and
there was a unilateral reopener by the commissioner, there might be
a chilling effect on their desire to invest if an agreement was not
bargained up-front. He stated that is why it was stipulated in the
language that the agreements be made up-front. Therefore, the
state's interest would be protected, as well as the applicant's
interest, in terms of an investment.
Number 314
REPRESENTATIVE ROKEBERG stated after significant testimony, the OGC
decided to adopt a provision, page 2, line 30, that provided a
floor of 25 percent on a new field and recognized current law as it
relates to older fields. He said the current statute, AS
38.05.180(j), does not stipulate any type of a floor--it is wide
open in terms of the commissioner's discretion. Therefore,
particularly in light of the economics of older fields, the OGC
felt it was necessary to give the commissioner maximum flexibility
as it relates to those fields and zeroed it out. He stated the
committee tried to make certain distinctions between old and new
fields, recognizing the provisions of existing law, removing some
of those obstacles, and then allowing the commissioner to move
forward on both fronts.
Number 338
REPRESENTATIVE ROKEBERG said on page 3, beginning at line 8, the
OGC added a provision which went through a quick evolution and the
resulting language did not come out very artfully. The committee
took testimony from producers in older fields, where there had been
transfers of ownership from one leaseholder to another of existing
production. He noted there were instances and a case history where
a royalty reduction application was denied because of the
regulatory schemes in place under AS 38.05.180(j). He explained
that statute requires the entire history of the field be provided
to the commissioner and the director of the Division of Oil and Gas
in reviewing the application. In this case, the leasehold had
changed hands on two occasions and the historical data did not
follow with the purchase and sales transactions through the course
and history of that particular field. Therefore, the company shut
down production in Cook Inlet because it could not receive the
royalty reduction due to the fact it did not have the required data
from the prior situation.
REPRESENTATIVE ROKEBERG stated the OGC tried to put a provision in
HB 207 which lessened the burden of the applicant in instances
where that particular data was not available to them. He noted Co-
Chairman Green had artfully redesigned this language in the new
work draft CS.
Number 373
REPRESENTATIVE ROKEBERG told committee members the OGC added
provisions such as the one on page 3, line 14, that the findings
would be written. He said the original bill the Governor brought
forward contained a provision where the commissioner could retain
a consultant to review the technical data provided by the applicant
and the applicant would pay for that consultant. He noted the OGC
had received significant testimony about the nature of that
relationship. The OGC decided to set up a system whereas the
commissioner would provide a list of consultants, the applicant
could choose from that list, the applicant would pay for the
consultant, the commissioner would define the scope of work and the
consultant would work for the commissioner.
REPRESENTATIVE ROKEBERG explained this system had an added beauty
because it allowed the process to happen rapidly, due to the fact
that it avoided going through the state's procurement code, by
having the direct contract or relationship between the
commissioner's office and the consultant, since the applicant was
hiring the consultant. The OGC decided to set up this system
because testimony indicated there may be instances where the
applicant has a bad experience with a consultant because there was
no list contained in the original bill. The OGC wanted to provide
some veto power on the part of the applicant, who is paying for the
consultant, to have some say over who is paid. He said in order to
have a certain amount of flexibility and have some control by the
commissioner, the commissioner would bring forward the list. He
noted the OGC and the Administration came to an agreement on this
clause which was a conceptual change from the Governor's bill.
Number 411
REPRESENTATIVE ROKEBERG stated one of the more difficult tasks the
committee had was trying to generate greater oversight for the
protection of the public's interest in the discretionary power of
the commissioner. He said during several of the committee's
discussions, the committee primarily discussed inserting the AOGCC
into the loop to provide a review of the process. Testimony
indicated the need to theorize there is the "evil" commissioner.
Therefore, some oversight has to be provided because as some of the
testimony pointed out, it is possible to go on a continuum from
skullduggery on one hand all the way over to a plain stupid
decision. The OGC felt some additional oversight was needed.
REPRESENTATIVE ROKEBERG stated the OGC discussed adding the
Attorney General as one entity who could provide that oversight.
He explained that concept was voted down. The general consensus
was the Attorney General is already part of the loop and is
advising the commissioner anyway, so actual oversight could not be
provided. He said the OGC then discussed the AOGCC. The OGC felt
the AOGCC would be an excellent organization to provide the
oversight, particularly because later in the bill there is a
provision of confidentiality. The company can ask that the
technical and financial data they forward to the commissioner, as
a part of the application, be kept confidential. He noted the
AOGCC is accustomed to working with confidential data and its
makeup is such that the people on the commission are familiar with
the petroleum industry and make those judgements, plus they are
there.
REPRESENTATIVE ROKEBERG stated the OGC received testimony from the
commissioner's office and several firms within the industry
indicating there was a conflict of interest. He hoped the
memorandum from the Division of Oil and Gas regarding an Attorney
General's opinion was in committee members folders as it is
something the committee needs to review. He said he still believes
the AOGCC is the best oversight group available. However, because
of the testimony received and his own lack of knowledge of the
AOGCC and inability to overcome the arguments, the OGC inserted the
AROGDAB, which consists of three public members and the
commissioners of the Departments of Revenue (DOR), Commerce and
DNR. He noted the OGC's vote was 4-3 to approve the AROGDAB as the
oversight entity. He strongly urged the committee to review the
oversight situation. He explained the OGC also changed the
transmission of where the documents go by putting in the officers
and noted the committee had Representative Gary Davis's bill, which
they made a citation of.
