Legislature(1995 - 1996)
03/13/1996 08:10 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 13, 1996
8:10 a.m.
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative William K. "Bill" Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative Alan Austerman
Representative Ramona Barnes
Representative John Davies
Representative Pete Kott
Representative Don Long
Representative Irene Nicholia (via teleconference)
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL 394
"An Act authorizing a program of natural gas and coal bed methane
development licensing and leasing; relating to regulation of
certain natural gas exploration facilities and coal bed methane
exploration facilities for purposes of preparation of discharge
prevention and contingency plans and compliance with financial
responsibility requirements; amending the duties of the Alaska Oil
and Gas Conservation Commission as they relate to natural gas
exploration activities and coal bed methane exploration activities;
and amending the exemption from obtaining a waste disposal permit
for disposal of waste produced from coal bed methane drilling."
- PASSED CSHB 394(RES) OUT OF COMMITTEE
*HOUSE JOINT RESOLUTION 62
Requesting the federal government to purchase surplus 1995 Alaska
canned pink salmon.
- PASSED HJR 62 OUT OF COMMITTEE
HOUSE BILL 511
TITLE: "An Act relating to deposits into the fish and game fund."
- PASSED HB 511 OUT OF COMMITTEE
HOUSE BILL 447
"An Act providing that state land, water, and land and water may
not be classified so as to preclude or restrict traditional means
of access for traditional recreational uses."
- PASSED CSHB 447(RES) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 54
Encouraging the lessees of Alaska's vast North Slope natural gas
reserves to reach agreement to market gas, expressing the
legislature's support for an Alaska North Slope (ANS) gas
transmission pipeline, and requesting the President of the United
States and the Governor of the State of Alaska to publicly support
and take action that will help expedite the construction of that
system.
- HEARD AND HELD
*HOUSE BILL 469
"An Act relating to the University of Alaska and to assets of the
University of Alaska; authorizing the University of Alaska to
select additional state public domain land, designating that land
as `university trust land,' and describing the principles
applicable to the land's management; and defining the net income
from the University of Alaska's endowment trust fund as `university
receipts' subject to prior legislative appropriation."
- HEARD AND HELD
*HOUSE JOINT RESOLUTION NO. 63
Opposing the proposed expansion of the United States Environmental
Protection Agency's toxics release inventory program.
- SCHEDULED BUT NOT HEARD
*HOUSE BILL NO. 539
"An Act changing the name of the Alaska Soil and Water Conservation
Board."
- SCHEDULED BUT NOT HEARD
*HOUSE BILL NO. 537
"An Act renaming the division of geological and geophysical surveys
in the Department of Natural Resources as the department's division
of mining and geology, and revising the duties of the state
geologist within that division; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
HOUSE JOINT RESOLUTION NO. 60
Relating to Revised Statute 2477 rights-of-way.
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 118
"An Act relating to seafood marketing, to the definition of
'seafood' for purposes of the Alaska Seafood Marketing Institute,
and to an aquatic farm product marketing tax; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
(* First Public Hearing)
PREVIOUS ACTION
BILL: HB 394
SHORT TITLE: GAS & COAL METHANE LICENSES & LEASES
SPONSOR(S): REPRESENTATIVE(S) OGAN, ROKEBERG, James, Kohring
JRN-DATE JRN-PG ACTION
01/05/96 2369 (H) PREFILE RELEASED
01/08/96 2370 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2370 (H) O&G, RESOURCES, FINANCE
02/08/96 (H) O&G AT 10:00 AM CAPITOL 124
02/08/96 (H) MINUTE(O&G)
02/13/96 (H) O&G AT 10:00 AM CAPITOL 124
02/13/96 (H) MINUTE(O&G)
02/21/96 2846 (H) COSPONSOR(S): JAMES
02/27/96 (H) O&G AT 10:00 AM CAPITOL 124
02/27/96 (H) MINUTE(O&G)
02/28/96 2909 (H) O&G RPT CS(O&G) NT 2DP 4NR 1AM
02/28/96 2910 (H) DP: ROKEBERG, OGAN
02/28/96 2910 (H) NR: BRICE, B.DAVIS, G.DAVIS, WILLIAMS
02/28/96 2910 (H) AM: FINKELSTEIN
02/28/96 2910 (H) FISCAL NOTE (DNR)
02/28/96 2910 (H) ZERO FISCAL NOTE (DEC)
02/28/96 2910 (H) REFERRED TO RESOURCES
02/29/96 2972 (H) COSPONSOR(S): KOHRING
03/08/96 (H) RES AT 8:00 AM CAPITOL 124
03/08/96 (H) MINUTE(RES)
03/11/96 (H) RES AT 8:00 AM CAPITOL 124
03/11/96 (H) MINUTE(RES)
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HJR 62
SHORT TITLE: FED PURCHASE SURPLUS '95 CANNED SALMON
SPONSOR(S): RESOURCES
JRN-DATE JRN-PG ACTION
03/11/96 3061 (H) READ THE FIRST TIME - REFERRAL(S)
03/11/96 3061 (H) RESOURCES
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 511
SHORT TITLE: DEPOSITS INTO FISH AND GAME FUND
SPONSOR(S): REPRESENTATIVE(S) OGAN
JRN-DATE JRN-PG ACTION
02/12/96 2728 (H) READ THE FIRST TIME - REFERRAL(S)
02/12/96 2728 (H) RESOURCES, FINANCE
03/08/96 (H) RES AT 8:00 AM CAPITOL 124
03/08/96 (H) MINUTE(RES)
03/11/96 (H) RES AT 8:00 AM CAPITOL 124
03/11/96 (H) MINUTE(RES)
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 447
SHORT TITLE: CAN'T CLOSE LAND TO TRADITIONAL REC. USES
SPONSOR(S): REPRESENTATIVE(S) MASEK, Toohey, Kohring
JRN-DATE JRN-PG ACTION
01/24/96 2524 (H) READ THE FIRST TIME - REFERRAL(S)
01/24/96 2524 (H) RESOURCES
01/26/96 2548 (H) COSPONSOR(S): WILLIAMS
01/31/96 (H) RES AT 8:00 AM CAPITOL 124
01/31/96 (H) MINUTE(RES)
02/05/96 (H) RES AT 8:00 AM CAPITOL 124
02/05/96 (H) MINUTE(RES)
02/16/96 (H) RES AT 8:00 AM CAPITOL 124
02/16/96 (H) MINUTE(RES)
02/19/96 2812 (H) COSPONSOR REMOVED: WILLIAMS
02/26/96 2890 (H) COSPONSOR(S): TOOHEY
02/28/96 2944 (H) COSPONSOR(S): KOHRING
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HJR 54
SHORT TITLE: FAVOR TRANS-ALASKA GAS SYSTEM & LNG SALES
SPONSOR(S): REPRESENTATIVE(S) KUBINA, Green, Barnes, Navarre,
Mackie, Grussendorf, Phillips, B.Davis, Willis, Sanders, Davies,
Robinson, Rokeberg, Ogan
JRN-DATE JRN-PG ACTION
01/16/96 2453 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/96 2453 (H) O&G, RESOURCES, FINANCE
02/05/96 2633 (H) COSPONSOR(S): ROBINSON
02/07/96 2666 (H) COSPONSOR(S): ROKEBERG
02/09/96 2707 (H) COSPONSOR(S): OGAN
02/13/96 (H) O&G AT 10:00 AM CAPITOL 124
02/13/96 (H) MINUTE(O&G)
02/13/96 (H) MINUTE(O&G)
02/14/96 2749 (H) O&G RPT CS(O&G) 3DP 3NR 1AM
02/14/96 2749 (H) DP: B.DAVIS, OGAN, FINKELSTEIN
02/14/96 2749 (H) NR: BRICE, G.DAVIS, WILLIAMS
02/14/96 2749 (H) AM: ROKEBERG
02/14/96 2749 (H) FISCAL NOTE (DNR)
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 469
SHORT TITLE: INCREASE LAND GRANT TO UNIV. OF ALASKA
SPONSOR(S): REPRESENTATIVE(S) THERRIAULT, Toohey, Kelly, Davies
JRN-DATE JRN-PG ACTION
02/02/96 2610 (H) READ THE FIRST TIME - REFERRAL(S)
02/02/96 2610 (H) HES, RESOURCES, FINANCE
02/09/96 2708 (H) COSPONSOR(S): DAVIES
02/28/96 2943 (H) HES REFERRAL WAIVED
02/28/96 2943 (H) REFERRED TO RESOURCES
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
WITNESS REGISTER
JAMES HANSEN
Leasing/Evaluations
Division of Oil and Gas
Department of Natural Resources
3601 C Street, Suite 1380
Anchorage, Alaska 99503-5948
Telephone: (907) 269-8804
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 394.
