Legislature(2001 - 2002)
02/21/2001 03:35 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
February 21, 2001
3:35 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Drue Pearce, Vice Chair
Senator Pete Kelly
Senator Robin Taylor
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Rick Halford
COMMITTEE CALENDAR
SENATE BILL NO. 77
"An Act repealing the exception that applies to collection and
payment of interest of $150 or less on royalty or net profit share
underpayments and overpayments; and providing for an effective
date."
MOVED SB 77 OUT OF COMMITTEE
CS FOR HOUSE JOINT RESOLUTION NO. 7(RES)
Urging the United States Congress to pass legislation to open the
coastal plain of the Arctic National Wildlife Refuge, Alaska, to
oil and gas exploration, development, and production.
MOVED CS HJR 7(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 77 - No previous action to consider.
HJR 7 - No previous action to consider.
WITNESS REGISTER
Mr. Darwin Peterson
Staff to Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 77.
Mr. Mark Meyers, Director
Division of Oil and Gas
Department of Natural Resources
550 W 7th, Ste 800
Anchorage AK 99501
POSITION STATEMENT: Supported SB 77.
Representative Beverly Masek
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of HJR 7.
Mr. Ed Grasser
Staff to Representative Masek
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on HJR 7.
Mr. John Schoen
Audubon Alaska
308 G St, #217
Anchorage AK 99501
POSITION STATEMENT: Commented on HJR 7.
Ms. Adeline Raboff
No address provided
Fairbanks AK
POSITION STATEMENT: Opposed HJR 7.
Ms. Sue Schrader
Alaska Conservation Voters
Alaska Conservation Alliance
P.O. Box 22151
Juneau AK 99802
POSITION STATEMENT: Opposed HJR 7.
ACTION NARRATIVE
TAPE 01-15, SIDE A
Number 001
SB 77-NET PROFIT SHARE UNDER/OVERPAYMENTS
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:35 p.m. and announced SB 77 to be up for
consideration.
MR. DARWIN PETERSON, Staff to Senator Torgerson, sponsor, said,
In 1998, the Legislature enacted AS 38.05/135(g),
exempting the Department of Natural Resources from
calculating interest on small over or underpayments of
royalty if the interest is $150 or less. The cost of
calculating these small over/underpayments was more than
the interest received or credit applied. Prior to 1998,
DNR was calculating these small payments manually. For
the 12 months prior to October 31m 2000, the state
processed 1716 royalty filings where interest amounts
were between a negative $150 and a positive $150. The net
amount of these under/overpayments was a positive $4,096.
The effort of calculating, processing and tracking
interest for small under/overpayments was not cost
effective for either oil companies or the state. With the
advent of the state's new Oil and Gas Royalty Accounting
system, all interest is calculated electronically. Also,
most royalty payers are using mainframe computer systems
and sending their royalty reports electronically. The
failure to repeal AS 38.05.135(g) would require the
Department and royalty payers to reprogram their computer
systems to not compute under or overpayments of interest
less than $150.
The sophisticated computer systems used by the royalty
payers and the state are now able to quickly compute the
interest owed on even the smallest under or overpayment.
All the royalty payments are automatically summed
together and one wire transfer is used for payment. The
repeal of AS 38.05.135(g) will solve the problem of the
administrative burden on the part of the royalty payers
and the state to manually track very small amounts of
interest. It is an unnecessary expense to reprogram
computer systems to handle separate interest calculations
for these small amounts of interest, especially when a
much easier option is available.
MR. MARK MEYERS, Director, Division of Oil and Gas, supported SB 77
because it provides a more complete and accurate answer and involve
less work and it will be revenue neutral in the long run. He
thought the lessees would support the bill as well.
CHAIRMAN TORGERSON noted the committee had a letter of support from
Mr. Geoffrey Stein, Associate General Tax Counsel, BP.
SENATOR PEARCE moved to pass SB 77 from committee with the
accompanying fiscal note and individual recommendations. There were
no objections and it was so ordered.
HJR 7-ENDORSING ANWR LEASING
CHAIRMAN TORGERSON announced HJR 7 to be up for consideration.
REPRESENTATIVE MASEK, sponsor, said:
Opening the coastal plain to oil and gas exploration and
development is supported by a majority of Alaskans
including those who live close to the coastal plain. One
of the leading arguments made against opening ANWR that
is made by environmental preservationists concern the
health of the Porcupine Caribou herd. Records indicate
that concern may be overstated as the Central Arctic
Caribou herd has prospered since development at Prudhoe
Bay has taken place. Furthermore, most biologists have
not offered any conclusions that development would be
detrimental. That herd has survived development at
Prudhoe Bay, but it has grown since it was opened.