Number 477
REPRESENTATIVE ROKEBERG explained Section 2, page 4, provides for
royalty reductions in cooperative or unitization areas, which is
the same as the Governor's bill.
REPRESENTATIVE ROKEBERG noted the OGC discussed the entire
regulatory situation. He said there are existing regulations that
do apply to AS 38.05.180(j). He explained the evidence suggests
that the statutory language supersedes and negates some existing
regulations, but rather than include a provision in HB 207 which
says the commissioner should adopt additional regulations to
implement, the OGC felt there is existing authority to move forward
if necessary. He stated the existing regulations should be
adequate, with the statutory overview, to enable the commissioner
to proceed post-haste on any application he might receive.
Therefore, the OGC was silent on that area.
REPRESENTATIVE ROKEBERG said the other issue the OGC discussed at
great length was the provision about appealability, which is
contained on page 3, line 16. There was substantial testimony
taken on what this provision means, particularly where it says "the
commissioner's determination is final and not appealable to the
court;". He stated one of the main reasons this provision is in HB
207 is due to the case of Conoco-Oxy, which was a protracted, long
royalty reduction application which was litigated and consumed
substantial resources on the part of the department and industry in
trying to come to a conclusion.
REPRESENTATIVE ROKEBERG explained the application by Conoco and Oxy
was for Milne Point where they paid for a portion of the leases,
which had a stipulated bid for 20 percent, down to a 5 percent
basis. He noted the committee may have in their folders the case
history, which points out substantial obstacles to applicants from
a historical perspective. He pointed out the only reduction in
royalties that has ever occurred in the state has been as a result
of the Conoco-Oxy case. He explained Oxy was a very small lease
holder and in the settlement of the case, there was an agreement to
lower the royalty from 20 percent to 12.5 percent. He added Conoco
did not receive any benefit from that. He pointed out after an
$800 million investment, Conoco decided to leave the state and sold
their interest to British Petroleum (BP) in that field.
Number 525
REPRESENTATIVE ROKEBERG reiterated that line 16, page 3, states
"the commissioner's determination is final and not appealable..."
He said the OGC discussed putting the word "applicant" in to keep
everyone from twisting in the wind and to give some finality in the
process. He noted that is intended in the language. He said the
OGC did not put the word "applicant" in the language because the
committee felt if a competing company would maintain standing,
because their interest was violated, they would be allowed to bring
a cause of action. He pointed out that leads to the major point.
What does this language really mean? Does it mean that a third
party like a citizen or taxpayer of the state could bring action,
under due process, to challenge this particular finding?
REPRESENTATIVE ROKEBERG explained the general consensus is that the
due process rights of the state's citizens are not hampered in this
language. Anyone who can find standing, particularly under the
Alaska State Constitution, could bring a cause of action against
the commissioner for the finding under the state's body of law and
this language is not going to necessarily restrict that. However,
the courts may intentionally look at the standing of a particular
person, given the way this language is drafted.
REPRESENTATIVE ROKEBERG stated he reviewed the work draft CS and he
strongly endorses most of the revisions made by Co-Chairman Green.
He felt Co-Chairman Green has made the Oil and Gas CS a much better
bill. He said there are three areas which he disagrees with but
those can be discussed as they come up.
CO-CHAIRMAN GREEN noted that Representative WILLIAMS had joined the
committee shortly after the meeting began.
Number 556
REPRESENTATIVE DAVIES recalled that Representative Rokeberg had
talked about the other factors listed on page 2, lines 27-29, and
had referred to those factors as a mandate. He noted the words
prior to that language is "may consider."
REPRESENTATIVE ROKEBERG stated on page 2, line 23, it says the
"commissioner shall include provisions..." and then goes on to say
"in the price of oil or gas, and may consider..." He said that is
the distinction.
REPRESENTATIVE DAVIES clarified the commissioner has to provide the
provisions but they do not necessarily have to include those
particular relevant factors.
REPRESENTATIVE ROKEBERG said that is correct. He stated the OGC's
intention was to mandate the commissioner to include the
price...Co-Chairman Green has made changes to this section in the
work draft CS. He noted this part of the bill is a major
substantive distinction between the OGC CS and the work draft CS.
REPRESENTATIVE DAVIES recalled that Representative Rokeberg had
mentioned the desire of the OGC for the commissioner to not have
the ability for a universal reopener. He clarified there is
nothing in the language in CSHB 207(O&G) which precludes a
negotiated contract that would have some specific kinds of
reopeners.
REPRESENTATIVE ROKEBERG said that is correct. He explained the
language in CSHB 207(O&G) is somewhat different than the work draft
CS. He stated the OGC's intention is that any reopeners should be
bargained for up-front. He pointed out the desire is to have a
clear understanding that the commissioner does not have a
unilateral right to a reopener after the fact, unless he has
bargained for that right, because a reopener has a chilling effect
on the investment, particularly in older fields.