CHERYL SUTTON, Legislative Assistant
to Representative William K. "Bill" Williams
Alaska State Legislature
Capitol Building, Room 128
Juneau, AK 99801
Telephone: (907) 465-3715
POSITION STATEMENT: Introduced HJR 62.
JANICE ADAIR, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova Street
Anchorage, AK 99501
Telephone: (907) 269-7644
POSITION STATEMENT: Provided department's position in support and
answered questions regarding HJR 62.
LAURIE H. OTTO, Deputy Attorney General
Criminal Division
Department of Law
P.O. Box 110200
Juneau, Alaska 99811-0300
Telephone: (907) 465-3428
POSITION STATEMENT: Provided department's position and answered
questions regarding HB 511.
DEAN PADDOCK
Bristol Bay Driftnetters Association
P.O. Box 21951
Juneau, Alaska 99802
Telephone: (907) 463-4970
POSITION STATEMENT: Supported HB 511.
JEFF LOGAN, Legislative Assistant
to Representative Joe Green
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-4931
POSITION STATEMENT: Provided information on status of HB 447.
BEVERLY MASEK, Representative
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
Telephone: (907) 465-2679
POSITION STATEMENT: As sponsor of HB 447, supported committee
substitute and new amendment.
SARA HANNAN, Executive Director
Alaska Environmental Lobby
P.O. Box 22151
Juneau, Alaska 99802
Telephone: (907) 463-3366
POSITION STATEMENT: Testified on HB 447.
NICO BUS, Acting Director
Division of Support Services
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801-1724
Telephone: (907) 465-2406
POSITION STATEMENT: Responded to question on HB 447.
GENE KUBINA, Representative
Alaska State Legislature
Capitol Building, Room 406
Juneau, Alaska 99801
Telephone: (907) 465-4859
POSITION STATEMENT: Provided sponsor statement on HJR 54.
MORGAN SOLOMON
P.O. Box 589
Barrow, Alaska 99723
Telephone: (907) 852-7674
POSITION STATEMENT: Supported HJR 54.
CLIFF EAMES
Alaska Center for the Environment
519 West Eighth, Suite 201
Anchorage, Alaska 99501
Telephone: (907) 274-3621
POSITION STATEMENT: Opposed HB 469.
GENE THERRIAULT, Representative
Alaska State Legislature
Capitol Building, Room 421
Juneau, Alaska 99801
Telephone: (907) 465-4797
POSITION STATEMENT: Provided sponsor statement on HB 469.
CHARLIE BODDY, Representative
Resource Coalition
Usibelli Coal Mine, Inc.
122 First Avenue, Suite 302
Fairbanks, Alaska 99701
Telephone: (907) 452-2625
POSITION STATEMENT: Testified on HB 469.
ACTION NARRATIVE
TAPE 96-32, SIDE A
Number 0001
CO-CHAIRMAN JOE GREEN called the House Resources Committee meeting
to order at 8:10 a.m. Members present at the call to order were
Representatives Green, Williams, Ogan, Austerman, Davies, Kott, and
Long. Representative Barnes arrived late and Representative
Nicholia joined the meeting via teleconference.
HB 394 - GAS & COAL METHANE LICENSES & LEASES
Number 0089
REPRESENTATIVE SCOTT OGAN, sponsor of HB 394, offered to answer any
questions before addressing amendments. The committee was working
from version M, dated 3/7/96. Representative Ogan moved
Amendment1 to CSHB 394, which read:
Page 2, line 24: Delete "at the drill site"
Page 3, line 27: Delete "at the drill site"
Page 5, line 26: Delete "at the drill site"
REPRESENTATIVE OGAN explained this was a technical amendment
recommended by the Department of Natural Resources, Division of Oil
and Gas. He said, "They felt that `at the drill site' was not
appropriate language because right before that, it talks about ...
within 3,000 feet of the surface at the drill site. The problem is
sometimes that the casing doesn't go straight down. If they
deviate the casing somewhat, it could be interpreted that 3,000
feet from the drill site might not be 3,000 feet down."
CO-CHAIRMAN GREEN asked if there were any comments about the
proposed amendment. There being none, Amendment 1 passed.
Number 0231
REPRESENTATIVE OGAN moved Amendment 2 to CSHB 394, which read:
Page 9, line 5 & 6: Delete "of the facility"
line 5: Insert "owner or" following "the"
Page 9, line 11: Delete "of the facility"
line 11: Insert "owner or" following "the"
Page 10, line 7: Delete "of the facility"
line 7: Insert "owner or" following "the"
REPRESENTATIVE OGAN believed this was a recommendation of the Oil
and Gas Conservation Commission. "Of the facility", which was not
clear language, was being changed to "owner or operator".
Basically a technical amendment, it would cover anybody associated
with the drilling operation, Representative Ogan said.
CO-CHAIRMAN GREEN asked if there were questions or objections.
There being none, Amendment 2 passed.
Number 0320
REPRESENTATIVE OGAN offered Amendment 3 to CSHB 394, which read:
Page 3, line 19: Substitute "more" for "less"
He explained, "What we'd like to do is put a very linear process in
the public comment period, here. This was a drafting mistake, a
request of the drafter to change this. ... We'd like the public
comment period not to exceed 60 days, so when an operator will
know, for example, that if he applies for a lease in the fall of
one year, that in so many days, by the spring of next year, he'll
be able to go into the area and set up and operate."
CO-CHAIRMAN GREEN asked if there were questions or objections to
Amendment 3.
REPRESENTATIVE JOHN DAVIES objected. He asked: "Would you object
to just making it 60 days, period?"
REPRESENTATIVE OGAN replied 60 days would be fine.
Number 0443
REPRESENTATIVE DAVIES moved to amend Amendment 3 to read, "a
comment period of 60 days".
CO-CHAIRMAN GREEN said, "Just deleting `not less than'."
REPRESENTATIVE DAVIES concurred.
CO-CHAIRMAN GREEN noted that was a friendly amendment to
Amendment3.
REPRESENTATIVE OGAN agreed he perceived it as a friendly amendment.
Number 0479
REPRESENTATIVE GREEN stated, "We're making it a 60-day specific,
rather than `more' or `less'." He asked if there was an objection.
There being none, Amendment 3 passed. Co-Chairman Green noted that
it would read, "comment for a period of 60 days."
REPRESENTATIVE OGAN moved Amendment 4 to CSHB 394, which read:
Page 5, Lines 26-29:
Delete: "If the lessee's operation under the lease
results in the production of oil or of gas in violation of
this subsection, the director shall immediately suspend the
lessee's operation under the lease and may terminate the
lease."
Insert: following "surface" ". If an
onshore well drilling for natural gas under a lease authorized
by AS 38.05.177 penetrates a formation capable of producing
gas below 3,000 feet of the surface, the owner or operator
(1) shall notify the department and the Alaska Oil
and Gas Conservation Commission; and
(2) may not conduct further operations in the
drilled well until the facility complies with all applicable
laws and regulations relating to oil and gas production;
however, this paragraph does not prevent the owner or operator
from conducting activities that may be required by the Alaska
Oil and Gas Conservation Commission to plug or abandon a
well."
Number 0489
REPRESENTATIVE OGAN explained there was a similar provision in the
bill that when an operator entered a formation capable of producing
oil, that operator had to cease operation and notify the
department. Further operations could not be conducted until the
facility complied with applicable laws and regulations.
Representative Ogan said, "What we're attempting to do with this is
to put some further parameters. The legal experts and DNR [have]
shared some concern about ... who owns the gas below 3,000 feet.
And if the operator enters into a gas formation [where] gas is
possibly produced below 3,000 feet, ... we would like them to cease
operations and enter into the normal oil and gas lease process."
REPRESENTATIVE OGAN mentioned there had been subsequent discussion,
not reflected in Amendment 4, where someone would possibly be able
to plug the well at 3,000 feet and produce the gas above that. He
said he would not put that on the table currently.
REPRESENTATIVE OGAN stated, "What I've been told by the experts is
if a person enters a formation, ... for example, if its a gas cap
on an oil formation, the pressures will be much greater and they'll
be able to tell that they're into this formation that possibly
produces gas from below 3,000 feet. Because we're making a lot of
accommodations to put this program in place, we'd like to make this
as bullet-proof as possible, so we don't end up in litigation and
problems further on down the line."
Number 0642
CO-CHAIRMAN GREEN referred to page 2, line 20, and said "SHALLOW
NATURAL GAS LEASES" applied to a lease within 3,000 feet of the
surface. He asked: "How, then, would a well produce gas below
3,000 feet in this amendment?"
