Legislature(2023 - 2024)BARNES 124
04/05/2024 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB394 | |
| HB393 | |
| HB388 | |
| HB359 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 393 | TELECONFERENCED | |
| += | HB 388 | TELECONFERENCED | |
| += | HB 349 | TELECONFERENCED | |
| += | HB 394 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 359 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 5, 2024
3:32 p.m.
DRAFT
MEMBERS PRESENT
Representative Tom McKay, Chair
Representative Kevin McCabe
Representative Dan Saddler
Representative Stanley Wright
Representative Jennie Armstrong
Representative Donna Mears
Representative Maxine Dibert
MEMBERS ABSENT
Representative George Rauscher, Vice Chair
Representative Thomas Baker
OTHER LEGISLATORS PRESENT
Senator Robert Meyers
COMMITTEE CALENDAR
HOUSE BILL NO. 394
"An Act relating to the Regulatory Commission of Alaska and
regulation of the service of natural gas storage and liquefied
natural gas import facilities; relating to records of the
Regulatory Commission of Alaska; relating to rates established
by the Regulatory Commission of Alaska; and providing for an
effective date."
- MOVED HB 394 OUT OF COMMITTEE
HOUSE BILL NO. 393
"An Act relating to oil and gas leases and royalty shares; and
providing for an effective date."
- FAILED TO MOVE OUT OF COMMITTEE
HOUSE BILL NO. 388
"An Act relating to state loans for oil and gas projects in the
Cook Inlet sedimentary basin; relating to the Alaska Energy
Authority; relating to the Alaska Industrial Development and
Export Authority; and providing for an effective date."
- MOVED CSHB 388(RES) OUT OF COMMITTEE
HOUSE BILL NO. 359
"An Act relating to the permanent fund dividend and a one-time
permanent fund dividend payment and land voucher; and providing
for an effective date."
- FAILED TO MOVE OUT OF COMMITTEE
HOUSE BILL NO. 349
"An Act relating to leases of public land for renewable energy
projects; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 394
SHORT TITLE: RCA REGULATE NATURAL GAS STORAGE FACILITY
SPONSOR(s): RESOURCES
03/20/24 (H) READ THE FIRST TIME - REFERRALS
03/20/24 (H) RES, L&C
04/01/24 (H) RES AT 1:00 PM BARNES 124
04/01/24 (H) <Bill Hearing Rescheduled to 04/03/24>
04/03/24 (H) RES AT 1:00 PM BARNES 124
04/03/24 (H) Heard & Held
04/03/24 (H) MINUTE(RES)
04/05/24 (H) RES AT 1:00 PM BARNES 124
BILL: HB 393
SHORT TITLE: COOK INLET/MIDDLE EARTH GAS ROYALTIES
SPONSOR(s): RESOURCES
03/18/24 (H) READ THE FIRST TIME - REFERRALS
03/18/24 (H) RES, FIN
04/01/24 (H) RES AT 1:00 PM BARNES 124
04/01/24 (H) <Bill Hearing Rescheduled to 04/03/24>
04/03/24 (H) RES AT 1:00 PM BARNES 124
04/03/24 (H) Heard & Held
04/03/24 (H) MINUTE(RES)
04/05/24 (H) RES AT 1:00 PM BARNES 124
BILL: HB 388
SHORT TITLE: COOK INLET RESERVE-BASED LENDING
SPONSOR(s): RESOURCES
02/26/24 (H) READ THE FIRST TIME - REFERRALS
02/26/24 (H) RES, ENE, FIN
02/28/24 (H) ENE REFERRAL REMOVED
03/06/24 (H) RES AT 1:00 PM BARNES 124
03/06/24 (H) <Bill Hearing Rescheduled to 03/11/24>
03/08/24 (H) RES AT 1:00 PM BARNES 124
03/08/24 (H) <Bill Hearing Canceled>
03/11/24 (H) RES AT 1:00 PM BARNES 124
03/11/24 (H) <Bill Hearing Canceled>
03/20/24 (H) RES AT 1:00 PM BARNES 124
03/20/24 (H) <Bill Hearing Canceled>
03/22/24 (H) RES AT 1:00 PM BARNES 124
03/22/24 (H) Heard & Held
03/22/24 (H) MINUTE(RES)
03/27/24 (H) RES AT 1:00 PM BARNES 124
03/27/24 (H) <Bill Hearing Canceled>
04/03/24 (H) RES AT 1:00 PM BARNES 124
04/03/24 (H) Heard & Held
04/03/24 (H) MINUTE(RES)
04/05/24 (H) RES AT 1:00 PM BARNES 124
BILL: HB 359
SHORT TITLE: ONE-TIME PFD PAYMENT
SPONSOR(s): CRONK
02/20/24 (H) READ THE FIRST TIME - REFERRALS
02/20/24 (H) RES, FIN