REPRESENTATIVE MASEK said that production at Prudhoe Bay is
declining and ANWR might represent our best opportunity to locate
and recover sizeable reserves of oil. It is in our financial and
best interest as a state to provide opportunities to extend oil
production and use of the existing infrastructure.
It has been said that reserves we locate in ANWR may only
provide six months of oil given America's current rate of
consumption. Alaskans should not look at this opportunity
that way. A discovery in ANWR would provide years of good
jobs for Alaskan and it would insure that the state
treasury continues to receive oil revenues for a much
longer period. Both jobs and state revenues are something
that other industries cannot replace, at least not at the
current levels provided by the oil industry. With the
election of President Bush and continued control of
Congress by Republicans, Alaska has its best chance right
now to persuade the federal government and the American
public to open ANWR. With the energy problems California
is experiencing along with the increase in energy costs
across the nation over the past year, Alaska has a window
of opportunity to convince the American public that
exploration and development in ANWR would be in the
nation's best interests. We should take advantage of that
opportunity.
SENATOR LINCOLN said her district covers Arctic Village and Venetie
where the Porcupine Caribou herd is part of their life. They have
been consistent with their concern for the core area for calving
and that they might move from there. She asked how she would
respond to those concerns.
REPRESENTATIVE MASEK said her point was valid, but since the
pipeline opened over 20 years ago, the caribou herd has and
continues to prosper. Biologist are saying that the pipeline is
good in that area, because in some cases the caribou go to it to
get in the shade and in some cases they go up on the gravel beds
where there is a wind and they can get away from the bugs. She is
under the impression the Gwich'in people have applied for permits
in the past around Kaktovik and they did not find any oil, so it
seems a contradiction if they are saying the caribou are not being
protected. If they had found oil, they would have developed it. "If
the caribou herd was in decline, we would have to look at it
differently."
SENATOR LINCOLN said that Arctic Village and Venetie never applied
for any oil exploration for themselves. She has also witnessed the
caribou under the pipeline and the buildings, but she can't get to
them there. She didn't know if their migration had changed due to
the pipeline. She is very concerned for the migration pattern of
this Porcupine Caribou herd. Her mother told her when she grew up
in Rampart that you could almost walk across the backs of the
caribou that were bank to bank in the Yukon River that went right
through their village. In her lifetime, Senator Lincoln said, she
hadn't seen those caribou at all, although she has heard there is a
herd of about 25 that is 30 miles below Rampart.
SENATOR LINCOLN appreciated the improvements in HJR 7 recognizing
how much her villages depend on the caribou for their livelihood,
but she could not support it because of just knowing the area and
how much it could possibly have a negative affect on the lives of
the people there.
REPRESENTATIVE MASEK responded that she understood Senator
Lincoln's concerns and she also thought protecting the animals was
important. There were a lot of moose in the area she grew up in and
couldn't say the oil effected them. She pointed out that a number
of Senator Lincoln's constituents work for the oil companies and
she is on the Doyon Board which has a drilling rig on the Slope.
Opening up ANWR would open up more possibilities for her
constituents.
Number 1100
CHAIRMAN TORGERSON asked why there was a "no more clause." He
thought it might cloud the issue as well as the 9010 part telling
Congress we might be coerced into accepting something we don't want
to.
REPRESENTATIVE MASEK replied that issue had been discussed in the
House Resource Committee and she felt it was an important message
to send to Congress.
CHAIRMAN TORGERSON replied that he didn't disagree, but he thought
it might cloud the main message, which is to open up ANWR. The
resolution gets into wilderness areas, the no more clauses, and the
9010.
REPRESENTATIVE MASEK said she didn't know if it would get to the
Delegation in time to deliver it to the Energy Council before it
met in D.C. if they would start changing it.
SENATOR TAYLOR noted that on the bottom of page 2 she addresses the
concerns of the Porcupine Caribou herd, but on page 3, line 12 the
same thing is restated and is coupled with the concept of using the
state's workforce to the maximum extent possible. It seemed like an
odd combining of the two.
MR. ED GRASSER, staff to Representative Masek, explained that to a
large extent this was the same resolution that passed last year,
although the House changed parts of it. One "whereas" was taken out
because it was no longer timely.
SENATOR TAYLOR noted that back in the 70's everyone thought the
Central Arctic Caribou herd would be hurt by the pipeline, but all
the statistics he has heard say that herd is 7 to 9 times greater
today since the building of the pipeline. He asked if there was any
factual basis for the concerns that have been expressed about the
Porcupine Caribou herd.
MR. GRASSER replied that he had discussed that issue with Pat
Volcanberg, ADF&G who said that the normal rule of thumb has been
to err on the side of caution if you don't have scientific data. It
appears that most caribou herds throughout Alaska would be able to
sustain the development in ANWR because they traditionally change
their migration routes. However, biologists just aren't sure.