REPRESENTATIVE OGAN replied, "Only if ... the gas that they hit
above 3,000 feet ... possibly comes from below 3,000 feet. In
other words, if they hit the top of a gas cap that extends below
3,000 feet, we'd like them to enter into a conventional oil and gas
lease."
Number 0777
REPRESENTATIVE ALAN AUSTERMAN indicated there was no competitive
leasing at that point in time, as would normally occur. He asked
what prohibited people from drilling 3,000-foot wells without
having to get permits until they found a gas pocket.
Representative Austerman understood that an operator could complete
the paperwork afterwards, without going through a competitive bid.
He asked if that was how it was set up, with the amendment.
Number 0828
REPRESENTATIVE OGAN suggested someone on teleconference might be
better qualified to answer that.
CO-CHAIRMAN GREEN asked: "Is your question that they can go
anywhere and punch holes? They're only going to be drilling holes
on their lease. Their lease is just limited to 3,000 feet. Or are
you thinking maybe there'll be some 3,000-foot leases and not
anything leased below that?"
REPRESENTATIVE AUSTERMAN replied, "Well, obviously, this bill is
for everything above 3,000 feet. And everything above your
demarcation line ... is a competitive-type leasing, whereas this
new bill is not a competitive-type leasing program." He suggested
a person could pick a place to drill; if everybody said it was all
right, that person could go ahead and drill there above 3,000 feet.
Representative Austerman asked if that was correct.
CO-CHAIRMAN GREEN responded, "If a lease is granted."
REPRESENTATIVE OGAN agreed.
CO-CHAIRMAN GREEN said, "So, it's what's happened below that, in
this area that has not been leased, below 3,000 feet."
REPRESENTATIVE AUSTERMAN concurred.
CO-CHAIRMAN GREEN stated, "It's my understanding there would be
nothing to preclude the driller of the 3,000-foot well, who had
special compensation because he doesn't have to have as big a bond
and all these other ramifications for the likelihood it's not
there. If he then says, `hey, I think there's a mother lode below
here, I'm going to go get a lease of a different kind', then he
would be subject to all the other ramifications of a lease, the big
bond, the whole nine yards, just as he would be now."
Number 0937
REPRESENTATIVE AUSTERMAN asked if that would have eliminated the
competition that would normally occur.
CO-CHAIRMAN GREEN replied, "Well, no, he has to get the lease. And
the owner of the land, if it's Native land or if it's state land,
may say, `I'm sorry, Charlie, that's not going to be on the lease
schedule for five more years.' So, you ... can't drill in the
lower until you get a lease, and that's not going to be up for
awhile. The only exception that I can think of is if there was
[an] exploration licensing area, that the shallow gas entity wanted
to come in and say, `look, there's a Native village on this large,
sub-surface lease and we think we can find some shallow gas', that
might be an exception. But, then, that would already be leased to
someone else who has the rights to drill deeper. So, I don't think
that would be a problem."
REPRESENTATIVE AUSTERMAN asked: "But what if at 2,995 [feet] he
finds oil? Then he has to cap it?"
CO-CHAIRMAN GREEN said yes.
REPRESENTATIVE AUSTERMAN continued: "He can't go any further with
it?"
Number 1002
REPRESENTATIVE OGAN said that was covered in another portion of the
bill. An operator who encountered a formation capable of producing
oil had to cease operations and notify the department and the
Alaska Oil and Gas Conservation Commission (AOGCC), as well as
comply with all applicable laws. Representative Ogan noted that
operations would cease except for whatever was instructed by the
AOGCC.
CO-CHAIRMAN GREEN stated, "Then you get into a correlative rights
situation. And that's where the Conservation Commission comes in,
because then, in effect, you have a 3,000-foot lease but you're
trying to drain ... oil from a 3,001-foot lease, which is a
different entity." He added, "You can't drain oil from someone
else's lease, unless it's unitized."
Number 1072
REPRESENTATIVE OGAN pointed out that Section 7, page 9, relating to
onshore well drilling for gas that penetrated a formation capable
of producing oil, had the same stipulations.
REPRESENTATIVE DAVIES said he understood the concern and noted they
were talking about the "hinterlands," where little geophysical
exploration had occurred. He wondered how a person would know, at
2,900 feet, where gas was coming from.
Number 1138
REPRESENTATIVE OGAN replied he had been told by Tuckerman Babcock
of the AOGCC that if they hit a natural gas formation not
associated with the characteristics of methane, which was low-
pressure and low-volume, chances were it could be associated with
another type of gas. Representative Ogan suggested if committee
members had reservations about the Amendment 4, he would withdraw
it for later discussion.
Number 1192
REPRESENTATIVE DAVIES stated the amendment was better than the
existing language. However, he was seeking clarification. He
asked if an adjacent leaseholder or the AOGCC would trigger it.
CO-CHAIRMAN GREEN replied, "In order to drill the well, to get the
permit, you have to have an Oil and Gas Conservation Commission
permit. And in that permit, the requirements are that you will
provide the geological information you find - if you're going to
log it, all copies of the logs, any cuttings, any cores that are
taken - so that the Conservation Commission engineering and
geological staff would be privy to the information that the
operator gets on the well. ... Let's assume ... at 2,990 you
encounter a gas sand that might be a part of a dome that extends
below 3,000 feet, which would come under this operation. At that
time, you would have to follow this amendment, as I understand your
suggestion." Chairman Green added that the AOGCC would then have
authority. "You then get into a situation of either draining
unleased or other leased interests below 3,000 feet," he said,
indicating that addressed Representative Austerman's question.
Number 1384
CO-CHAIRMAN GREEN continued, "So, then, you either have to ... go
to a unitization or get permission of the owner of the lower gas-
hold," he said. "That gets sticky, and so, I would imagine what
would happen is you'd be tangled up in a unitization effort, which
would actually work against the concept here, because those things
probably take a year, at minimum. But, on the other hand, it might
not take that much, because whoever has the sub-surface lease,
then, is assured of at least finding some gas." He noted this was
all speculative. He suggested it would be handled not in this bill
but by the AOGCC and the Department of Natural Resources (DNR), as
far as leasing was concerned.
Number 1411
CO-CHAIRMAN GREEN noted there were several methods for determining
that the condition existed. For an unleased area, the situation
would be stickiest, he suggested, because the operator or someone
else might want to take out a conventional lease. And the lease
for the lower interval would not be on the lease schedule.
REPRESENTATIVE AUSTERMAN said that was his question.
CO-CHAIRMAN GREEN said, "Then, you get a situation where, at this
person's detriment, they have discovered a gas reservoir at the
very, very edge of their lease area and that's an unfortunate
situation, because they would be in a correlative rights problem."
Number 1444
JAMES HANSEN, Leasing/Evaluations, Division of Oil and Gas,
Department of Natural Resources (DNR), testified via teleconference
from Anchorage.
CO-CHAIRMAN GREEN asked: "Would you be willing to take this
situation on? Did you understand the concern that was registered?"
MR. HANSEN replied he had written down the same concern that
morning. "You pretty much have pointed out all the problems," he
said. He referred to the question of what would happen if gas were
struck that extended below 3,000 feet. He suggested the operator
would have to hold back and DNR would have to go through the
competitive process in order to lease below 3,000 feet. "That
would be a stumbling block to producing any of that gas, even above
the 3,000 feet," he said.
Number 1484
REPRESENTATIVE DAVIES asked Mr. Hansen, "In a relatively unexplored
area, ... how would we know that you'd penetrated a formation
capable of producing gas below the 3,000 feet? What kinds of
information would be available out of single hole to know that kind
of information?"
MR. HANSEN replied there were several ways to tell. If a bed was
dipping down-slope, away from the well, it was fairly certain that
gas existed further down. "If you drill down to 3,000 feet, stop
at that point, and you hit gas, and you still have gas at 3,000,
chances are pretty good you've got gas below 3,000," he said. "But
you're right, without a geophysical survey to be able to `see'
what's down there or ... how thick the formation is ..., it would
be hard to tell." He said if there were other signs, it could be
assumed gas extended further down, however.
Number 1546
CO-CHAIRMAN GREEN explained that surface geology would create the
desire to drill there in the first place. He asked why a person
would want to drill a 3,000-foot well just on speculation.
"They're going to try to find that area that gives the most
likelihood of finding gas," he said, indicating magnetometers,
seismic indications, or surface geology could be used to make that
determination.
REPRESENTATIVE DAVIES referred to a concern raised by Dave Lappi at
an earlier hearing and asked: "Suppose that you encountered gas at
2,000 feet and the well went on down, and then you got into a
situation where this paragraph would be triggered and you had to
plug it. Within this language, is it possible for AOGCC to allow
them to plug the bottom of the hole and back up to the 2,000-foot
horizon and just produce the low-pressure methane from that level?"