03/01/24 (H) RES AT 1:00 PM BARNES 124
03/01/24 (H) Heard & Held
03/01/24 (H) MINUTE(RES)
03/08/24 (H) RES AT 1:00 PM BARNES 124
03/08/24 (H) Heard & Held
03/08/24 (H) MINUTE(RES)
03/15/24 (H) RES AT 1:00 PM BARNES 124
03/15/24 (H) <Bill Hearing Canceled>
03/25/24 (H) RES AT 1:00 PM BARNES 124
03/25/24 (H) Heard & Held
03/25/24 (H) MINUTE(RES)
03/27/24 (H) RES AT 1:00 PM BARNES 124
03/27/24 (H) <Bill Hearing Canceled>
04/03/24 (H) RES AT 1:00 PM BARNES 124
04/03/24 (H) Scheduled but Not Heard
04/05/24 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
TREVOR JEPSEN, Staff
Representative Tom McKay
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of the sponsor, the House
Resources Standing Committee, of which Representative McKay
served as chair, spoke to HB 394, HB 393, and explained
Amendment 1 to CSHB 388.
ROBERT DOYLE, Chair
Regulatory Commission of Alaska
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on
amendments to HB 394.
BRANDON BREFCZYNSKI, Deputy Director
Alaska Industrial Development and Export Authority
Anchorage, Alaska
POSITION STATEMENT: Responded to a question during the hearing
on HB 388.
ACTION NARRATIVE
3:31:53 PM
CHAIR MCKAY called the House Resources Standing Committee
meeting to order at 3:32 p.m. Representatives Mears, Armstrong,
Dibert, McCabe, Saddler, Wright, and McKay were present at the
call to order.
HB 394-RCA REGULATE NATURAL GAS STORAGE FACILITY
3:32:36 PM
CHAIR MCKAY announced that the first order of business would be
HOUSE BILL NO. 394, "An Act relating to the Regulatory
Commission of Alaska and regulation of the service of natural
gas storage and liquefied natural gas import facilities;
relating to records of the Regulatory Commission of Alaska;
relating to rates established by the Regulatory Commission of
Alaska; and providing for an effective date."
3:33:57 PM
REPRESENTATIVE MEARS moved to adopt Amendment 1 to HB 394,
labeled 33-LS1441\U.1, Nauman, 4/4/24, which read as follows:
Page 1, lines 2 - 3:
Delete "relating to records of the Regulatory
Commission of Alaska;"
Page 2, line 27, through page 3, line 4:
Delete all material.
Renumber the following bill sections accordingly.
Page 4, lines 17 - 27:
Delete all material.
Renumber the following bill sections accordingly.
3:34:02 PM
CHAIR MCKAY objected for the purpose of discussion.
3:34:16 PM
REPRESENTATIVE MEARS stated that Amendment 1 deals with the
section of the proposed legislation concerning required
confidentiality. She argued that the point is mute because the
Regulatory Commission of Alaska (RCA) already has the ability to
make documents confidential and requiring this in statute would
diminish RCA's ability to provide public service.
3:35:02 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, Alaska State
Legislature, on behalf of the sponsor, the House Resources
Standing Committee, of which Representative McKay served as
chair, spoke to HB 394. He expressed the understanding that RCA
would not have an issue with protecting financial records from
the onset, without the petitioning process for confidentiality.
He noted that the main concern is that there would be adequate
gas storage available and engaging the private sector to do
this.
3:36:00 PM
ROBERT DOYLE, Chair, Regulatory Commission of Alaska, answered
questions during the hearing on HB 394. On behalf of RCA, he
expressed support for the proposed legislation and the belief
that having gas shortages is the "new normal." He expressed the
importance of having the private sector involved [in procuring
gas for the state], and he said that having these [records
confidential from the onset would promote this]. He discussed
RCA's process with confidentiality.