SENATOR TAYLOR said he wasn't questioning the validity of a
concern. He was questioning the basis for it. There must be some
basis for it in fact. He thought evidence in the form of the
Central Arctic Caribou herd actually increasing 7 to 9 times after
the pipeline was built would indicate that the facts are that if
you build another pipeline, you will probably help the caribou in
that area, not hurt them.
MR. GRASSER said he wasn't aware of any evidence.
SENATOR ELTON said he thought it was interesting that as part of
the packet there were two documents; one was an overview by Ken
Whitten, retired ADF&G Research Biologist, which noted:
The Porcupine Caribou herd far exceeds the Central Arctic
herd in importance as a regional subsistence resource and
the preferred coastal plain habitats in the Arctic Refuge
are much narrower than the range of the Central Arctic
herd and the disturbances so far have only displaced
Central Arctic caribou and other coastal plain
inhabitants - a few predators. But if a similar special
displacement, and he acknowledges that there was a
displacement of the Central Arctic herd, which would
occur in the Arctic Refuge, caribou would be driven to
foothills and mountains with more abundant predators
and/or lower quality forage and consequently, that herd
may not fare as well as the Central Arctic herd did,
apparently.
SENATOR ELTON pointed out another document from some biologists,
both active and inactive. He thought it was clear there is some
dispute about what might happen.
MR. JOHN SCHOEN, senior scientist, Audubon Alaska, said prior to
working for Audubon, he spent 20 years as a wildlife biologist
for the ADF&G. While there, he supervised research work on ANWR
in 1989 and 90, including work by Ken Whitten. He serve as an
affiliate professor of wildlife biology at UAA.
MR. SCHOEN urged caution regarding oil development and its
effects on the wildlife and wilderness within the coastal plain
of ANWR saying:
The Refuge is the United States' only conservation unit
that encompasses an intact arctic ecosystem. In 1960,
when the original Arctic National Wildlife Range was
established, the purposes for its establishment were for
preserving the areas unique wildlife, wilderness and
recreation values.
MR. SCHOEN read an excerpt of a letter signed by over 250 North
American scientists including 60 Alaskan scientists regarding the
Arctic Refuge:
Five decades of biological study and scientific research
has confirmed that the coastal plain of the Arctic Refuge
forms a vital component of the biological diversity of
the Refuge and merits the same kind of permanent
safeguards and precautionary management as the rest of
the original conservation units. In contrast to the broad
coastal plain to the west, the coastal plain in the
Refuge is much narrower, from 15 - 40 miles to the Brooks
Range. This unique compression of habitat concentrates
the occurrence of a wide variety of species, including
polar bears, grizzly bears, wolves, caribou, musk ox and
more than 130 migratory birds. The coastal plain provides
essential calving and post-calving habitat to the
Porcupine Caribou herd. The Gwich'in Nation of Alaska and
Canada depends upon the sustained productivity of the
Porcupine herd and are justifiably concerned about
security. Extensive research on the Central Arctic herd
at Prudhoe Bay indicates that there have, indeed, been
appreciable losses of preferred calving and summer
habitats in response to petroleum development.
MR. SCHOEN continued:
Biologists have also identified conservation concerns
with other wildlife populations in the Arctic Refuge
including polar bears, musk oxen and snow geese. Based on
our collective experience and understanding of the
cumulative affects of oil and gas exploration and
development on Alaska's North Slope, we do not believe
the impacts have been adequately considered for the
Arctic Refuge and mitigation without adequate data on
this complex ecosystem is unlikely.
MR. SCHOEN added that they do not think this issue is just a simple
issue of mitigating impacts to caribou, but it's more a fact of
safeguarding the entire ecological integrity of the Refuge
including the coastal plain, which is largely the biological heart
of the Refuge. He agreed with others that there is a high degree of
uncertainty and a need for precautionary measures.
Number 1800
SENATOR PEARCE said the Porcupine Caribou herd had been under
minute research for quite a few years in terms of calving areas.
Calving did not always take place in the heart of the calving
grounds in the 1002 area, rather, in some years the snow was deep
and the calving took place further up the mountain. She asked if
there was research that the sustained productivity of the herd was
less in those years.
MR. SCHOEN replied that he thought there were only two out of the 8
to 10 closely monitored years that the Porcupine herd did not calve
in the "core calving area" within the 1002 area. There are concerns
that if they go further up the foothills, they're in an area that
won't provide as valuable or nutritious forage and that area is
more prone to higher density of predators, including grizzly bears
and wolves.
SENATOR PEARCE said she thought there were more than two years out
of 10 that the primary calving was not in that core area and didn't
think there was any scientific research showing there was less
sustained productivity in those years. She noted that the letter
Mr. Schoen referenced was based on research that was done before
1991 and does not include some of 90's when some of the calving
happened outside of the core area.