CO-CHAIRMAN GREEN replied, "I would certainly think so."
Number 1640
MR. HANSEN agreed it was a definite possibility that the gas could
be plugged and left there.
REPRESENTATIVE DAVIES asked: "So, when it says `plug the well',
that doesn't imply plug the whole thing, but just plug that portion
of it. Is that right?"
MR. HANSEN replied that the wording may need to be more specific.
REPRESENTATIVE DAVIES asked: "So, could we put some language in
like `plug a portion or all of', or something like that?"
MR. HANSEN agreed that should work.
CO-CHAIRMAN GREEN thought it was covered. He said the paragraph
did not prevent the owner or operator from activities that may be
required by the AOGCC, which had jurisdiction over the well.
Number 1659
REPRESENTATIVE DAVIES said, "My concern is that the language says
`to plug or abandon the well'.
CO-CHAIRMAN GREEN explained, "They will allow plug-backs, partial
plug-offs of zones above. You can actually plug off a[n] ...
intermediate zone and produce lower, or you can plug the lower zone
and produce above it, as required by AOGCC."
REPRESENTATIVE DAVIES stated, "I'm just concerned that this line
doesn't get read that the only option AOGCC has is to plug or
abandon the entire well."
CO-CHAIRMAN GREEN thought the language could not be construed to
say "you must plug and abandon the well."
Number 1689
REPRESENTATIVE OGAN clarified, "The legislative intent, my intent,
and maybe the committee's intent we could put on the record, is
that it is not for them to plug and abandon, but just simply to
give AOGCC the authority to deal appropriately with a situation.
I think we all maybe agree that we still would like to see the gas
produced from that well to go to that particular village, ... but
let AOGCC make the call as [to] what the appropriate steps are to
do that."
Number 1714
CO-CHAIRMAN GREEN said, "If I could offer a friendly amendment [to
Amendment 4] to avoid that possibility: `to plug, plug back or
abandon the well'."
REPRESENTATIVE DAVIES replied, "I'd be more comfortable with that."
REPRESENTATIVE OGAN said, "That would be more than considered a
friendly amendment."
CO-CHAIRMAN GREEN stated, "And that plug-back is a common
vernacular in the oil industry." He asked if there was any
objection to the amendment to Amendment 4. There being none, it
was so ordered. Co-Chairman Green asked if there were questions,
comments, or any objection to Amendment 4, as amended. There being
none, Amendment 4, as amended, was adopted.
Number 1748
REPRESENTATIVE OGAN moved Amendment 5 to CSHB 394, which read:
Page 4, line 20, after "lease;":
Insert "if the commissioner determines that the lessee
has not diligently developed or continued to operate under the
lease, the commissioner, after giving notice and opportunity
for hearing to the lessee, may terminate the lease;"
REPRESENTATIVE OGAN explained that because of the many
accommodations being made to independent companies to facilitate
drilling the gas, he was attempting to make this as "bullet-proof"
as possible, to prevent speculators from coming in and tying up
leases for five years without developing them. "What we want
people to do is to lease these leases and be ready, within a year,
to do some drilling and some action," he said, adding this was a
safe-guard measure to enhance the intent of the bill.
Number 1803
CO-CHAIRMAN GREEN asked Mr. Hansen if legal problems might occur
with the amendment. He asked if it would be an agreement entered
into beforehand, eliminating potential litigation.
MR. HANSEN replied he thought the amendment was needed. He
suggested changing "commissioner" to "director"; when the annual
review was done, the director would have the discretion of
terminating the lease if the party was not doing anything.
CO-CHAIRMAN GREEN asked: "And you don't feel there's any problem,
then, with somebody suggesting that that director might be
deleterious or ... arbitrary and capricious?"
REPRESENTATIVE AUSTERMAN indicated page 4, line 18, already dealt
with that.
MR. HANSEN replied that one could always request a reconsideration
by the commissioner on the director's decision.
Number 1875
REPRESENTATIVE OGAN moved an amendment to Amendment 5 to change
"commissioner" to "director".
CO-CHAIRMAN GREEN asked if there was any objection to using the
word "director". There was none. He asked if there was further
concern that, as indicated by Mr. Hansen, there might be other
words to help prevent arbitrary capriciousness or whether that was
understood.
REPRESENTATIVE DAVIES commented, "I would think that this kind of
language would be part of the lease. It should be able to be
known, going into this situation, that this is part of the deal,
... that if the director isn't happy with your operation, then he
has this power to make the decision."
CO-CHAIRMAN GREEN asked Mr. Hansen if he had indicated that.
Number 1917
MR. HANSEN replied yes and said, "We do have appeal regs in effect
in which anybody, for any decision by the director, ought to
appeal. They have that right to appeal to the commissioner. So,
if someone thinks they're being unfairly treated by the director,
they do have legal standing."
CO-CHAIRMAN GREEN asked if there was further discussion or any
objection to adopting Amendment 5. There being none, Amendment5,
as amended, was adopted.
Number 1965
REPRESENTATIVE DAVIES offered Amendment 6 to CSHB 394, which read:
Page 10, line 15-18:
Delete all material
He explained that Amendment 6 deleted Section 11, the prohibition
against using the 470 Fund.
Number 1906
REPRESENTATIVE OGAN said he did not object. He indicated his
concerns about deleting the language had been alleviated.
CO-CHAIRMAN GREEN asked if there was indication that suppliers of
the 470 Fund would object.
REPRESENTATIVE OGAN replied that he had spoken with three major
suppliers. While they had some reservations that the 470 Fund was
being expanded, Representative Ogan thought they understood that
the possibility of the 470 Fund being used would probably be
mitigated by this bill. If the bill was effective, there would be
less handling and shipping of diesel fuels in the bush. " And
we've also addressed some of the concerns by providing some
financial responsibility for incidental operational spills,"
Representative Ogan said. "So, because of that, they don't have an
objection to it."
CO-CHAIRMAN GREEN asked if there were further comments about
Amendment 6.
REPRESENTATIVE OGAN asked anyone in the audience who objected to
please speak up.
Number 2065
CO-CHAIRMAN GREEN noted there were no objections and stated that
Amendment6 was adopted. He asked if there was further discussion
on HB 394.
REPRESENTATIVE DON LONG recalled a concern at a past meeting about
page 2, lines 25-32, and page 3, on existing leases. He asked if
anything was being done about that.
REPRESENTATIVE OGAN explained there had been a meeting between
himself and Representatives Long, Davis and Austerman to discuss
those issues. He said, "I know what your concerns are about the
North Slope. I remain committed to work with you between now and
the next committee of referral to see if we can get some language
that would help your situation. It's got to be a concerted effort
between the [Department of] Natural Resources and myself, and I'd
be happy to work with you on that." He explained that the short
notice had precluded the ability to draft language for the present
committee.
REPRESENTATIVE LONG said he had no problem with that.
Number 2135
REPRESENTATIVE DAVIES expressed concern about that issue, as well.
His office had contacted Mr. Hansen the previous day to try to work
out language. "The department's concerns are sufficiently
complicated that it's not easy to draft some language in the short
period of time," he said.
Number 2161
MR. HANSEN responded that his concern was over how complicated it
would be. Legal problems needed to be addressed and he wanted to
run it by the Attorney General's office to see what could happen if
leases were allowed to overlap. He was unsure what problems there
might be, but he foresaw there would be some.
CO-CHAIRMAN GREEN said, "Wouldn't it be, since that is a lease-hold
entity to whoever has the deeper lease - they go from the surface
down - that the only way you could accomplish, I think, what
Representative Long wants would be a sublease, if the lease itself
does not preclude that. I think if you try and file lease-on-top-
of-lease, you'll hang both leases up."
MR. HANSEN thought that was correct.
CO-CHAIRMAN GREEN continued, "But I think it's not without reason
to think that you might be able to get a sublease, from a deep
lease owner, for the shallow rights."
Number 2211
MR. HANSEN said, "I believe that's right, Mr. Chairman. I think
Mr. Lappi said that it's actually done in the Lower 48. So, that's
why I'm saying it's not impossible. I'm just saying we need to
look at it closely to see what legal ramifications there might be."
REPRESENTATIVE LONG suggested that in the interest of time, the
bill would be the instrument to start with. Another amendment
could be made later.
CO-CHAIRMAN GREEN submitted that it would not be part of the
current bill in any regard. "It would have to be an agreement with
the other leaseholder," he said. "The state could not
retroactively take back a portion of that lease by itself."
Number 2239
REPRESENTATIVE DAVIES referred to page 2, line 26 and said he had
a corollary concern because that wording excluded everything in the
North Slope and Cook Inlet, whether or not it was currently leased.