Number 596
REPRESENTATIVE DAVIES recalled that Representative Rokeberg had
talked about the appealability issue contained on page 3, lines 14-
17 and had mentioned the Conoco/BP situation at Milne Point. He
wondered if Representative Rokeberg could finish that story.
REPRESENTATIVE ROKEBERG responded that BP bought the lease and made
substantial investments in that particular field. He said there
are several horizons there and BP is having certain success there.
He noted he had asked BP why they were making money in that area
and Conoco did not. He also asked BP what they had paid for the
lease, as that is the issue, and they would not tell him. He
stated there are two obvious reasons BP is making money--BP does
not have capital investment costs and BP, with their ownership of
the Trans-Alaska Pipeline System (TAPS) and their existing
infrastructure they have on the North Slope, operates on a
different set of economics.
REPRESENTATIVE DAVIES asked what royalty level BP is operating at.
REPRESENTATIVE ROKEBERG said there are a number of different
royalties there, from 20 percent down to 12.5 percent. He
recommended that Representative Davies ask BP representatives the
question. He noted that BP is operating, other than the small Oxy
decrease, under the royalty regime in place when Conoco applied for
a reduction on the royalty.
Number 628
TIMOTHY WAGNER, INDEPENDENT INVENTOR, ANCHORAGE, testified via
teleconference and stated in regard to the general development of
oil fields, he has an oil recovery enhancement process which can
not only increase the prolonged life of fields such as Prudhoe Bay,
but would also make the harvesting of the crude (indiscernible).
He said the process would involve greater costs than standard
recovery methods but has the potential for doubling expected output
in such fields as Prudhoe Bay. He explained his process is an oil
refinery and gas (indiscernible) process, which combined with the
oil recovery enhancement process, would make the total process
quite efficient and reduce the overall construction costs, as
compared to each process being billed separately.
MR. WAGNER said this process, combined with his transportation
system, would allow shipments of the product directly from Prudhoe
Bay to anywhere in the world. He stated he is hoping to work with
oil companies in an effort to develop the processes. He noted he
also needs financial support which could potentially be provided by
an agency such as the Alaska Industrial Development and Export
Authority. He mentioned he does realize that financial support
will require legislative approval but he is hoping there will be
cooperation there.
CO-CHAIRMAN GREEN wondered if Mr. Wagner's inventions will have an
effect on HB 207.
MR. WAGNER replied he just wants to point out what his inventions
could do and wants the legislature to respond appropriately.
TAPE 95-39, SIDE B
Number 000
CO-CHAIRMAN GREEN said the committee wishes Mr. Wagner well and
stressed if he can double output, they are very interested.
RICHARD FINEBERG, RESEARCH ASSOCIATES, FAIRBANKS, testified via
teleconference and stated the graphs, which the committee has
before them, will demonstrate that the case for using the state's
existing royalty relief provisions has yet to be made. He recalled
that Commissioner Shively's argument earlier was that people have
the impression Alaska is not a good place to do business. He said
a lot more information on that subject is needed because if DNR's
production forecast for 1985, 1990, and 1995 is reviewed, a clear
trend becomes evident. The North Slope production decline,
although real, consistently plays out in a much more benign manner
than forecasted.
MR. FINEBERG explained if the 1985 forecast is compared to the
current forecast for oil to be produced from 1985 through the year
2010, it will be found that the state can anticipate production of
3.75 billion more barrels of oil through 2010 than what was
forecasted in 1985. In other words, over the last ten years, the
current tax and royalty regime has generated five more years of
production of two million barrels per day than what was forecasted
in 1985. He stated each two years the state booked one more year
of forecasted production at TAPS maximum throughput. He said this
trend of increasing production was established in the face of
declining prices and appears to continue today, despite the dire
predictions by the industry in the late 1980s that the state had
seen the last of such increases.
(Representative BARNES joined the committee.)
Number 080
MR. FINEBERG stated he would like to comment on CSHB 207(O&G) and
the work draft CS. He said both are correcting a bill that he
believes is going in the wrong direction and for which a compelling
case has not been made. He stressed if it is decided to go forward
with the bill, he felt the substantive points do need consideration
and he would like the opportunity to deal with those at the
committee's pleasure.
CO-CHAIRMAN GREEN reiterated it was not his intent to move HB 207
today but would take input. He wondered if Mr. Fineberg had a
desire to raise specific points now.
MR. FINEBERG responded he would. First, he would like to flag two
items, in terms of the substance of the bill. He said the first
point is the question of confidentiality. He felt the oversight
problem is created by the fact that the normal checks and balances
have been removed by granting confidentiality. He pointed out the
courts have spoken on that issue. He noted that in the footnotes
of the document before the committee, there is a reference to how
one judge, who has dealt with more confidential information from
the industry than any other, looks at that issue. He stated he did
not understand the granting of confidentiality.
MR. FINEBERG said in both the work draft CS and CSHB 207(O&G),
there is a mandate for the commissioner to not consider pipeline
economics in granting royalty relief. He felt if that course is
taken, there is a presumption that Conoco departed because it did
not get royalty relief, not because BP was making the profit that
Conoco paid on the pipeline. He stated everyone might make that
simple mistake when viewing the economic map. However, he assured
the committee that the industry, whose representatives are beholden
to stockholders, will not make that mistake.