COMMISSIONER DOYLE, in response to a question from Chair McKay,
expressed the opinion that Amendment 1 would not be needed;
however, he added it would be a matter of public policy, and the
legislature would need to make the decision.
3:38:08 PM
REPRESENTATIVE MCCABE maintained that the proposed legislation
is designed to create more access to natural gas storage, and it
is not designed to obtain Hilcorp's financial records. He
expressed opposition to Amendment 1.
3:39:00 PM
CHAIR MCKAY removed his objection to the motion to adopt
Amendment 1.
REPRESENTATIVE MCCABE objected.
3:39:30 PM
REPRESENTATIVE MEARS argued that HB 394 would create additional
layers of secrecy in statute for the [gas] industry, of which
more transparency is needed. She continued that RCA already has
mechanisms for confidentiality. She expressed the opinion that
additional confidentiality "above and beyond" what is given to
other utilities should not be provided.
3:40:12 PM
CHAIR MCKAY explained that S corporations are protected by
federal law to have their financial information confidential.
3:40:24 PM
REPRESENTATIVE SADDLER expressed opposition to the proposed
amendment. He pointed out that utilities are publicly regulated
so their financials are available to the public, while liquified
natural gas (LNG) and gas storage facilities would be private
organizations. He opined that transparency for records is
mostly a positive thing; however, competitive businesses would
not want records available to competitors. He pointed out that
RCA, as a trusted public entity and in service to the public
good, would have access to the records.
3:41:41 PM
A roll call vote was taken. Representatives Mears, Armstrong,
and Dibert voted in favor of adopting Amendment 1 to HB 394.
Representatives Wright, McCabe, Saddler, and McKay voted against
it. Therefore, Amendment 1 failed to be adopted by a vote of 3-
4.
3:42:29 PM
REPRESENTATIVE MEARS moved to adopt Amendment 2 to HB 394,
labeled 33-LS1441\U.2, Nauman, 4/4/24, which read as follows:
Page 1, line 2:
Delete "and liquefied natural gas import
facilities"
Page 1, line 7:
Delete "AS 42.05.711(q), (s), and (w)"
Insert "AS 42.05.711(q) and (s)"
Page 3, lines 16 - 18:
Delete all material.
Renumber the following bill sections accordingly.
3:42:35 PM
REPRESENTATIVE MCCABE objected.
3:42:42 PM
REPRESENTATIVE MEARS explained that Amendment 2 would remove the
carveout that directs RCA to oversee imported LNG to the state.
She pointed out that the Federal Energy Regulatory Commission
(FERC) already oversees this. She explained that FERC does not
always provide oversite for setting rates, as its role is to
make certain permitted facilities are safe, while RCA would
provide rate protection. She noted the short timeframe she has
had to examine this, and she expressed unease because parts of
the supply chain might be left out of the regulations.
3:44:00 PM
MR. JEPSEN stated that there is concern that FERC would not
regulate some situations where a facility is importing LNG. He
opined that if RCA was removed as a regulator as well, there
would be no regulation of the facility. After some research, he
stated that he obtained a legal memo, of which he read, as
follows:
The Nikiski LNG import terminal would be subject to
the exclusive jurisdiction of the Federal Energy
Regulatory Commission under the Natural Gas Acts
[sic]. State regulation of those facilities is
preempted by federal law. The Natural Gas Act has
long been recognized as a comprehensive scheme of
federal regulation of all wholesale of natural gas in
interstate commerce, which ... confers upon for
exclusive jurisdiction over the transportation and
sale of natural gas in interstate commerce for resale.
Where state regulation affects ability of FERC to
regulate comprehensively of the transportation,
storage, and sell of natural gas to achieve
uniformity, which was an objective of the Natural Gas
Act, or presents the prospect of interference with
federal regulatory power, the state law has been
preemptive.
MR. JEPSEN reiterated that FERC has total jurisdiction over the
subject, and this amendment would clarify this so there is no
confusion. He stated that FERC would have power in any scenario
where gas was imported, transported, or sold.
3:45:44 PM
CHAIR MCKAY expressed the understanding that Amendment 2 would
be redundant.
MR. JEPSEN expressed the opinion that the amendment is
unnecessary.
3:46:13 PM
COMMISSIONER DOYLE expressed opposition to Amendment 2, as the
carveout would be appropriate.