"And the reason for that is to avoid the possibility of an
overlapping lease," he said. He thought the bill should be
modified to allow for that possibility, although it would be
complicated. He believed it was possible to amend the language at
line 26, for example, to allow for the possibility where no lease
currently existed. "In other words, the lease sale could be
offered subject to whatever existing shallow leases may be in place
and whatever language would have to be around it would have to be
developed," he said. "That would take care of Representative
Long's concern in a number of instances," he concluded.
REPRESENTATIVE AUSTERMAN moved that CSHB 394(RES), version M, as
amended, move from the House Resources Committee with accompanying
fiscal notes and individual recommendations. There being no
objection, it was so ordered.
HJR 62 - FED PURCHASE SURPLUS '95 CANNED SALMON
Number 2326
CO-CHAIRMAN WILLIAM K. "BILL" WILLIAMS accepted the gavel from Co-
Chairman Green to preside over the testimony on HJR 62. He said
his intent was move the resolution from committee today.
Number 2348
CHERYL SUTTON, Legislative Assistant to Representative Bill
Williams, read the sponsor statement for HJR 62 into the record:
MS. SUTTON said, "The Alaska canned pink salmon industry is facing
a serious crisis caused by record harvests in 1995. The record
pack of nearly four million cases on a 48 tall basis is seriously
affecting the industry's ability to move these surpluses.
MS. SUTTON continued, "The pink salmon harvest forecast for 1995
was 76.1 million but actually turned out to be 128 million. This
was 51.9 million over forecast. The strength is attributed to good
ocean survival.
MS. SUTTON proceeded, "USDA has traditionally required that canned
salmon be processed under NMFS "Type 1" Continuous Inspection, even
though neither the commercial marketplace nor the U.S. Food and
Drug Administration (FDA) makes this requirement. The canned
salmon industry does not normally contract NMFS inspectors to
oversee the processing operation unless there is an indication that
there will be a USDA purchase program. In 1995, a letter was sent
by USDA to the salmon industry indicating that, based on the
harvest level forecasts at the time, a purchase was not warranted.
Consequently, the bulk of the industry did not assume the
additional expense of NMFS inspection. When the size of the run
became apparent, it was too late to bring inspectors to the plants.
MS. SUTTON said, "The industry is prepared to have the National
Marine Fisheries Service (NMFS) Inspection Services Division
conduct lot inspections of product processed in 1995 to certify
that the product meets the technical requirements of the Commercial
Item Description for canned salmon. NMFS believes these assurances
should be deemed adequate for USDA purchases for its various
programs.
MS. SUTTON said, "House Joint Resolution 62 requests the federal
government to purchase 1995 Alaska canned pink salmon surpluses for
their domestic and export programs. These programs, managed by the
Agricultural Marketing Service, include school lunch programs,
export programs, assistance to low income persons and the federal
prison system.
MS. SUTTON continued, "The resolution asks the Department of
Agriculture to waive the National Marine Fisheries Service "Type 1"
inspection requirement. The canned salmon industry operates under
federal and State of Alaska regulations as well as the guidelines
of the "Canned Salmon Control Plan and Container Integrity Program"
which were developed in conjunction with the National Food
Processors Association and FDA. Alaska canned salmon is traded
internationally on the assurances of these programs.
MS. SUTTON said, "At present, at least six major Alaska seafood
companies have notified fishermen they will not be buying pink
salmon for the 1996 season because of the surplus. This situation
poses economic disaster for our fishermen and processors.
MS. SUTTON concluded, "The canned pink salmon surpluses offer a
highly nutritious and healthful product for the federal
government's programs. It is imperative that USDA make a decision
quickly. Operating plans and commitments to purchase cans and
packaging material must be made now to be manufactured and shipped
for the 1996 season."
MS. SUTTON added that the committee's support would be much
appreciated...(CHANGE TAPE)
TAPE 96-32, SIDE B
Number 0001
REPRESENTATIVE LONG questioned Ms. Sutton about the use of bagged
salmon. Would that also require the "Type 1" inspections?
Number 0023
MS. SUTTON felt that particular product had not been produced in
any volume at this point for the marketplace.
REPRESENTATIVE DAVIES asked whether the sponsor had considered
adding a resolve to include some specific reference to substituting
the other marine fisheries inspections or the ADEC inspections so
the resolve did not say that we were asking them to waive the "Type
1" inspections but to utilize the other information that was
available in lieu of that requirement.
Number 0058
MS. SUTTON replied that numerous industry people and Alaska's
federal delegation and others have been working on this issue. She
said the National Marine Fisheries Service who conducts both of
these inspections, the "Type 1" continuous inspection and the lot
inspection, has written to the U.S. Department of Agriculture
expressing their concern with the "Type 1" inspection and asking
them to waive that requirement and outlining what the lot
inspection would cover and why it would suffice. These issues have
been dealt with. She referred to page 2, line 10 of HJR 62 and
stated she felt that Representative Davies concern was adequately
addressed.
Number 0108
CO-CHAIRMAN GREEN said if the federal government comes in and buys
up copious amounts of excess canned salmon, what they do with that
and what sort of price, is it a reduced or competitive price.
MS. SUTTON replied that she did not know but informed him that
canned salmon is now moving at a low price everywhere in the
international and domestic marketplace. She said she expected it
to be a comparable price to what is moving and being traded now.
There is no doubt that people are going to take losses but it is
more important to move that inventory, the costs of warehousing 1.7
million cases are astronomical.
Number 0149
CO-CHAIRMAN GREEN stated in the past, there was a concern about
botulism, albeit a fake scare; he asked if relieving this kind of
inspection would increase that possibility.
MS. SUTTON answered in the negative, no it would not increase the
threat of that kind of incident. She informed the committee that
Janice Adair, Department of Environmental Conservation, would be
addressing what the DEC requirements are for inspection. She said
the state's canned salmon regulations are so strict that people who
can salmon are not allowed to anything that is watermarked. A fish
that is watermarked means a fish that comes late in the run or has
been milling in area where there is fresh water.
MS. SUTTON emphasized that this is wonderful product going into the
can. It is not as some people think that because it is in a can it
must be low in product. It is very high in product and the
industry standards are extremely strict all the way through. She
suggested that the regulations in place now exceed what the "Type
1" inspection would be.
MS. SUTTON explained that all the "Type 1" inspection would do is
have someone from the federal government, an inspector from the
National Marine Fisheries Service physically present in the plant
on the line when it is being processed. They would process in the
same manner whether that person were standing there or not standing
there. They do not change anything in their operation.
Number 0221
JANICE ADAIR, Director, Division of Environmental Health,
Department of Environmental Conservation, testified in support of
HJR 62. She said she was encouraged to see canned salmon in the
school lunch program.
CO-CHAIRMAN WILLIAMS closed testimony on HJR 62 and asked the wish
of the committee.
Number 0250
REPRESENTATIVE AUSTERMAN moved that HJR 62 move from the House
Resources Committee with individual recommendations and attached
zero fiscal note. There being no objection, it was so ordered.
CO-CHAIRMAN GREEN accepted the gavel from Co-Chairman Williams and
announced that HB 118, Seafood Marketing / Aquatic Product Tax, and
HB 537, Division of Mining & Geology/State Geologist, would be
rescheduled to the continuation of the recessed meeting on
March14, 1996, at 1:00 p.m.
HB 511 - DEPOSITS INTO FISH AND GAME FUND
Number 0282
CO-CHAIRMAN GREEN brought HB 511 before the committee.
REPRESENTATIVE OGAN, sponsor of HB 511, explained the bill
originated in response to concerns over inadequate protection of
wildlife resources in the state. In light of declining revenues,
dry-docked equipment, and lack of enforcement from the Department
of Law, HB 511 was designed to help with cases involving commercial
fishing violations. "Already, civil fines are being deposited into
the Fish and Game Fund," he said. "House Bill 511 adds that
criminal fines would also be deposited into the Fish and Game Fund.
And the legislature each year will still have to approve the budget
and reimburse service agreements." He suggested a good example was
the Tyson settlement.
REPRESENTATIVE DAVIES asked for clarification on how the Fish and
Game Fund worked and whether it was a dedicated fund.
Number 0402
REPRESENTATIVE OGAN explained that the Fish and Game Fund was the
only dedicated fund, other than funds dedicated by federal law, in
the state of Alaska. Monies from various sources, including
hunting and fishing licenses, tags, and federal monies, went into
the fund, he said.
REPRESENTATIVE LONG said it appeared that previous legislation had
intended that all forfeitures be deposited to the general fund.
Now, the legislature was asking that this be deposited into the
Fish and Game Fund, which was originally for licenses, fees, and so
forth. "I feel that this may be looking toward a need for a
proposition that the voters would have to consider, making it a
dedicated fund for the forfeitures," he said.