Number 162
CO-CHAIRMAN GREEN said granting confidentiality is in regard to
technical data used, not in the negotiations between the
commissioner and a royalty reduction applicant--those would be
matters of public record. He stated those things which are
presently held confidential would remain confidential. He assumed
that on the pipeline reference, Mr. Fineberg was referring to
Representative Rokeberg's discussion of why one company might be
able to operate either more efficiently or at less cost than
another company. He stressed that is not part of HB 207 but was by
way of an explanation only.
MR. FINEBERG stated he was referring to page 2, lines 27-29, in
CSHB 207(O&G) or in the work draft, page 3, lines 10-12. He said
that language says what the commissioner shall consider and
excludes the impact, pro or con, of the pipeline part of the
operation. He felt in regard to confidentiality, the bill looks to
be further reaching in its granting of confidentiality, at the
request of industry, without review, which means it is up to the
industry to decide. He pointed out the language is broader than
what might be desired. He thought some clarification is warranted.
CO-CHAIRMAN GREEN said there was no intent in the work draft CS to
alter the list. He stated the list was intended to give the kinds
of things...as it says may consider other relevant factors. He
stressed if he had inadvertently omitted something, it was an
oversight and not his intention.
Number 208
REPRESENTATIVE ROKEBERG recalled that Mr. Fineberg had referred to
a judge's opinion on confidentiality. He wondered if that opinion
was referred to in testimony provided to the OGC.
MR. FINEBERG responded that opinion was contained in the footnotes
of his testimony to the OGC dated March 15, 1995. He said it was
footnote 5, on page 2 of that testimony. He noted the footnote is
compacted in the March 23, 1995, testimony before this committee.
He stated the footnote is Memorandum Opinion and Order No. 92-71 of
May 27, 1992, in the Alaska Native Sisterhood Royalty case. He
quoted, "the court specifically refused to hold material
confidential merely at the request of the industry because `the
public's right to know what the executive branch is about'
outweighed the industry's speculative assertion of possible damage
resulting from the release of information about its business."
MR. FINEBERG told committee members that if the record is checked,
they will find that the judge did made the ruling reluctantly
because he thought the state would come forward and represent the
public's interest. When the state did not come forward, he made
the ruling from the bench on his own. He reiterated this is the
judge who has reviewed more confidential industry documents than
any other judge in the state and possibly more than any citizen in
the state, outside of the oil and gas managers.
REPRESENTATIVE DAVIES requested that the March 15, 1995, testimony
from Mr. Fineberg be distributed to the committee.
Number 274
CO-CHAIRMAN GREEN stated he would review the changes contained in
the work draft CS, version K. He noted this CS is not a proposed
CS but one he would like the committee to review over the weekend.
He said the first suggestion is to insert a legislative intent,
Section 1. He recalled there had been an earlier discussion that
this legislative intent language is perhaps too restrictive. He
stressed the potential for the commissioner to negotiate royalty
reductions and get something done which otherwise would not be done
is needed but is something which is a stark adjustment from what
has been done the last 20 years in the state. He pointed out since
85 percent of the state's revenue comes from the oil industry, the
royalty issue is of significant importance to the state. He said
while he does not like legislative intent language in most bills,
he feels in this case it might be necessary.
REPRESENTATIVE ROKEBERG stated he had requested this language to be
drafted and noted that Co-Chairman Green had the foresight to adopt
it as intent language which he appreciates. He noted there has
been concern about the word "permit" on line 6 of the work draft
CS. He suggested getting some input on that issue. He explained
the concern is that the word "permit" is a strong or active word
which might need reviewing. He expressed support for the insertion
of the intent language.
CO-CHAIRMAN GREEN wondered if words like "suggest" or "allow" might
be better.
REPRESENTATIVE ROKEBERG replied yes. He said the word "permit"
assumes the granting of a permit, rather than allowing.
Number 329
CO-CHAIRMAN GREEN said the next suggestion is on page 1, line 11,
of CSHB 207(O&G), after the words "of this section", insert the
words "or subject to an agreement described in (s) or (t) of this
section". He stated section (p) provides for unitization and there
are other combinations of leases in two other sections of the bill.
He explained this is a housekeeping measure to show that even if it
is a drilling unit that may be tested, the same thing applies to
all sections referring to a unitization.
CO-CHAIRMAN GREEN stated the next suggested change is on page 2,
lines 3 and 4, of CSHB 207(O&G) where it says "the field, pool, or
portion of the field or pool has not previously produced oil or
gas", insert after the word "produced" the words "commercial
quantities of." He said the reason for the suggested change is,
"so there is not some stickler out there that says you have this
delineation, you have a well and have tested the well. You did
then produce oil or probably oil and gas but would that then
preclude this section from being operative. By putting it as a
commercial quantity, that would exclude the possibility of well
tests, which are very frequent and would not change the intent of
(ii)."
Number 372
CO-CHAIRMAN GREEN said the next suggested change is a
clarification. He explained the change is located on page 2, lines
5 and 6, of CSHB 207(O&G), inserting the words "oil or gas" before
the word "production." He stated the suggestion is for continuity
more than anything else.