CHAIRMAN TORGERSON commented that the Canadian Gwich'in argument is
starting to carry less weight with him when they are starting to
sell drilling rights on their land and building pipelines.
MS. ADELINE RABOFF, Fairbanks, said she was born and raised in the
Arctic village of Fort Yukon. She does not agree with this
resolution at all. She wanted to see ANWR maintained as a
wilderness. Any development there would be detrimental to the
wildlife. She mentioned that persistent pollutants contribute to
global warming and are detrimental to fish and waterfowl, as well.
A lot of water would be taken from the lakes and rivers causing
more impacts.
SENATOR LINCOLN asked her if the Porcupine Caribou herd changed its
migratory patterns or something happened in the core calving area,
what would be the impact upon Arctic Village and Venetie.
MS. RABOFF answered that it would probably create a real hardship.
In approximately 1950, the Porcupine Caribou herd was in the
Sheenjek Valley and all the calves died. [indisc.]
MS. SUE SCHRADER, Alaska Conservation Voters and Alaska
Conservation Alliance, said they are sister, nonprofit
organizations dedicated to protecting Alaska's environment through
public education and advocacy. They represent over 35,000
registered Alaskan voters. Their members are concerned with the
energy distribution problems going on in California and the effect
they are having on the national economy, but they don't think
opening ANWR to exploration and drilling is the answer to the
current situation.
MS. SCHRADER reminded the committee that there are thousands of
Alaskans who are joined by hundreds of thousands of Americans and
they are all opposed to opening the Refuge. They have a variety of
reasons. "It is disingenuous to lead the American people to believe
that we can drill our way to oil independence," she said.
The amount of oil there is a debate. The U.S. contains about five
percent of the world's population and yet every year we use 25
percent of the world's produced oil. We are not going to be
satisfied by simply opening the Refuge. She said seeing pictures of
caribou rubbing themselves on the pipeline does not accurately
portray the impacts of oil development on the North Slope. The
impacts that Prudhoe Bay have caused on caribou are scientifically
documented Ms. Schrader said. Also, resources vital to the
subsistence lifestyle and all the North Slope should be protected.
There should be scientific evidence proving that oil exploration
and drilling will not impact the caribou and other resources that
the Gwich'in depend on before ANWR is opened. Not doing that
clearly makes opening ANWR a human rights issue. She hoped they
would take time to read the letter that 200 scientists signed so
they could have an understanding of why so many Alaskan and
Americans are going to fight very hard to protect ANWR.
MS. SCHRADER commented about the Porcupine Caribou herd that a
letter dated December 11 states that in four of the past 30 years
the caribou have not calved on the coastal plain. The scientific
articles substantiating that claim are attached to that letter.
SENATOR LINCOLN asked if there was research she could site that
would answer Senator Taylor's concerns.
MS. SCHRADER responded that Senator Elton pointed him in the right
direction to Ken Whitten's article.
TAPE 01-15, SIDE B
MS. SCHRADER said it states that there are 5,000 caribou roughly in
the mid 1970s when oil development first started and in the year
2000 it is 27,000. She said the scientific articles are listed
there and could be found at the Juneau Library.
SENATOR TAYLOR clarified that he had reviewed the referenced
documents and he said that the "scientists" who signed the letter
weren't all scientists. Most of them were managers of environmental
organizations. Mr. Whitten doesn't even start looking at the herd
until the mid-70s when the herd was less than 5,000. He had asked
if there was any historic or factual basis for the concerns
expressed on adversely impacting a caribou herd.
MS. SCHRADER responded that she had a scientific article that she
would provide him.
SENATOR TAYLOR moved to pass CSHJR 7(RES)am from committee with
individual recommendations.
SENATOR KELLY objected for purposes of discussion and asked if
there was an outdated section that needed to be taken out.
CHAIRMAN TORGERSON said he thought there was testimony that it was
already taken out.
SENATOR TAYLOR mentioned a typographic error that the drafters
could clean up on page 3, line 12. That was so ordered.
SENATOR KELLY removed his objection.
SENATOR LINCOLN objected for purposes of discussion. She always has
difficulty with weasel words like "maximum extent possible" on page
3, line 12 where it says "and uses the state's work force to the
maximum extent possible;"
She said it doesn't mean anything and she doesn't like to see that
kind of language in a resolution. The last "Further Resolved" was
new language from last year. After noting those things, she said
she wasn't supporting the resolution anyway, but would remove her
objection.
CHAIRMAN TORGERSON said that without objection, CSHJR 7(RES)am
moved from committee with individual recommendations and the
accompanying fiscal note.
CHAIRMAN TORGERSON adjourned the meeting at 4:30 p.m.
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