3:46:31 PM
REPRESENTATIVE MEARS expressed the belief that her point was
made in the [memo read to the committee]. She opined that if
there were an overlap, FERC would have jurisdiction and primacy;
therefore, the carveout would be unnecessary.
3:46:52 PM
MR. JEPSEN expressed disagreement.
REPRESENTATIVE MCCABE maintained his objection to the motion to
adopt Amendment 2.
3:47:03 PM
A roll call vote was taken. Representatives Armstrong, Mears,
and Dibert voted in favor of adopting Amendment 2 to HB 394.
Representatives Saddler, Wright, McCabe, and McKay voted against
it. Therefore, Amendment 2 failed to be adopted by a vote of 3-
4.
3:47:56 PM
REPRESENTATIVE MEARS withdrew Amendment 3.
3:48:08 PM
REPRESENTATIVE MEARS moved to adopt Amendment 4 to HB 394,
labeled 33-LS1441\U.4, Nauman, 4/4/24, which read as follows:
Page 1, lines 3 - 4:
Delete "relating to rates established by the
Regulatory Commission of Alaska;"
Page 2, lines 3 - 26:
Delete all material.
Renumber the following bill sections accordingly.
Page 4, lines 9 - 16:
Delete all material.
Renumber the following bill sections accordingly.
3:48:16 PM
REPRESENTATIVE MCCABE objected.
3:48:19 PM
REPRESENTATIVE MEARS explained that RCA code already covers fair
market value, so the amendment would remove this language from
the proposed legislation. She noted that the language in
proposed legislation only concerns the oil and gas fields, and
not the equipment, which would be considered in depreciation
schedules. She noted the fluctuation in the fair market value
of oil and gas fields; therefore, should not be included in the
calculations.
3:49:17 PM
MR. JEPSEN explained that the fair market value language was
added to the bill to signal to the private sector that it would
not be told the value of its assets, as there would be an
evaluation process. He argued that if the private sector is to
engage in gas storage, these companies must be treated fairly.
He referenced the subjectivity in determining the fair market
value, as no sales would be taking place; however, he expressed
the belief that this would be appropriate.
3:50:14 PM
COMMISSIONER DOYLE pointed out the natural gas shortages in the
state and the need for the public to have adequacy. He
reiterated that there will be a "new normal," and new procedures
will need to be considered, with fair market value being part of
the new process. He pointed out that fair market value is based
on selling an asset on the open market, and when something is
new, RCA would look at the date of the investment, the cost of
the asset, and how it would be put into the system. He stated
that the consideration would be how the fair market value would
change these things. He stated that if this were the policy,
RCA would make sure it is done in a prudent, just, and fair
manner. Because more storage is needed, he expressed opposition
to removing this as a consideration. He suggested that to have
more gas storage in the older gas fields, depreciation of these
fields would need to be considered and a new system would need
to be created to assess this. He reiterated that RCA would take
the legislature's direction in this.
3:52:17 PM
REPRESENTATIVE SADDLER expressed opposition to Amendment 4. He
opined that deleting the fair market value language would risk
leaving the value of assets constant. He continued that values
would be set at the beginning of a contract and never adjust
while the price of gas would fluctuate.
3:53:07 PM
REPRESENTATIVE MEARS noted that the commissioner touched on the
fact that these are already considered as capital investments;
therefore, there would already be a consideration of the fair
market value under other utilities RCA is regulating. Because
of this, she argued that the language on fair market value does
not need to be in the proposed legislation.
Representative McCabe maintained his objection to the motion to
adopt Amendment 4.
3:53:44 PM
A roll call vote was taken. Representatives Armstrong, Mears,
and Dibert voted in favor of adopting Amendment 4 to HB 394.
Representatives Saddler, Wright, McCabe, and McKay voted against
it. Therefore, Amendment 4 failed to be adopted by a vote of 3-
4.
3:54:35 PM
REPRESENTATIVE MCCABE moved to report HB 394 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 394 was reported out of the
House Resources Standing Committee.
3:55:10 PM
The committee took an at-ease from 3:55 p.m. to 3:58 p.m.
HB 393-COOK INLET/MIDDLE EARTH GAS ROYALTIES
3:58:41 PM
CHAIR MCKAY announced that the next order of business would be
HOUSE BILL NO. 393, "An Act relating to oil and gas leases and
royalty shares; and providing for an effective date."