CO-CHAIRMAN GREEN stated the next suggestion is on page 2, line 9,
of CSHB 207(O&G), after the word "increase," delete the current
language and insert "as the sale value of oil or gas decreases, and
the increase or decrease is sufficient to make future production no
longer economically feasible; or". He explained, the reason for
the suggestion is that the existing language in CSHB 207(O&G) says
"as per barrel or barrel equivalent costs increase in the later
stages of production decline;" He said he does not have a problem
with that language but explained there could also be a per barrel
value decrease, as what was witnessed last year, and a prolonged
activity at a reduced value of oil is as imperative to a change as
the increased cost of production.
Number 401
CO-CHAIRMAN GREEN explained the next suggested changes are in
subsection (3), on page 2, line 16, of CSHB 207(O&G): After the
word "approved", delete the words "in the royalty reduction
agreement", on line 23, page 2, after the words "provisions to",
delete the words "increase or otherwise", and on line 25, page 2,
after the word "upon", delete "the occurrence of a change" and
insert "a showing, by clear and convincing evidence, that, because
of a sufficient change in one or more of the following factors,
further development or continued production of the field, pool, or
portion of the field or pool is not economically feasible:".
CO-CHAIRMAN GREEN stated what the suggested change is doing is
rewriting subsection (3) in CSHB 207(O&G). He said the suggested
change is not changing the context except for one point. He
recalled that Representative Rokeberg pointed out that the language
says the commissioner shall include provisions, including the price
of oil and gas, and then may consider all the other factors listed.
He explained the rewrite of that subsection indicates that the
commissioner will make a sound, economical judgement as to why
there should be a royalty reduction by considering clear and
convincing evidence which he feels is necessary.
REPRESENTATIVE RAMONA BARNES commented the clear and convincing
evidence standard is a fairly high criminal standard and she
wondered how it relates to oil and gas terminology. She questioned
what would have to be shown in order to qualify as clear and
convincing evidence.
MR. SHIVELY responded the department has problems with the rewrite
of this subsection (3). He said the rewrite changes the intent of
what the Administration understood this subsection was to do. He
explained the words "increase or otherwise modify" were in HB 207
for an important reason. He stated, "we were looking at some of
the points Mr. Fineberg made and points that other people have made
(indiscernible), because we are looking particularly at marginal
fields and what could be a very long life of the field, things
could also improve, so we have oil prices in the future. We very
likely will have more volume because when a new field is in the
feasibility stage, the industry just does not know what is in that
field."
MR. SHIVELY said the intent of subsection (3) was to continue to
allow the department to drive the royalties further down but allow
the state to recoup more (indiscernible) and allow the department
to go above the existing royalty if such situations should prove.
He felt that has been changed in the work draft CS. He stated the
rewrite also made the list less inclusive, so the things listed are
the only things the commissioner can consider. He said in CSHB
207(O&G), the things listed were just examples. He stressed there
may be other things which change the economics, such as
transportation. The department feels this list should be a
permissive list, not an inclusive list.
MR. SHIVELY explained "the "clear and convincing evidence" is
probably not necessary in this kind of situation, because what you
are looking at here is when we negotiate the royalty reduction with
the oil companies, we would say okay, assuming that we agree that
there was a delineated field and we agreed that with the economics
at this point, there should be a royalty reduction, we then agree
on some kind of formula, sliding scale, or reopeners or maybe some
other system to take into account future changes in the economics."
REPRESENTATIVE BARNES hoped that Mr. Shively would prepare
different language for this subsection.
Number 493
CO-CHAIRMAN GREEN said the points Mr. Shively made are well taken
and added they are the points discussed with the OGC. He felt the
language could be corrected. He stressed there is no intent to
handcuff the commissioner.
MR. SHIVELY stated the department would provide some language. He
added this subsection is very complicated.
REPRESENTATIVE ROKEBERG recalled Representative Davies' question
about the mandate of a reopener on changed oil and gas prices in
CSHB 207(O&G) versus the work draft CS addressed earlier. He
wondered if Mr. Shively had an opinion on that subject.
MR. SHIVELY recalled the OGC did not talk about mandating
reopeners. He stated reopeners are just one way to deal with
changes in situations. He said the problem with reopeners is that
you go back into negotiations and if no agreement is reached, then
you are back to the original royalty, etc. He is more inclined, in
these kinds of arrangements, to try and take into account the three
major factors one looks at in the development of oil and gas
fields--the cost of those developments, the volume and price--and
then have the royalty change as those factors change. He stated
while there may be a situation where an agreement cannot be reached
on how to do that fairly because the field is going to operate for
a long period of time, the only thing left to do is a reopener. He
stressed he would not mandate a reopener.
Number 528
REPRESENTATIVE ROKEBERG stated he appreciates Mr. Shively's
willingness to redraft that particular language. He agreed with
Mr. Shively's statement that there is a need to have the language
about "increasing" in the bill because of existing royalty
contracts. He clarified that Mr. Shively and him are in agreement
on the concept that any reopeners would be bargained for in the
first instance--in other words when the agreement was made.
