03/20/2015 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB8 | |
| HJR4 | |
| SB57 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 8 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HJR 4 | TELECONFERENCED | |
| += | SB 57 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 20, 2015
3:31 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Mia Costello, Vice Chair
Senator John Coghill
Senator Peter Micciche
Senator Bert Stedman
Senator Bill Stoltze
Senator Bill Wielechowski
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 8
"An Act relating to the regulation and production of industrial
hemp."
- HEARD & HELD
HOUSE JOINT RESOLUTION NO. 4
Urging the United States Congress to provide a means for
consistently and equitably sharing with all oil and gas
producing states adjacent to federal outer continental shelf
areas a portion of revenue generated from oil and gas
development on the outer continental shelf to ensure that those
states develop necessary infrastructure to support outer
continental shelf development and preserve environmental
integrity.
- MOVED SCS HJR 4(RES) OUT OF COMMITTEE
SENATE BILL NO. 57
"An Act relating to the development of state emission standards
in accordance with the federal Clean Air Act."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 8
SHORT TITLE: INDUSTRIAL HEMP PRODUCTION LICENSES
SPONSOR(s): SENATOR(s) ELLIS
01/21/15 (S) PREFILE RELEASED 1/9/15
01/21/15 (S) READ THE FIRST TIME - REFERRALS
01/21/15 (S) RES, JUD, FIN
03/20/15 (S) RES AT 3:30 PM BUTROVICH 205
BILL: HJR 4
SHORT TITLE: OFFSHORE OIL & GAS REVENUE SHARING
SPONSOR(s): REPRESENTATIVE(s) SADDLER
01/21/15 (H) READ THE FIRST TIME - REFERRALS
01/21/15 (H) RES
02/27/15 (H) RES AT 1:00 PM BARNES 124
02/27/15 (H) Moved HJR 4 Out of Committee
02/27/15 (H) MINUTE(RES)
03/02/15 (H) RES RPT 6DP
03/02/15 (H) DP: JOSEPHSON, SEATON, TARR, OLSON,
HAWKER, TALERICO
03/04/15 (H) TRANSMITTED TO (S)
03/04/15 (H) VERSION: HJR 4
03/06/15 (S) READ THE FIRST TIME - REFERRALS
03/06/15 (S) RES
03/16/15 (S) RES AT 3:30 PM BUTROVICH 205
03/16/15 (S) Heard & Held
03/16/15 (S) MINUTE(RES)
BILL: SB 57
SHORT TITLE: CLEAN AIR ACT PLAN
SPONSOR(s): SENATOR(s) GIESSEL
02/20/15 (S) READ THE FIRST TIME - REFERRALS
02/20/15 (S) NRG, RES
03/17/15 (S) NRG AT 1:00 PM BUTROVICH 205
03/17/15 (S) Moved CSSB 57(NRG) Out of Committee
03/17/15 (S) MINUTE(NRG)
03/18/15 (S) NRG RPT CS 3DP 1NR NEW TITLE
03/18/15 (S) DP: MICCICHE, BISHOP, EGAN
03/18/15 (S) NR: HOFFMAN
03/18/15 (S) FIN REFERRAL ADDED AFTER RES
03/18/15 (S) RES AT 3:30 PM BUTROVICH 205
03/18/15 (S) Heard & Held
03/18/15 (S) MINUTE(RES)
WITNESS REGISTER
MATT MOSER, staff to Senator Ellis
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on SB 8 for the sponsor.
SCOTT HENDRICK, Program Director
National Conference of State Legislature (NCSL)
Denver, Colorado
POSITION STATEMENT: Commented on SB 8.
LARRY DEVILBISS, Mayor
Mat-Su Borough
Palmer, Alaska
POSITION STATEMENT: Provided supporting information for SB 8.
BRYCE WRIGLEY, President
Alaska Farm Bureau (AFB)
Delta Junction, Alaska
POSITION STATEMENT: Supported SB 8.
JIM SYKES, representing himself
Palmer, Alaska
POSITION STATEMENT: Supported SB 8.
FRANK TURNEY, representing himself
Fairbanks, Alaska
POSITION STATEMENT: Supported SB 8.
FRANCI HAVEMEISTER, Director
Division of Agriculture
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 8.
CHAD HUTCHISON, staff to Senator Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on Amendment 1 for HJR 4 for the
sponsor.
REPRESENTATIVE SADDLER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HJR 4; said he supported
Amendment 1.
NORMAN ROKEBERG, representing himself
Commissioner, Regulatory Commission of Alaska (RCA)
Anchorage, Alaska
POSITION STATEMENT: Opposed SB 57 (not the official RCA
opinion).