Number 0463
REPRESENTATIVE OGAN indicated HB 511 simply clarified existing law.
It was not a constitutional issue, he said. He deferred to Laurie
Otto for an explanation.
LAURIE H. OTTO, Deputy Attorney General, Criminal Division,
Department of Law, read language from the Alaska Constitution,
explaining that it helped clarify the general prohibition on
dedicated funds. The exception to that prohibition said, "this
provision shall not prohibit the continuance of any dedication for
special purposes existing upon the date of ratification of this
section by the people of Alaska".
MS. OTTO said if a dedicated fund existed when the constitution was
adopted, funds could currently be dedicated for that purpose. "And
so, in this bill, what you see is a continuation of the historical
practice of dedicating funds that were related to claims or losses
caused by damages to fish and game resources to the state," she
said, "which is why, if you look at the language of the bill, you
will see that it ... only allows deposit into the Fish and Game
Fund of fines and forfeitures in cases where there were violations
that damaged or present a threat of damage to the fisheries
resource. The Fish and Game Fund was not historically used for
game, and it was not historically used just to enforce general
regulations in the fishing arena. But if it's related to damage or
threat of damage to the resource, it's constitutionally permissible
to deposit it in the Fish and Game Fund."
Number 0576
MS. OTTO continued, "Now, certainly a past legislature has made a
decision in the language that you asked about, to have those monies
go into the general fund. But this legislature, as in all
appropriation areas, is not bound by actions of past legislatures.
You can make an independent determination of where you think those
monies should be deposited and you can, as Representative Ogan
proposes, change the law to allow those monies to go into the Fish
and Game Fund, although, as he said, this legislature, and future
legislatures, still retain the ability to decide how Fish and Game
Funds will be used. It's an appropriation that you make like every
other appropriation."
Number 0586
REPRESENTATIVE LONG said, "You're expanding the definition of the
original dedication that's happened earlier. That's my concern, is
that whatever is relating to a fish product of any kind would be
dedicated to this fund."
MS. OTTO replied, "You are correct that if it tied it to anything
relating to fish and tried to put it in the Fish and Game Fund as
a dedicated fund, that would not be permissible, because it is
broader than the original dedication." She referred to page 1,
line 4, "violations that damage or present a threat of damage",
which, she said, was in every section of the bill. "As long as it
is narrowed in that way, that is, in fact, what the original pre-
statehood fund was used for," she said. "And, therefore, it is a
constitutionally permissible action of dedicating those funds in
the Fish and Game Fund. You're right, though. If it were anything
relating to fish, that would not be acceptable."
Number 0700
REPRESENTATIVE DAVIES voiced concerns. For example, there was a
certain amount of dedicated motor fuels tax, which he believed to
be a nickel, in existence at the time of statehood. He understood
that interpretations were that the nickel was dedicated, but that
any amount beyond that could not be increased without a vote of the
people, as a dedicated fund. "If that understanding and
interpretation is correct, it seems like this is a similar sort of
a thing," he said, "where we're ... expanding the scope of the
amounts of money that would go into the fund. And it would seem
like that would require a vote of the people, by analogy of what
happened under the motor fuel situation."
Number 0714
MS. OTTO responded she did not know about the motor fuel tax. "If,
in fact, what happened is that there was a specific amount of money
identified in the law as going into the motor fuels tax, I could
see that that would be limited," she stated. "But pre-statehood,
what happened with [the] Fish and Game Fund, or the predecessor to
that, is that any monies were ... dedicated to the furtherance of
the protection, rehabilitation, preservation and conservation of
the territorial fish and shellfish resources. And any money that
came into the state for that purpose could be deposited into the
Fish and Game Fund. So, it was not limited by any particular
amount of money, as what you're describing with the motor fuels
tax. So, pre-statehood, the money that we're talking about would
have gone into the Fish and Game Fund." She emphasized that pre-
statehood dedicated funds were analyzed by what would have
happened, pre-statehood, had the money come into the state. "Pre-
statehood, the money that is identified in Representative Ogan's
bill would have gone into the Fish and Game Fund," she concluded.
Number 0779
REPRESENTATIVE OGAN offered to clarify the intent of the bill. He
referred to Section 1, relating to purpose. He said "fisheries law
enforcement activities" would include possibly funding equipment to
apprehend violators and funding Department of Law personnel who
would specialize in such cases. The Tyson case had resulted in a
$4.1 million settlement. "There may be other violations of this
sort going on, that are not being caught just because we ... don't
have the resources to do it," he suggested.
Number 0850
REPRESENTATIVE DAVIES said he did not disagree with the purpose.
However, he was concerned about the general prohibition against
dedication of funds in Alaska's constitution. "And every time we
do that, we increase the scope or increase the amount or add
another dedication of funds, it makes me nervous," he said,
"because the folks that drafted our constitution recognized that
... every time you do that, you limit the scope of a succeeding
legislature to have an adequate array of tools to deal with
problems that are presented to them at the time. While it is true
that the legislature appropriates the money ... out of the fund,
the ... purposes for which it can be appropriated are limited by
the terms of the dedication of the fund, so they couldn't
appropriate it for general public safety on the highways, for
example." He emphasized it was a constitutional concern.
REPRESENTATIVE DAVIES indicated another way to solve the problem
would be to adequately fund the Department of Law and the Division
of Habitat and Restoration in the Department of Fish and Game.
"While we may disagree on the mechanisms for doing that, I think
that that's what needs to be done," he said, voicing his preference
to fund it through the operating budget by looking to other revenue
sources.
Number 0944
MS. OTTO said, "Everybody, I think, who looks at the situation
acknowledges that we're not adequately pursuing commercial fishing
violations, particularly ones that damage the resource, that there
appears to us to be both a significant number of violators who are
really damaging one of our really most important renewable
resources, very important to the economy of the state, but also,
that we're not capturing the fines and forfeitures because we don't
have the resources to dedicate to it. And I think that essential
to understanding what is trying to be done with this bill is
realizing that we are, in fact, creating a new revenue stream into
the Fish and Game Fund, money that's not being captured right now,
that most of the money isn't money that's being diverted out of the
general fund and put into the general fund. It's mostly money
that's not being captured right now."
Number 1052
DEAN PADDOCK, Bristol Bay Driftnetters Association, testified in
support of HB 511, saying, "This association has always supported
the conduct of an orderly fishery. We believe strongly in the
protection of the resource. But there's another element ... and
that is the need to provide a level playing field between the
participants in the fishery." He suggested that nowhere else in
Alaska was that as important as in Bristol Bay, where large numbers
of fishermen competed for large numbers of fish.
MR. PADDOCK indicated Bristol Bay enforcement was the single
largest operation carried out by the Division of Fish and Wildlife
Protection in the Department of Public Safety. Members of his
association, wanting to ensure enforcement presence in Bristol Bay,
had suggested supplementing funds by instituting a statutory
assessment on every license sold there. "As it is now, when the
enforcement money runs out, they're gone," Mr. Paddock. "Maybe
there'll be a fly-over by a plane, but the boats, the skiffs, the
surveillance, it's gone. And then, when that happens, the orderly
fishery deteriorates and we've got people fishing further and
further outside these lines." He advocated a "user pay" concept.
He concluded by saying he thought this situation applied elsewhere
in the state, as well.
Number 1300
CO-CHAIRMAN GREEN asked if there was further comment and closed the
public testimony.
REPRESENTATIVE AUSTERMAN mentioned a letter received from Larry
VanderLind from the Committee to Prevent Illegal Salmon Fishing in
Bristol Bay. Mr. VanderLind indicated that with 1900 drift permits
in the Bristol Bay area, the fishermen themselves would like to
impose a $250 surcharge, which would total approximately $475,000
per year. That committee had criteria for involvement in setting
regulations and policies on how the enforcement would be done, and
to ensure it was done correctly, Representative Austerman added.
REPRESENTATIVE OGAN closed by saying, "They're not doing an
adequate job. I understand people's concerns with this bill." He
referred to Section 1 and said to the extent permitted by
applicable state and federal law, this would operate within
parameters of existing law. "If you look, starting from the East
Coast and work your way around, Alaska's one of the last great
fisheries in the world, and certainly in North America," he said.
"And if we don't do an adequate job of protecting the resource, we
will be paying dearly for it in the future."
CO-CHAIRMAN GREEN referred to Representative Davies' concern about
dedication. He asked if Representative Ogan believed the
legislature would be operating within its purview and its
constitutional rights.
REPRESENTATIVE OGAN replied yes. He added that they had heard
qualified testimony that day asserting that fact.