3:59:11 PM
REPRESENTATIVE MEARS moved to adopt Amendment 1 to HB 393,
labeled 33-LS1006\R.1, Nauman, 4/4/24, which read as follows:
Page 8, line 17, following "(7)":
Insert "except as provided in (nn) of this
section, and"
Page 8, line 27:
Delete "a new subsection"
Insert "new subsections"
Page 8, line 28:
Delete "Notwithstanding"
Insert "Except as provided in (nn) of this
section, and notwithstanding"
Page 9, following line 4:
Insert a new subsection to read:
"(nn) The royalty share modifications in (f)(7)
and (mm) of this section terminate on January 1,
2035."
3:59:17 PM
CHAIR MCKAY objected for the purpose of discussion.
3:59:22 PM
REPRESENTATIVE MEARS explained that Amendment 1 would put a
sunset date on royalty relief, so the legislature could revisit
the program in 10 years. She expressed the opinion that this
would be reasonable; otherwise, the state would be locked in to
never receiving royalties from Cook Inlet.
4:00:06 PM
MR. JEPSEN stated that he has no comments on Amendment 1, and he
suggested that this be left up to the will of the committee.
4:00:27 PM
REPRESENTATIVE SADDLER stated that there would be a long lead-in
time for investments for these projects, and time would go by
quickly. He suggested that future legislatures would have the
ability to put a sunset date on this once its effectiveness is
realized. He expressed the opinion that a hard sunset date put
in place in the beginning would erode the value of the royalty
reduction. He expressed opposition to Amendment 1.
4:01:16 PM
REPRESENTATIVE ARMSTRONG moved to adopt Conceptual Amendment 1
to Amendment 1, on page 1, line 15, to replace "2035" with
"2045". There being no objection, Conceptual Amendment 1 to
Amendment 1 was adopted.
4:02:06 PM
REPRESENTATIVE SADDLER commented that even though this would be
a longer time, the same argument applies; however, he stated
that he would add some more thought to this.
4:02:39 PM
CHAIR MCKAY commented that gas wells decline rapidly, and the
opportunity to tax and gather royalties would not last very
long. He suggested that the gas wells would most likely be shut
in, and something else would be happening. He expressed the
opinion that in 20 years the point would be mute.
4:03:19 PM
REPRESENTATIVE ARMSTRONG stated that the 2045 sunset would be
reasonable because it is 20 years away, and she expressed the
belief that future legislatures could easily extend this date,
while the public would be assured the current gas crisis is not
being used to enact an indefinite fix. She expressed the
importance of having a sunset clause.
4:04:08 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, Alaska State
Legislature, on behalf of the sponsor, the House Resources
Standing Committee, of which Representative McKay served as
chair, addressed the proposed sunset clause in Amendment 1, as
amended, to HB 393. He stated that the reason there is a zero-
royalty rate is because this concerns Alaskan gas, and any tax
on this would be passed to the consumer. He expressed the
opinion that there should not be any tax that would be passed
through to Alaskans. He added that to have the cheapest gas, it
should be royalty free.
4:04:45 PM
REPRESENTATIVE ARMSTRONG commented that the proposed legislation
is not only impacting natural gas, but it also would be
impacting oil royalties, and currently there is not an oil
crisis in the state.
4:05:05 PM
REPRESENTATIVE SADDLER expressed opposition to Amendment 1, as
amended, for the same reasoning he expressed earlier.
4:06:00 PM
CHAIR MCKAY expressed the belief that Amendment 1, as amended,
would make no difference, and he expressed support for the
amendment.
[The committee treated the objection as if it were maintained.]
4:06:18 PM
A roll call vote was taken. Representatives Armstrong, Mears,
and Dibert voted in favor of Amendment 1, as amended, to HB 393.
Representatives McCabe, Saddler, Wright, and McKay voted against
it. Therefore, Amendment 1, as amended, failed to be adopted by
a vote of 3-4.
4:07:21 PM
REPRESENTATIVE MEARS moved to adopt Amendment 2 to HB 393,
labeled 33-LS1006\R.2, Nauman, 4/4/24, which read as follows:
Page 1, line 1, following "shares;":
Insert "relating to disclosure of information
related to oil and gas production taxes;"
Page 9, following line 4:
Insert new bill sections to read:
"* Sec. 3. AS 43.55.890 is amended to read:
Sec. 43.55.890. Disclosure of tax information.