EMMA POKON, Assistant Attorney General
Department of Law (DOL)
Anchorage, Alaska
POSITION STATEMENT: Commented on SB 57.
ALICE EDWARDS, Deputy Commissioner
Department of Environmental Conservation (DEC)
Anchorage, Alaska
POSITION STATEMENT: Commented on SB 57.
ACTION NARRATIVE
3:31:04 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:31 p.m. Present at the call to
order were Senators Stedman, Costello, Micciche, Stoltze,
Coghill, Wielechowski and Chair Giessel.
SB 8-INDUSTRIAL HEMP PRODUCTION LICENSES
3:32:13 PM
CHAIR GIESSEL announced SB 8 [version 29-L/S028|A] to be up for
consideration.
3:32:17 PM
MATT MOSER, staff to Senator Ellis, sponsor of SB 8, explained
that industrial hemp has been cultivated by humans for thousands
of years. The Declaration of Independence and the Constitution
were both written on hemp papers. It is ironic that a crop so
important to American history is still illegal today.
He said 19 states have embraced pilot studies on hemp production
across the country and it is, in fact, an issue with which to
fight federal overreach. It is also an issue that brings
Republicans and Democrats together, which is what drew Senator
Ellis to the issue originally. He said that Kentucky Senators
Mitch McConnell and Rand Paul have introduced the Industrial
Hemp Farming Act that has numerous co-sponsors.
3:34:25 PM
MR. MOSER provided a sectional analysis of SB 8 as follows:
Section 1 adds a new section to Title 3 entitled Industrial Hemp
and defining it as an agricultural crop in Alaska. It
establishes a license procedure in the Department of Natural
Resources (DNR) that allows a licensed hemp producer to plant,
grow, harvest, process, possess, sell or buy industrial hemp. It
also requires the DNR to adopt regulations.
Language on page 2, line 6, says a licensed industrial hemp
grower must document and file verification that hemp seeds they
have used are certified and document to have less than .3
percent tetrahydrocannabinol (THC), the psycho active ingredient
in recreational marijuana. Language on page 2, line 19, sets
this definition in statute.
Section 2 on page 2, line 21, creates an affirmative defense to
prosecution for a properly licensed hemp grower.
Section 3 on page 3, line 4, allows the Department of Public
Safety (DPS) to conduct a national criminal history record
check, something that other states have included in their
statutes.
Section 4 on page 3, line 6, states that a properly licensed
producer of industrial hemp is not required to be licensed as a
marijuana establishment.
3:37:40 PM
SENATOR STOLTZE asked why there has to be a criminal history
registry record check if hemp is a benign substance.
MR. MOSER answered that the sponsor agrees that it is probably
not necessary, but that component of the bill used model
legislation from other states.
3:38:46 PM
SENATOR WIELECHOWSKI said it is still considered a controlled
substance by the federal government and asked if he would be
arrested for eating a hemp granola bar.
MR. MOSER answered that hemp products across the United States
are growing by double digits every year, but right now the U.S.
is an importer of industrial hemp raw materials from China and
Canada. So, the feds won't interfere with his snack.
SENATOR MICCICHE asked if Alaska has right growing conditions
and soils to grow it.
MR. MOSER answered that there are a number of different
opinions. He found information about hemp growing in Northern
Russia, and British Columbia has a white paper about hemp
production in Canada.
3:40:33 PM
SCOTT HENDRICK, Program Director, National Conference of State
Legislature (NCSL), Denver, Colorado, said the NCSL is a
bipartisan organization that presents research and analysis to
state legislatures and doesn't take positions on issues debated
in the states. His purpose today was to provide information on
how other states have handled this issue.
He said that the increasing number of industrial hemp
discussions are driven by the inclusion of a provision in the
2014 Federal Farm bill that authorizes states to pursue
industrial hemp pilot projects through their universities or
Departments of Agriculture. Some states have passed legislation
to promote the industrial hemp industry prior to the federal law
changes last year. To date, 22 states have passed laws on
industrial hemp; 7 states - Delaware, Hawaii, Illinois,
Michigan, Nebraska, New York and Utah - have laws establishing
hemp research programs usually administered by a state agency or
university. Connecticut and New Hampshire have passed laws to
study industrial hemp. Thirteen other states - California,
Colorado, Indiana, Kentucky, Maine, Montana, North Dakota,
Oregon, South Carolina, Tennessee, Vermont, Virginia, and West
Virginia - have passed laws to establish a commercial industrial
hemp program similar to what is being considered in SB 8. Some
of these states will not start issuing licenses until they are
granted waivers from the Drug Enforcement Agency (DEA) or until
changes are made to federal law. So, some states have laws on
the books, but they aren't being acted upon now. Several states,
such as Washington and Colorado, are moving forward with their
commercial hemp programs. He would focus his remarks on these
types of laws and how they compare to the language in SB 8.