Number 1473
REPRESENTATIVE AUSTERMAN moved that HB 511 move from committee with
accompanying fiscal notes and individual recommendations.
REPRESENTATIVE LONG objected.
CO-CHAIRMAN GREEN asked for a roll call vote. Voting for moving HB
511 were Representatives Austerman, Kott, Ogan, Williams and Green.
Voting against it were Representatives Davies and Long.
Representative Nicholia was present via teleconference and did not
vote; Representative Barnes was absent. Co-Chairman Green noted
that HB 511 moved from the House Resources Committee.
HB 447 - PROTECT ACCESS FOR TRADIT'NL OUTDOOR USES
Number 1514
CO-CHAIRMAN GREEN called on Jeff Logan to advise the committee of
the status of HB 447, which had been in subcommittee.
JEFF LOGAN, Legislative Assistant to Representative Joe Green,
stated that the subcommittee on HB 447, chaired by Representative
Ogan, had produced a committee substitute. On February 16, 1996,
the House Resources Committee met again and heard additional
testimony, but there was no quorum present. At that time,
Representative Ogan presented the committee substitute, version G.
MR. LOGAN discussed changes in that committee substitute. First,
there was a new title reflected in the bill. In Section 1, the CS
added intent language to assure that nothing in the bill affected
private property interests. In Section 3, the CS provided for
reasonable alternatives for access when conflicts arose and added
new means of access for any new activities covered in the bill. In
Section 4, the CS established authority for development interests
to control access across leased areas when reasonable alternatives
were not available to go around them. Mr. Logan noted that
versionG had not yet been adopted by the committee.
Number 1655
REPRESENTATIVE AUSTERMAN moved to adopt CSHB 447, version G, dated
2/12/96. There being no objection, it was adopted as the work
draft.
REPRESENTATIVE BEVERLY MASEK, sponsor of HB 447, testified that she
had no problem with the manner in which the subcommittee had
amended the bill. She stated there was an additional amendment
that she supported, Representative Long's suggestion to change
"recreational" to "outdoor".
REPRESENTATIVE LONG indicated that change was to be made throughout
the bill.
Number 1760
CO-CHAIRMAN GREEN asked if there was an objection to changing
"recreational" to "outdoor". There being no objection, it was so
ordered.
REPRESENTATIVE DAVIES referred to page 2, line 32, and questioned
whether making that line read "outdoor restrictions" was
appropriate.
CO-CHAIRMAN GREEN asked Representative Long whether he wanted that
change throughout the bill.
REPRESENTATIVE LONG clarified the change should occur wherever it
said "traditional recreational activities". That should be changed
to "traditional outdoor activities". He suggested that would
preclude page 2, line 32, from being altered.
CO-CHAIRMAN GREEN asked if there were further questions or comments
and noted that the amendment had been adopted.
Number 1857
REPRESENTATIVE AUSTERMAN referred to the first hearing on the bill,
in early February, when there had been concern about Title 41
lands. He asked if that would be addressed in the bill.
REPRESENTATIVE MASEK said it was not addressed in the bill, nor was
there an intention to do so. She restated that she concurred with
all the changes in the committee substitute.
REPRESENTATIVE OGAN moved that CSHB 447, version G, as amended,
move from the House Resources Committee with individual
recommendations and attached fiscal notes.
REPRESENTATIVE AUSTERMAN asked if there would be public testimony.
CO-CHAIRMAN GREEN noted that nobody was signed up to testify. He
further noted that Representative Barnes had joined the meeting.
Number 1954
REPRESENTATIVE PETE KOTT objected for the purpose of hearing from
the Department of Natural Resources about the fiscal note.
CO-CHAIRMAN GREEN asked if anyone was present from the Department
of Natural Resources to address the fiscal note.
Number 2001
REPRESENTATIVE RAMONA BARNES moved that HB 447 be moved from
committee with a zero fiscal note.
REPRESENTATIVE OGAN withdrew his motion to move the bill with the
attached fiscal note.
CO-CHAIRMAN GREEN acknowledged a request from Sara Hannan to
testify on the bill.
Number 2070
SARA HANNAN, Executive Director, Alaska Environmental Lobby,
testified that HB 447 transferred authorities that had been
available for all state agencies through a process called
interagency land management agreements (ILMAs), a Title 37
provision that allowed transfer of authorities between divisions.
"Typically, those authority transfers average 97.5 acres each," she
said. "Since 1970, 95 ILMAs have occurred, transferring a total of
9,258 acres between agencies. In 86 of these transfers, there has
been absolutely no closure, no restrictions of access provisions in
those transfers. In eight of the nine other transfers, there were
restrictions such as no motorized access in the campground. Most
of these transfers of lands are to accommodate a changing purpose,
a trailhead, a campground, an airport extension or an airport
provision protection that's no longer needed, so the Department of
Public Safety, the Department of Transportation no longer wants
control over the area outside of the airstrip and they're willing
to give that authority back to another division."
Number 2158
MS. HANNAN continued, "In one of those transfers, the Blair Lake
transfer that occurred in 1995, there was a closure. And the
transfer of land [indisc.] authority to regulate Blair Lake to the
Division of Parks. There was a closure. Blair Lake has been
closed to airplane traffic. Blair Lake is adjacent to Denali State
Park. Just near Blair Lake, Princess Cruises is constructing what
will become the largest commercial operation in a state park in the
state of Alaska. At their request, Blair Lake was closed to
airplane access. Now, much like Representative Masek, my
constituents are not happy that Blair Lake is closed to access.
But the purpose for closing Blair Lake to airplane access was at
the request of the commercial operator who is making a multi-
million-dollar investment in an in-holding in a state park."
MS. HANNAN continued, "An extensive public review process goes into
place before state park plans come into place and are approved.
This accommodation of a commercial user doesn't please other
commercial users; it doesn't please many people who thought that
access was guaranteed. But I would indulge you to think about the
fact that sometimes there are closures that are there not for the
purpose of keeping people out, but providing for commercial
development."
MS. HANNAN continued, "Most of the closures to access that are
accomplished are for public safety protections. We keep airport
perimeters, even though it's public multiple-use land; we don't
allow snow machines to cross the airport approach, for the safety
of the airplane, for the safety of the snow-machiner." Ms. Hannan
expressed that the changes to titles under the HB 447 were
misdirected, irrelevant, and did not accomplish the desired end.
"You heard a lot of testimony from snow-machiners, saying the state
parks prevent us from snow-machining where we'd like to recreate,"
she said. "The titles that this bill affects don't affect the
authority that a state park uses to close snow-machine access. I'd
also like you to realize that most of Alaska and most state parks
are not closed to snow-machines. A few valleys within Chugach
State Park, which is the largest state park in Alaska, are closed
to snow-machines, but all of the public lands along the Parks
Highway and the Glenn Highway are open to snow-machines."
Number 2350
MS. HANNAN concluded, "Any time you close lands to access, Alaskans
are concerned. And those decisions should be made through a
lengthy, public, deliberate process. And I would say that the
legislature is not going to have the time to indulge in those kind
of closure decisions, that this bill requests that the legislature
do directly, instead of its agencies. I'd urge you not to pass
[HB] 447 from committee because I don't think that it does anything
except for put a large work pile on your desk that you'll never be
able to get to."
CO-CHAIRMAN GREEN thanked Ms. Hannan and noted that public
testimony was closed.
REPRESENTATIVE WILLIAMS referred to page 2, line 26, which had been
amended to read "traditional outdoor activities means those types
of activities that people may utilize for sport, exercise,
subsistence". He asked if they were trying to define subsistence.
[END OF TAPE]
TAPE 96-33, SIDE A
Number 0021
CO-CHAIRMAN GREEN indicated they were waiting to hear from Nico Bus
from the Department of Natural Resources regarding the fiscal note.
REPRESENTATIVE OGAN said he would be happy to move the bill from
committee with a zero fiscal note.
REPRESENTATIVE KOTT indicated a number of bills had come before the
House on the floor with zero fiscal notes for promulgating
regulations. He suggested in the current case, there had been a
weak analysis of the expense associated with the bill.
CO-CHAIRMAN GREEN said he agreed and that fiscal notes were
certainly subject to question.
REPRESENTATIVE KOTT concurred with moving the bill with a zero
fiscal note and pointed out the bill would go to the House Finance
Committee.
Number 0198
REPRESENTATIVE DAVIES said that without having heard from the
Department of Natural Resources, he objected to changing the fiscal
note.
REPRESENTATIVE BARNES replied, "It is the responsibility of the
departments to be here and speak to their fiscal notes." She
recalled an occasion in the House Finance Committee when a
department had submitted a zero fiscal note that should have been
for $14 million.
CO-CHAIRMAN GREEN noted there was a motion to move the bill with a
zero fiscal note.