Notwithstanding any contrary provision of AS 40.25.100
or AS 43.05.230, [AND REGARDLESS OF WHETHER THE
INFORMATION IS CONSIDERED UNDER AS 43.05.230(E) TO
CONSTITUTE STATISTICS CLASSIFIED TO PREVENT THE
IDENTIFICATION OF PARTICULAR RETURNS OR REPORTS,] the
department shall make publicly available [MAY PUBLISH]
the following information under this chapter, [IF
AGGREGATED AMONG THREE OR MORE PRODUCERS OR
EXPLORERS,] showing by month or calendar year and by
lease or property, unit, or area of the state:
(1) the amount of oil or gas production;
(2) the amount of taxes levied under this
chapter or paid under this chapter;
(3) the effective tax rates under this
chapter;
(4) the gross value of oil or gas at the
point of production;
(5) the transportation costs for oil or
gas;
(6) qualified capital expenditures, as
defined in AS 43.55.023;
(7) exploration expenditures under
AS 43.55.025;
(8) production tax values of oil or gas
under AS 43.55.160;
(9) lease expenditures under AS 43.55.165;
(10) adjustments to lease expenditures
under AS 43.55.170;
(11) tax credits applicable or potentially
applicable against taxes levied by this chapter.
* Sec. 4. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. AS 43.55.890, as amended by sec. 3
of this Act, applies to information collected on or
after the effective date of sec. 3 of this Act."
Renumber the following bill sections accordingly.
4:07:33 PM
REPRESENTATIVE SADDLER objected for the purpose of discussion.
4:07:38 PM
REPRESENTATIVE MEARS spoke to her perspective on transparency
and accountability for Alaska's resources. Looking specifically
at Cook Inlet gas, she expressed the belief that smaller
operators would have no problem sharing their financials. She
pointed out that the largest operator [Hilcorp] also operates in
Texas, where there is fiscal transparency. She stated that
adding the amendment to the proposed legislation would be on par
with other business practices in the country, and she opined
that businesses in Alaska should not be treated any differently.
4:08:32 PM
MR. JEPSEN deferred to the chair.
4:09:16 PM
The committee took an at-ease from 4:09 p.m. to 4:10 p.m.
4:10:01 PM
CHAIR MCKAY stated that the discussion is on forcing S
corporations operating in Alaska to reveal competitive financial
information. He pointed out that this could be damaging to
current and future operations. He expressed opposition to the
proposed amendment.
4:10:33 PM
REPRESENTATIVE MCCABE expressed the understanding that Hilcorp
was invited to Alaska to do business 10 years ago, and at that
time the state knew that Hilcorp was an S corporation, and it
knew how Hilcorp reported its financials. He warned that the
amendment would "change the game" with an oil company, and he
argued that the state has done this over the past decades, and
this is why oil companies "shy away from Alaska." He expressed
opposition to Amendment 2.
REPRESENTATIVE SADDLER maintained his objection to the motion to
adopt Amendment 2.
4:11:25 PM
A roll call vote was taken. Representatives Dibert, Armstrong,
and Mears voted in favor of Amendment 2 to HB 393.
Representatives McCabe, Saddler, Wright, and McKay voted against
it. Therefore, Amendment 2 failed to be adopted by a vote of 3-
4.
4:12:14 PM
REPRESENTATIVE MEARS moved to adopt Amendment 3 to HB 393,
labeled 33-LS1006\R.3, Nauman, 4/4/24, which read as follows:
Page 1, line 1, following "shares;":
Insert "establishing an income tax on certain
entities producing or transporting oil or gas in the
state;"
Page 9, following line 4:
Insert new bill sections to read:
"* Sec. 3. AS 43.20 is amended by adding a new
section to read:
Sec. 43.20.019. Tax on income attributable to a
qualified entity. (a) If an entity has qualified
taxable income over $4,000,000 in a tax year, the
entity shall pay a tax of 9.4 percent on the qualified
taxable income over $4,000,000.
(b) The tax under this section does not apply to
a corporation paying tax under AS 43.20.011.
(c) The department may aggregate the qualified
taxable income of two or more entities for the purpose
of determining the tax due under this section if the
department determines that, without the provisions of
this section, the qualified taxable income would
reasonably be expected to be attributed to a single
entity.