MR. HENDRICK said several other policy options adopted by other
states were not included in the legislation. He said SB 8 is
very representative of industrial hemp program laws enacted in
other states. It defines industrial hemp, establishes a
licensing scheme with regulatory requirements for growers,
provides for inspection and oversight, and grants an affirmative
defense for prosecution under state substance control laws.
Other states have general addressed these areas, too.
SB 8's definition is in line with other states' definition. Some
states have also chosen to include in their definition that the
plant must have a "Delta-9" THC concentration of not more than
0.3 percent and many specify that the THC limits are "on a dry
weight basis."
MR. HENDRICK said the licensing scheme in SB 8 is similar to
other states' laws. However, section (1)(c) doesn't require GPS
coordinates or a map of the growing area for the growing areas
as other states have required. Indiana and Kentucky prohibit
anyone who has been convicted of a drug related offense in the
last 10 years from obtaining a growers license. Some states
require written consent with the license application that
explicitly allows access to the growing property for testing and
inspections. Some states set terms for licenses stating that
they are only valid for a certain time period, usually 1-3
years. Oregon's law states that a license is a personal
privilege and not transferrable.
3:45:48 PM
Regulatory requirements in section (1)(d) have a provision for
the licensee to provide documentation that seeds planted are of
a type and variety certified to grow industrial hemp having no
more than 0.3 percent THC. Other states have more detailed seed
certification requirements in statute; for example, California's
law establishes an approved list of seed types and Colorado's
law formally establishes a seed certification program. Some
states have slightly different regulatory requirements for seed
growers as opposed to those growing the crop, itself. The
requirements for the seed growers relate to inspection, keeping
records of who they sell to, preserving those records for a
certain time period, and requirements as the amount and type of
inventory they can hold at any one time.
MR. HENDRICK said SB 8 would also require the licensee to share
with the state any contracts to grow industrial hemp. This is a
small difference from others, but Colorado actually requires
proof of a contract before a license can be issued. Most of the
other regulatory requirements closely align with language in
other states. He said some state laws have more detailed
oversight for things like how inspections and testings can take
place and what to do if test samples come back with THC amounts
higher than lawfully acceptable.
3:47:21 PM
Section 2 of SB 8 provides an affirmative defense for
prosecution under the Controlled Substance laws. Some states,
such as Colorado, extended this protection to include people who
are processing, selling or otherwise distributing industrial
hemp grown by a person who is registered under their law. In
Montana, in order for the defense to apply, the licensee must
"have valid applicable controlled substances registrations with
the U.S.DEA."
3:48:01 PM
MR. HENDRICK said additional policy options that other states
have adopted are create a board or advisory committee to advise
on laws, regulations, enforcement and budgetary matters. Some
have adopted detailed seed registration certification programs.
Some specifically set up an industrial hemp fund to support the
program. Money going into these funds usually includes
registration or licensing fees. Some states specifically
authorize grants from foundations or private individuals.
Colorado uses a portion of its revenues from marijuana sale
taxes to support the industrial hemp fund, as well.
3:48:59 PM
In terms of penalties, some states authorize civil penalties of
up $2,500 per violation and some have minimum acreage
requirements, usually 5 acres or greater for growers of the crop
and 2.5 acres or more for seed cultivators.
MR. HENDRICK said some states have considered the transportation
of hemp away from the growth site and require agents
transporting the harvest to carry the licensing documentation
with them. California requires sample testing of industrial hemp
crops immediately before the harvest.
SENATOR STOLTZE asked if individual states does its own seed,
soil and product certification.
MR. HENDRICK replied that some states haven't established a seed
certification program and some have.
SENATOR STOLTZE said he was more concerned about the levels of
drug content.
MR. HENDRICK replied that the level of drug content is set at
the same amount as for the crop, itself.
SENATOR STOLTZE asked if each state is responsible for
conducting those tests.
MR. HENDRICK answered yes.
SENATOR STOLTZE asked to determine fiscal impact, if the federal
government is able to render any assistance for certification as
with other agricultural products.
MR. HENDRICK answered he wasn't aware of any federal assistance.