MR. SHIVELY said he agreed with that concept. He recalled there
was a discussion about the commissioner unilaterally raising a
royalty just because he or she felt like it and stressed that has
never been the intent. He stated the department would see a
reopener negotiated as part of the deal when a royalty reduction is
negotiated. He explained it would be agreed that a reopener would
only happen if the volume or price increased significantly or if
certain things happened. He noted if an agreement could not be
reached, they would just go back to the royalty that was originally
bid. He reiterated the Administration does agree that the
commissioner should not have the unilateral right to arrange
royalties without either being up-front in the agreement or being
subject to a reopener.
REPRESENTATIVE ROKEBERG felt that was an important point when
looking at the work draft CS and hoped the language could be
changed to that effect. He asked Mr. Shively if it is necessary to
have the mandate for having the oil and gas price in this
subsection or does he prefer Co-Chairman Green's approach on that.
MR. SHIVELY responded the department does not care one way or the
other because quite clearly the oil and gas price is going to be
one of the factors. He said the problem with what is contained in
this subsection (3) in the work draft CS is the department is
confined to only looking at those subjects listed, whereas CSHB
207(O&G) contains a permissive list. He stressed the list needs to
be expansive in order to take other factors into account.
CO-CHAIRMAN GREEN said he is a strong proponent of the sliding
scale concept. Therefore, what happened between the drafter and
him was a breakdown. He stated subsection (3) will be reworded.
Number 569
CO-CHAIRMAN GREEN said the next suggested change is to delete
subsection (4) on page 2, line 30 and 31, page 3, lines 1 and 2.
He stated, "what I have done by excluding that is again trying to
make it possible that the commissioner and industry can get
together...and in deference to the Chairman of the OGC, which says
there should be a floor and albeit whatever that is...it would be
shared under existing law with the general fund and the permanent
fund and that is the way I think it ought to be. My concern is
that even though that might seem like a small amount--3 1/8 percent
of what started off as perhaps as much as 12.5 percent...if you
leave that in, that is not very much and the state would then tend
to recoup some of what has been changed."
CO-CHAIRMAN GREEN continued, "my concern is that having looked at
places such as the Cook Inlet where they got down to actually
cooking their own meals on the platform because they were in an
effort to try and cut costs...and I realize that the Oil and Gas
version applies specifically to new fields and that existing old
fields would not have the floor...it is my contention that if we
were to lose an investment that would otherwise provide jobs and
all the state would get by continuing to attract investment here...
if we were to handcuff the commissioner, that he could not make a
deal for 2 percent of which the state would still get something, or
1 percent that artificially...and it is an arbitrary number--we do
not know where the 25 percent came from...there are some people who
think that was the old amount that was supposed to go to the
permanent fund dividend...but my concern is that just as we talked
about earlier, the commissioner should have the ability to work and
not be cornered into an area. It is my opinion that he should be
able to do this. There is nothing in here that says he has to go
below that and I would assume he will negotiate as much as he can
above that, but I just do not want to put an artificial encumbrance
in his ability to negotiate."
TAPE 95-40, SIDE A
Number 000
REPRESENTATIVE SCOTT OGAN stressed the state Constitution clearly
states the natural resources belong to the people and not the
state. He felt if the royalty reduction floor language is not
contained in HB 207, the state could be giving away the portion of
oil that truly belongs to the people. He noted these are new
fields being discussed. Therefore, the state's interest might be
better served by having that oil in the ground or in the bank at a
time in the future when the prices might go up to where it would be
economically feasible to recover that oil.
CO-CHAIRMAN GREEN responded there is an infrastructure in place
that never would have been there had it not been for Prudhoe Bay.
He said if it had not been for the in excess of 20 billion barrels
of oil there, the pipeline would never have been built. He stated,
"by curtailing development of those fringe areas which we have now
been doing up there such as Endicott, Point McIntyre,
etc...hopefully we can continue that and keep the pipeline full and
the infrastructure moving. If we were to allow that to shrivel and
die because we are going to save the small fields for later
development, they will never be developed. It is to the state's
best interest to get what you can, when you can, and if there is an
opportunity to get it now, it is better than to defer it down the
future 10 or 20 years. Not only would you perhaps lose the
infrastructure that is so necessary but we are in the technology
advancement stage, that we might ultimately not even do that."
Number 065
REPRESENTATIVE BARNES thought there was a section in the Pipeline
Enabling Act which provides that when the flow of oil through the
pipeline drops to a certain point, the pipeline has to be
dismantled. She felt, under that scenario, it is better for the
state to continue with marginal fields, at whatever cost, to keep
the oil flowing through the pipeline until the time of another
major find, such as in the Arctic National Wildlife Refuge.
CO-CHAIRMAN GREEN stated those are excellent points. He agreed
there is a certain level set at which time the pipeline becomes too
inefficient to operate. Therefore, not only would the state not
develop a field which would fall into the category in HB 207 but
the production of existing fields would also be lost because of the
inability to afford production. He stated there are several
persuasive arguments that the legislature should act on before it
is too late.
Number 095
REPRESENTATIVE OGAN said the state is not at that point yet and
there is nothing preventing the legislature, when the push and
shove point is reached, to act at the time needed to make an
appropriate adjustment. He felt in the meantime, the legislature
may be giving away millions of dollars of the people's money. He
reminded committee members the state Constitution clearly says the
natural resources belong to the people, not the state. He noted
the fact that the people get a permanent fund dividend is a
tangible shred of evidence that the natural resources do belong to
the people, not to the oil companies. He stressed as stewards of
the state's natural resources, the legislature has an obligation to
put the best interest of the state forward--the state being the
people.