(d) In this section,
(1) "entity" means a
(A) sole proprietorship;
(B) partnership; or
(C) entity that has elected to file federal
returns under 26 U.S.C. 1361 - 1379 (Internal Revenue
Code);
(2) "qualified taxable income" means income
from the production of oil or gas from a lease or
property in the state or from the transportation of
oil or gas by pipeline in the state before deductions
for
(A) dividends and gifts; and
(B) wages, salaries, bonuses, or other
similar payments to owners, partners, members, or
shareholders of the entity.
* Sec. 4. The uncodified law of the State of Alaska
is amended by adding a new section to read:
APPLICABILITY. AS 43.20.019, added by sec. 3 of
this Act, applies to the tax year of an entity
beginning on or after the effective date of sec. 3 of
this Act."
Renumber the following bill sections accordingly.
4:12:19 PM
REPRESENTATIVE SADDLER objected.
4:12:23 PM
REPRESENTATIVE MEARS stated that the subject of Amendment 3 has
been discussed by the committee before. She stated that the
amendment is most colloquially known as "closing the S corp
loophole." She noted that when Hilcorp took over BP's assets,
the result was a lack of income to the state. She noted that
Hilcorp pays corporate income taxes in Texas, but this does not
happen in Alaska. In looking at the state's financials, she
suggested that revenue should be compared with the needs of the
state. She maintained that it has been a decade since the oil
and gas tax structure in the state was examined. She argued
that this tax structure has not been working for Alaska, and the
revenue from the oil and gas industry needs to be examined.
4:13:46 PM
CHAIR MCKAY expressed disagreement with Representative Mears.
He argued that the permanent fund dividends have been decreasing
because of the cost of government. He stated that the
production on the North Slope has been increasing, with new
fields opening because the tax structure has not been changed.
He continued that tax stability and certainty is vital to long-
term industry investment.
4:14:33 PM
REPRESENTATIVE SADDLER argued that the tax structure created 10
years ago has been benefiting the state, and the amendment would
undo this progress. He provided examples of success with the
current tax structure. He noted Hilcorp's expertise in
obtaining more oil and gas out of mature fields. He restated
his opposition to Amendment 3.
4:15:31 PM
CHAIR MCKAY refocused the discussion to Cook Inlet, not the
North Slope. He expressed gratitude that Hilcorp came to the
state and "rescued Cook Inlet."
Representative Saddler maintained his objection to the motion to
adopt Amendment 3.
4:16:04 PM
A roll call vote was taken. Representatives Mears, Dibert, and
Armstrong voted in favor of adopting Amendment 3 to HB 393.
Representatives McCabe, Saddler, Wright, and McKay voted against
it. Therefore, Amendment 3 failed to be adopted by a vote of 3-
4.
4:16:58 PM
REPRESENTATIVE MCCABE moved to report HB 393 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE MEARS objected.
4:17:17 PM
A roll call vote was taken. Representatives McCabe, Saddler,
Wright, and McKay voted in favor of reporting HB 393 out of
committee with individual recommendations and the accompanying
fiscal notes. Representatives Armstrong, Mears, and Dibert
voted against it. [The tally was 4 yeas and 3 nays, but without
a 5-person majority of the full membership in favor, the vote
was not valid, and HB 393 was reported as failed to move out of
the House Resources Standing Committee.]
4:18:09 PM
The committee took an at-ease from 4:18 p.m. to 4:20 p.m.
HB 388-COOK INLET RESERVE-BASED LENDING
4:20:35 PM
CHAIR MCKAY announced that the next order of business would be
HOUSE BILL NO. 388, "An Act relating to state loans for oil and
gas projects in the Cook Inlet sedimentary basin; relating to
the Alaska Energy Authority; relating to the Alaska Industrial
Development and Export Authority; and providing for an effective
date." [Before the committee, adopted on 4/3/24 as a working
document, was the proposed committee substitute (CS) for HB 388
Version 33-LS1237\R, Nauman, 3/30/24, ("Version R").]
4:21:10 PM
REPRESENTATIVE MCCABE moved to adopt Amendment 1 to HB 388,
Version R, labeled 33-LS1237\R.1, Nauman, 4/4/24, which read as
follows:
Page 1, line 2. following "to":
Insert "the creation of subsidiaries by"
4:21:13 PM
CHAIR MCKAY objected for the purpose of discussion.