SENATOR MICCICHE said it seems like the background checks seems
a little extreme if it doesn't have potential for abuse and
asked him to explain why.
3:53:06 PM
MR. HENDRICK answered that he couldn't speak to why, but he had
heard someone say that allowing industrial hemp might be a way
for people to grow marijuana in those plots. It could be that
industrial hemp is still considered to be a controlled substance
on a federal level.
3:54:15 PM
SENATOR MICCICHE asked at what point would a controlled
substance not require control.
MR. HENDRICK answered that he wasn't sure, because he wasn't an
expert on federal law. The states have definitions for the
industrial hemp plant and some define industrial hemp products
separately from the plant. Zero levels of THC wouldn't be an
issue.
SENATOR STOLTZE asked about possible federal assistance with
marketing and other facets of the agricultural community.
MR. HENRICK responded that he would look into what federal
assistance is available.
SENATOR STOLTZE added "or prohibited."
3:56:31 PM
LARRY DEVILBISS, Mayor, Mat-Su Borough, Palmer, Alaska, said he
is a farmer and knows that the industrial hemp will not be
confused visually with a marijuana plant. They are not remotely
alike. He didn't think it had a massive commercial potential for
Alaska, but it probably has a niche value. The seed is available
at places like Costco and he has one 92 year old constituent who
credits his health all to hemp and has a bible verse to support
it.
4:00:04 PM
BRYCE WRIGLEY, President, Alaska Farm Bureau (AFB), Delta
Junction, Alaska, supported SB 8. He said the two crops of hemp
and marijuana are significantly different. Hemp is a very
versatile crop providing fiber and oil that can be used in a
wide range of products in the health food world. In fact hemp
seeds are considered a super food with up to 20 percent protein.
The U.S. imports $2 billion worth of hemp products per year and
it seems that if the products are safe to import, they could
also be safely grown here. The low level of THC contained in
industrial hemp provides the necessary safeguards to the public
health.
MR. WRIGLEY said it isn't clear whether industrial hemp can be
grown to maturity here, so that the desired products could be
processed into suitable items. The development of hemp varieties
with the required low THC concentration, the short season and
other desirable traits is the proper purview of the University
of Alaska Fairbanks as it is a land grant university with land
facilities in different areas of the state to provide a wide
range of trial locations. He stressed that it is important to
conduct this research in a controlled manner by legitimate
researchers who can evaluate the traits, measure the THC levels
and screen for unintended risks. Even if no varieties are found
that can mature in Alaska's latitude there is promise for
industrial hemp as a cover crop for green manure or for weed
suppression. The proper methods for determining whether this is
a good opportunity for Alaskan farmers is for UAF to do the
research and pass the breeder seed through the Plant Material
Center to individual farmers to grow.
4:02:24 PM
SENATOR STOLTZE asked if the Farm Bureau officially endorsed
growing hemp in the past.
MR. WRIGLEY replied this week is the first time it came before
the AFB and they endorsed SB 8 officially.
SENATOR COSTELLO asked how large of an industry hemp would be
and if any farmers had expressed interest in growing it.
MR. WRIGLEY answered that he hadn't heard of anyone wanting to
grow it. It has maturity issues in Alaska's latitude. Alaska
struggles with rotational crops being limited particularly in
the north as to what can be rotated with barley and grains.
There are possibilities that hemp could provide a green manure
crop or a method of suppressing weeds because it grows very
densely.
SENATOR COSTELLO asked if the research should be done by UAF or
individual farmers.
MR. WRIGLEY replied that his strong recommendation would be to
do it through UAF, because they have the capability of
evaluating various aspects of hemp as a crop and determining
what varieties would be the best, THC levels and things like
that. It would helpful to have the University provide that
research first, because accredited and land grant universities
were established to provide that service. The information was
meant to be disseminated through cooperative extension and the
Plant Material Center was tasked with growing those crops as
they were determined to be viable. He thought it was important
to reestablish the importance of the University in that process.
4:06:18 PM
SENATOR STOLTZE asked if the hemp plant could become invasive.
MR. WRIGLEY answered that it can, but it is spread by speed. One
hopes if it can mature here that it would be managed properly
and that the plant would be harvested before mature seed
setting. That is another compelling reason to involve the
University.
CHAIR GIESSEL thanked him for his testimony and opened public
testimony.
4:07:49 PM
JIM SYKES, representing himself, Palmer, Alaska, supported SB 8.
He is also a member of the Mat-Su Borough Assembly, but is not
speaking for them, but they were okay with the Mayor's testimony
earlier. The idea of putting a THC dry weight and allowing for
inspection at any time of a crop and testing is important,
especially with medical and recreational marijuana.