REPRESENTATIVE DAVIES still objected. He emphasized that Mr. Bus
was on his way to testify and that it was just a matter of
completing a phone call.
CO-CHAIRMAN GREEN indicated they had waited long enough and asked
for a roll call vote. Voting to move the bill with a zero fiscal
note were Representatives Austerman, Barnes, Kott, Ogan, Williams
and Green. Voting against it were Representatives Davies and Long.
Representative Nicholia, present via teleconference, did not vote.
Therefore, CSHB 447(RES), as amended, moved from the House
Resources Committee with individual recommendations and a zero
fiscal note.
Number 0322
The teleconference operator announced that Nico Bus was on-line.
CO-CHAIRMAN GREEN explained to Mr. Bus that concern had been raised
that the bill might not require the amount of money shown in the
fiscal note. He asked Mr. Bus to submit a justification and
informed him that HB 447 bill had been moved from committee with a
zero fiscal note.
NICO BUS, Acting Director, Division of Support Services, Department
of Natural Resources, agreed to provide the requested back-up.
HJR 54 - FAVOR TRANS-ALASKA GAS SYSTEM & LNG SALES
Number 0371
CO-CHAIRMAN GREEN brought HJR 54 before the committee and indicated
that although the bill would be heard the following day, the
sponsor wished to make a statement.
REPRESENTATIVE GENE KUBINA, sponsor of HJR 54, explained that the
resolution was the culmination of a year's discussions with people
throughout the state and private industry, with the goal of
encouraging marketing of North Slope natural gas. The resolution
specifically asked the legislature to bring together people
involved with natural gas, including lessees, the Governor, and the
potential buyers. It put the legislature on record as supporting
marketing of natural gas. It asked the Governor to bring those
involved together, to continue to support the joint pipeline
office, to encourage developers to have an Alaska-hire agreement
for the construction of any pipeline, and to meet with all parties
to try to bring it to fruition. The resolution also asked the
President of the United States to make it a trade issue with Asian
countries and to demonstrate to the country his support.
Number 0526
REPRESENTATIVE KUBINA mentioned there had been talk about a natural
gas pipeline for years. "This resolution does not really get into
the route that would be taken," he said. "It tried to really skirt
around the controversial parts and come into what we can all agree
on, and that is that we do want to market our natural gas."
Representative Kubina indicated some people suggested there was a
150-year supply of gas; he said there certainly was more than a 25-
year supply. "As a legislature, we want to do what we can to
encourage this to happen," he said, "so that, obviously, we can
have the income into our state for it." He concluded by saying
people would testify at the following day's meeting.
MORGAN SOLOMON testified via teleconference from Barrow in support
of HJR 54, saying the proposal had been on paper for many years and
that Alaskans would benefit from the gas line going through the
state rather than through Canada.
Number 0709
REPRESENTATIVE KUBINA mentioned that HJR 54 had a $10,000 fiscal
note from the department and therefore had a House Finance
Committee referral. He had talked to the commissioner, who
understood the fiscal note would be zeroed out; the commissioner
had included a yearly trip to Asia, which Representative Kubina
felt was unnecessary, as a lot of things could be done here to get
this project moving. Representative Kubina suggested there would
be little objection if the House Resources Committee wished to zero
out the fiscal note.
CO-CHAIRMAN GREEN noted that HJR 54 would be held over to the
following day's meeting.
HB 469 - INCREASE LAND GRANT TO UNIV. OF ALASKA
CO-CHAIRMAN GREEN brought HB 469 before the committee and noted
that Cliff Eames was on teleconference to testify.
Number 0822
CLIFF EAMES, Alaska Center for the Environment (ACE), testified via
teleconference from Anchorage, saying ACE, which had offices in
Anchorage and the Mat-Su Valley, opposed HB 469, as they had
opposed similar bills over the years. "It's not a question of
opposing adequate funding for higher and other education," Mr.
Eames said. "In fact, I think it's fairly clear that
conservationists as a group are very supportive of education. But
it's a question of how do we fund the University of Alaska and
other state services. Bills similar to this have been vetoed by
two governors for very good reasons. We believe those reasons are
still relevant."
MR. EAMES believed HB 469 would likely result in an
unconstitutional, dedicated fund. However, even if that were not
so, the policy against dedicated funds was violated by this bill,
he asserted. By transferring 500,000 acres, or another substantial
amount, of potentially revenue-generating land to the University of
Alaska, a tremendous amount of flexibility would be lost for
allocating future state funding to other programs, services or
facilities, Mr. Eames said. From a conservation or public use
standpoint, the chance to use these public lands in a multiple-use
fashion would also be lost. Instead, the lands would be entirely
dedicated to revenue generation for the university. Mr. Eames
concluded by saying he would submit written comments.
Number 1003
CO-CHAIRMAN GREEN apologized to the numerous people waiting to
testify via teleconference. He stated his intention had been to
take testimony that day only from one person unable to testify the
following day. Co-Chairman Green asked that additional testifiers
call again the next day at 1:00 p.m., when the hearing would
reconvene.
Number 1025
REPRESENTATIVE GENE THERRIAULT, sponsor of HB 469, stated that
since similar legislation had been passed and vetoed last year,
committee members were familiar with what the bill asked for.
"Basically, what we're trying to do is follow through on making the
University of Alaska a true land-grant college or university
system," he said. "At the time of statehood, the university did
have a pledge to receive lands from the federal government.
However, when lands were given to the state, that pledge from the
federal government was extinguished. Basically, the thought was
that the state would follow through on the pledge for the land
grant out of the state lands, that were given to the state."
Representative Therriault explained that Governor Egan had not
followed through on that. The land that the state received was
managed by DNR, including the 100,000 acres that the university had
selected at the time. Over the next 30 years, with DNR managing
those lands, the income to the university was estimated to be
around $590,000. "So, it's fairly clear that the state Department
of Natural Resources was not very aggressive in managing those
lands to derive a revenue stream for the benefit of the university,
which is what you would want a ... land-grant university to do,"
Representative Therriault said.
REPRESENTATIVE THERRIAULT continued, "House Bill 469 allows the
University of Alaska now to select up to 500,000 acres over a 20-
year period of time. And there are numerous things that have been
worked out with the Administration and different coal miners in the
state to try and alleviate some of their concerns." Representative
Therriault noted that Ms. Redman from the University of Alaska was
available for questions. He also indicated negotiations had
continued as late as that morning to try to address concerns of the
Administration and resource developers.
Number 1188
CHARLIE BODDY, Representative, Resource Coalition, stated he
representing a coalition including the Alaska Coal Association, the
Alaska Miners Resource Development Council, and the Council of
Alaska Producers, which had met via teleconference that week. Mr.
Boddy said the resource community had concerns and that the
coalition would submit a detailed list of concerns and additional
comments, probably by week's end.
MR. BODDY indicated the words "trusts lands" in the bill title was
of concern. He referred to the Mental Health Trust lands, which
had been acquired through the legislative, administrative and
superior court processes. Mr. Boddy indicated 175 items were being
challenged in that settlement, with briefs due April 20 in the
supreme court, and with the possibility that the issues could
continue on to the U.S. Supreme Court.
MR. BODDY referred again to the Mental Health lands and said, "At
one time, we had over 8 million acres hypothecated as part of that
settlement. The bill currently has no over-selection or parameters
built in around it about how much acreage could be set aside at
this time, until such time as a half a million acres were rounded
up. That's a major area that we'd like to have looked at."
MR. BODDY referred to the land management issue, which he noted had
been brought up the previous year in relation to where the
management of those lands should lie. "Again, that would be a
decision ... that this legislature is well equipped to deal with in
setting up that trust," he concluded.
Number 1341
CO-CHAIRMAN GREEN referred to "checkerboarding" from state and
Native selections, and now the university selections. He asked if
the concern of the coalition was that, even after the finality of
the Mental Health Trust lands, earlier selections could be impaired
because of subsequent selections either blocking access or creating
problems.
MR. BODDY responded that could be an issue.
CO-CHAIRMAN GREEN asked if those were the types of concerns the
coalition had, which would be on the list provided by the end of
the week.
MR. BODDY affirmed that and said they had identified issues but not
yet fleshed them out. He indicated the all-inclusive list still
needed to be sorted and put into a coherent form to provide to the
committee.
Number 1435
REPRESENTATIVE AUSTERMAN commented that he had a conflict and could
not attend the continuation of the hearing the next day.
CO-CHAIRMAN GREEN stated he also had a conflict and would be late.
He then recessed the House Resources Committee meeting at 10:07
a.m., noting the committee would reconvene the following afternoon.
[MEETING RECESSED UNTIL MARCH 14, 1996, AT 1:00 P.M.]
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