REPRESENTATIVE ROKEBERG hoped the committee would look favorable
upon reinserting the floor clause. He said this clause is one of
the "fences" around the "evil" commissioner and is one method to
put that "fence" up. He stated the distinction between older and
newer fields in the OGC version, clearly ratified the existing
statute which provides a potential zero royalty for older fields
and only provides this "fence" as it relates to new fields, in the
event there is some skullduggery or stupid decision making. He
explained the "fence" is part of the framework protecting the
people of the state from the "evil" discretion of the commissioner.
REPRESENTATIVE ROKEBERG found it extremely interesting that the
commissioner agrees with this. He noted the commissioner even
wants to insert this floor as it relates to old production, which
Representative Rokeberg vehemently opposes. He agreed the 25
percent was somewhat arbitrarily chosen, but stressed the number
was selected because it is a "fence".
Number 159
CO-CHAIRMAN GREEN clarified Representative Rokeberg would go from
a negotiated position of 12.5 percent, down 9.5 percent to 3
percent and a fraction, but he does not want to go below that. He
said, "My concern is that you have accepted, and the commissioner
has accepted moving down significantly but to some minimum point.
My point is where is that minimum point in an open negotiation. Is
it 4 percent, 6 percent or 2 percent? This says that anybody who
is interested in this, do not even show up if it is going to be
less than 3 1/8 percent."
REPRESENTATIVE ROKEBERG stated in the original Governor's bill, for
new fields, there was a floor of 6 1/4 percent. He explained the
OGC lowered the floor down to 3 1/8 percent to give the
commissioner more room. He added the OGC deleted Section 1 of the
Governor's bill because of the artificial floor. He said the
consensus opinion of the OGC was that providing a smaller or
reasonable floor for new fields only would still help contain the
commissioner's discretion. He felt CSHB 207(O&G) gives the
commissioner the flexibility to strike a good bargain with new
development.
CO-CHAIRMAN GREEN clarified that the commissioner, the Governor and
Representative Rokeberg all agree there should be a lowering
capability and now it is a matter of opinion as to where that level
is.
REPRESENTATIVE ROKEBERG replied that was correct.
REPRESENTATIVE DAVIES felt the 3 1/8 percent is a bright line
statement. He said the argument is where the level should be, not
the principle that it should be reduced somewhat. He stated under
existing statutes, which allow no reduction in royalties for new
fields, there is a significant amount of development of marginal
fields around the pipeline. He noted if the information provided
by Mr. Fineberg is reviewed, the production in the non-Prudhoe Bay,
non-Sadlerochit fields has been significant and is probably over
half the throughput in the pipeline currently. He felt the
fundamental economics are working and the oil companies have a
large interest in keeping the pipeline full. He added to develop
these other fields now will result in a potentially large profit,
if a new field can be put on line in a reasonable way.
REPRESENTATIVE DAVIES said, "I think what we are doing here is
taking one step toward encouraging that process somewhat. It is
working right now and we are just trying to encourage it a little
more. I think that Representative Ogan's point is let us do this
incrementally...let us look at this and see how it works and if it
has the desired result we want, fine. If it does not quite work or
it is a little too slow, we always have the opportunity to change
that in the future. Why give away the farm right away. I think
zero percent is pretty close to fire sale."
REPRESENTATIVE BARNES stated she did not feel it is a giveaway.
She felt it was in the state's interest to develop these marginal
fields and the legislature can always come back and change the
percentage. She agreed that up-front, there should be an attempt
to make these marginal fields work as best as possible.
Number 249
CO-CHAIRMAN GREEN said, "I would be the most vehement person when
the commissioner goes to negotiate that he absolutely negotiate at
the highest point he can from zero reduction to a very tiny little
reduction to whatever might be necessary to get what is done, done.
And I will even give further that if you are down talking in this
very, very low range, it seems almost questionable if it is that
marginal, should it even be developed and because it is in that
marginal range, that it must be developed now because as we go on
and on, those extremely close, close marginal fields are the ones
that will not make it. I still would suggest that he allow and
have the ability to negotiate freely, albeit well above this
arbitrary cut."
REPRESENTATIVE DAVIES disagreed with Representative Barnes that the
legislature could always go back and change the reduction because
once a contract is negotiated, it is fixed.
REPRESENTATIVE WILLIAMS agreed with Representative Green.
Number 280
CO-CHAIRMAN GREEN said the next suggested change is on page 3,
lines 8-11 of CSHB 207(O&G). The new version says, "may require
disclosure to only the financial and technical data relating to
production that is reasonably available to the applicant;" He
stated, "I can understand the concerns that an applicant has,
especially one who bought an old lease and then tries to come in
for some additional handling and if he has to go back to the first
part of production, the cost records and investment records may not
be in his possession. I think it is incumbent at this juncture
that the commissioner would find it sufficient to say that yes, we
certainly have the production records...the AOGCC has production
clear back to the beginning but the costs that are associated with
that would be perhaps only five or ten years and that is the period
of time we are really talking about. As the costs approach the net
value that is coming into the lease, that is when something has to
happen. It is not what happened back in the (indiscernible) days."