4:21:18 PM
TREVOR JEPSEN, Staff, Representative Tom McKay, Alaska State
Legislature, on behalf of the sponsor, the House Resources
Standing Committee, of which Representative McKay served as
chair, expressed the opinion that the language in the proposed
legislation is too broad, and Amendment 1 would tighten this up.
4:21:53 PM
CHAIR MCKAY removed his objection. There being no further
objection, Amendment 1 was adopted.
4:22:41 PM
The committee took an at-ease from 4:22 p.m. to 4:23 p.m.
4:23:10 PM
REPRESENTATIVE MCCABE moved to report CSHB 388, Version 33-
LS1237\R, Nauman, 3/30/24, as amended, out of committee with
individual recommendations, accompanying fiscal notes, and
authority for Legislative Legal Services to make technical and
conforming changes.
4:23:37 PM
REPRESENTATIVE MEARS objected for the purpose of discussion.
She expressed support for Alaska Industrial Development and
Export Authority (AIDEA) to provide loans for economic
development within the state, along with natural gas development
in Cook Inlet; however, given the other scope of AIDEA, she
argued that the case has not been made for why the proposed
legislation would be necessary. She expressed uncertainty that
the proposed legislation would provide advantages to the program
already in existence.
REPRESENTATIVE MEARS removed her objection.
4:24:32 PM
MR. JEPSEN stated that currently statute does not address
reporting requirements. He expressed the opinion that AIDEA is
actively looking at potential projects in Cook Inlet, and this
is an important portion of the proposed legislation. He added
that AIDEA also would be allowed to set interest rates below
market value, which would reinforce that the projects are
necessary for the state.
4:25:39 PM
BRANDON BREFCZYNSKI, Deputy Director, Alaska Industrial
Development and Export Authority, answered the question of why
the proposed legislation is necessary. He stated that AIDEA has
the ability to finance projects in Cook Inlet, but the proposed
legislation would add another tool, giving AIDEA additional
options if the legislature were to appropriate funds. He
pointed out that AIDEA would be able to issue loans below the
normal rate. He noted that AIDEA supports the piece that
creates subsidiaries, as currently AIDEA does not have accounts
to do this.
4:27:16 PM
REPRESENTATIVE SADDLER pointed out that in reference to reserve-
based lending, the state has borrowed money in the past based on
the oil in the ground after it was discovered. He added that
this would not be an appropriation, but "an empty bucket." He
said, "We may not need it, but we may be glad we have it."
4:28:17 PM
CHAIR MCKAY announced that there being no further objection,
CSHB 388(RES) was reported out of the House Resources Standing
Committee.
4:28:52 PM
The committee took an at-ease from 4:28 p.m. to 4:31 p.m.
HB 359-ONE-TIME PFD PAYMENT
4:31:20 PM
CHAIR MCKAY announced that the final order of business would be
HOUSE BILL NO. 359, "An Act relating to the permanent fund
dividend and a one-time permanent fund dividend payment and land
voucher; and providing for an effective date." [Before the
committee, adopted on 3/25/24 as a working document, was the
proposed committee substitute (CS) for HB 359, Version 33-
LS1292\B, Nauman, 3/15/24, ("Version B").]
4:32:00 PM
REPRESENTATIVE MCCABE moved to report CSHB 359, Version 33-
LS1292\B, Nauman, 3/15/24, out of committee with individual
recommendations and the accompanying fiscal notes.
REPRESENTATIVE MEARS objected.
4:32:14 PM
A roll call vote was taken. Representatives Saddler, Wright,
McCabe, and McKay voted in favor of the motion to move CSHB 359,
Version 33-LS1291\B, Nauman, 3/15/24, out of committee with
individual recommendations and the accompanying fiscal notes.
Representatives Armstrong, Mears, and Dibert voted against it.
[The tally was 4 yeas and 3 nays, but without a 5-person
majority of the full membership in favor, the vote was not
valid, and CSHB 359 was reported as failed to move out of the
House Resources Standing Committee.]
4:33:17 PM
The committee took an at-ease from 4:33 p.m. to 4:35 p.m.
4:35:42 PM
CHAIR MCKAY made closing comments.
4:36:12 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at [4:36]
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AM1 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM2 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM3 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM4 HB 394.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 394 |
| AM1 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM2 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM3 HB 393.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 393 |
| AM1 HB 388.pdf |
HRES 4/5/2024 1:00:00 PM |
HB 388 |