Number 319
REPRESENTATIVE DAVIES wondered if the change implies that if the
data is insufficient, the commissioner must proceed. He asked does
the commissioner still have the discretion, if the information is
insufficient, to simply deny the request.
CO-CHAIRMAN GREEN replied the commissioner has that right.
MR. SHIVELY added that the Administration feels this change is a
good improvement over the OGC CS.
CO-CHAIRMAN GREEN explained the next suggested change is on page 3,
line 16, of CSHB 207(O&G) delete the words after "the
commissioner's determination" and insert the words "of royalty
reduction is final and not appealable to the court;" He said the
reason why the determination should not be appealable is because of
frivolous lawsuits. He stated this change clarifies what decisions
the commissioner may make that are not appealable.
CO-CHAIRMAN GREEN said the next suggested change in on page 3, line
20, of CSHB 207(O&G) after the word "list" and insert the words "of
nationally recognized consultants in hydrocarbon production and
economics". He explained the reason for the change, "is to be sure
that we are talking with someone who is looking at this from arm's
length and is not necessarily a petroleum economist, for example,
who might be either a member of the staff or has been, who may be
capable of doing something locally but would not necessarily be
really the person we want to look at something as major...as
Representative Ogan said, to look at the people of the state of
Alaska's resources. So it just causes that to be a very qualified
organization."
Number 380
CO-CHAIRMAN GREEN stated the next suggested change is on page 3,
lines 28-31 through page 4, lines 1-7, of CSHB 207(O&G) and is a
total rewrite of subsection (8)(A) and (B). He said the change
makes that subsection more easily understood and is not intended to
be a substantive change.
CO-CHAIRMAN GREEN noted there has been a lot of discussion
regarding the various groups that should be the oversight to the
commissioner. He stated the next change is on page 3, lines 29 and
30 of CSHB 207(O&G). The new version goes back to the AOGCC as the
oversight entity. He said, "after reading testimony and the
arguments made against that which were furnished to me by the OGC,
I can see where a technical group such as the AOGCC which would be
I think necessary to determine whether applicant A in order to do
what he is going to do to continue or to develop is going to have
to have 19 widgets and there are very few people in the state that
understand why he needs widgets. The technical expertise in the
state is the AOGCC...yes 19 are sure enough and this nationally
referenced consultant has said yes 19 and our oil and gas people
say yes in order to operate this field safely, he needs 19
widgets."
CO-CHAIRMAN GREEN continued, "Now the argument then goes to say
that the AOGCC should not be involved in what determines how much
royalty should be reduced. Then we are getting into economics and
that is beyond the expertise of the AOGCC. So what I am proposing,
that you do not have, is that this would be expanded to say after
`Oil and Gas Conservation Commission,' on the new version, `as to
the technical merits and the Department of Revenue, as to the
economic merits'. That I think would adequately protect the
people's interest in that technically this is needed...Revenue does
not know if the widgets are needed so Oil and Gas says yes widgets
are needed and Oil and Gas does not know if a reduction from 12.5
percent to 10 percent or 8 percent because the commissioner is
going to bargain far above the little 3 1/8 percent. That should
be left up to the people who deal with our finances."
REPRESENTATIVE ROKEBERG felt that was a good change. He clarified
that Co-Chairman Green had said the economic merits would be
reviewed by the Department of Revenue.
CO-CHAIRMAN GREEN said that was correct.
REPRESENTATIVE ROKEBERG noted there had been discussions about a
real conflict of interest between the commissioner...maybe it
should be the commissioner not the department. He said it was the
confidentiality aspect he is concerned about.
CO-CHAIRMAN GREEN stated the Department of Revenue has confidential
information as well.
REPRESENTATIVE ROKEBERG expressed concern about the potential
conflict of interest argument. He noted the Department of Revenue
is supposed to increase revenues, not decrease revenues.
CO-CHAIRMAN GREEN stated what the Department of Revenue will be
reviewing is this proposal, how it affects the state, and is it in
the best interest of the state. He noted the Department of Revenue
may or may not agree with the commissioner. He added the two
responses are forwarded to the various people.
Number 448
REPRESENTATIVE ROKEBERG felt this suggested change is the ultimate
fix because it takes out the judgement of the overview people and
they just look at the process, to make sure there is nothing stupid
or skullduggery going on.
CO-CHAIRMAN GREEN stated it should not be opinion but rather should
be fact.
CO-CHAIRMAN WILLIAMS disagreed.
CO-CHAIRMAN GREEN asked the committee to review CSHB 207(O&G) and
the work draft CS.
REPRESENTATIVE OGAN asked Co-Chairman Green if he intends to move
HB 207 on Monday.
CO-CHAIRMAN GREEN said it depends on what is found and what comes
into the committee on Monday. He stated he is not going to rush it
through.
CO-CHAIRMAN GREEN noted an amendment was passed out by
Representative Ogan for review. He stated he also passed out an
amendment K.1, which is the technical fix for the two sections he
referred to earlier.
ADJOURNMENT
There being no further business to come before the House Resources
Committee, Co-Chairman Green adjourned the meeting at 9:55 a.m.
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