4:10:01 PM
FRANK TURNEY, representing himself, Fairbanks, Alaska, supported
SB 8. He said the real terminology is cannabis, not marijuana
that has been used as a racist tool against blacks and
minorities, has been grown for medicinal and industrial uses for
10,000 years. Cannabis sativa L is grown for industrial
production like fiber and oils; cannabis sativa is grown for
medicinal and recreational uses. Unlike other biomass that need
a lot of water, but hemp needs just a little bit of water and a
little bit of sunshine: 10 tons per acre for three or four
months growing time and 50,000 products can be made out of it.
People worry about sterilizing the seed, but now a hemp vodka
named Purgatory is being made in Wasilla; it is authorized by
the DEA and certified by the State of Alaska. They get their
seeds sterilized from Canada. Industrial hemp should be grown in
Alaska.
4:12:41 PM
SENATOR STOLTZE asked why the department needs the fiscal note.
FRANCI HAVEMEISTER, Director, Division of Agriculture,
Department of Natural Resources (DNR), Anchorage, Alaska,
replied that the fiscal note is strictly to write the
regulations for this crop. That would allow the industry to move
forward and possibly start production of the crop.
4:14:50 PM
SENATOR STOLTZE noted there were zero out-year costs and asked
if this becomes an industry what additional costs would be
involved.
MS. HAVEMEISTER answered that the department would be the
licensing agency as well as the regulator.
SENATOR STOLTZE said when he had the commercialization of
marijuana bill in the State Affairs Committee he was troubled,
because of the division's role which included making agriculture
revolving loan funds and seed certification, storage and
enhanced security, and a whole myriad of costs for which it is
not doing now had a zero fiscal note saying that hemp was the
Division of Commerce's problem. He didn't see the difference.
MS. HAVEMEISTER replied that the difference between this bill
and the one on marijuana is that this language and hemp
production would be allowed through the Farm bill and it is
written into the Farm Bill that the Divisions of Agriculture and
the Universities can be involved in research.
4:17:33 PM
SENATOR STOLTZE asked who in her division would be responsible
for certification and THC testing.
MS. HAVEMEISTER replied that at this time the Division of
Agriculture doesn't have capability to do the THC tests. If
funding were to come through, it potentially could be done
through them.
SENATOR STOLTZE said he wasn't asking if funding was coming
through; legislation is coming through and it has implications
for funding. He didn't want to pass the bill and then see the
need for funding. He was disappointed that he wasn't getting
answers.
CHAIR GIESSEL pointed out that the bill will go to the Finance
Committee as well as the Judiciary Committee. Seeing no further
comments, she left public testimony open and held SB 8 in
committee.
HJR 4-OFFSHORE OIL & GAS REVENUE SHARING
4:19:43 PM
CHAIR GIESSEL announced HJR 4 to be up for consideration.
SENATOR COGHILL moved to adopt Amendment 1, 29-LS0281\A.2.
29-LS0281\A.2
Nauman
3/20/15
AMENDMENT 1
OFFERED IN THE SENATE TO HJR 4
Page 1, line 5, following "integrity":
Insert "; urging the United States Congress to
reject any proposal to divert or otherwise reduce
revenue sharing to the coastal states and their
political subdivisions under the Gulf of Mexico Energy
Security Act of 2006; and urging the President of the
United States to direct, to the maximum extent
possible, federal funds received from outer
continental shelf development, and not dedicated to
states or other federal programs, to federal
infrastructure in the affected states"
Page 1, lines 7 - 13:
Delete all material and insert:
"WHEREAS the state, which has more coastline than
the rest of the United States combined, requests that
the United States Congress pass legislation that
allows the state to equitably share revenue generated
on the outer continental shelf of the state; and"
Page 2, lines 7 - 8:
Delete "federal oil and gas leases in outer
continental shelf areas adjacent to each state"
Insert "leases covered under phase one of the
Gulf of Mexico Energy Security Act of 2006; phase two
of the Gulf of Mexico Energy Security Act of 2006
expands the definition of "qualified outer continental
shelf revenue" and continues to share revenue on an
adjacency factor but includes an annual revenue-
sharing cap of $500,000,000 that applies through 2055"
Page 3, line 5, following "opportunities":
Insert "or, alternatively, could be used for
deficit reduction"
Page 3, line 11, following "integrity":
Insert new material to read:
"; and be it
FURTHER RESOLVED that the Alaska State
Legislature urges the United States Congress to reject
any proposal to divert or otherwise reduce revenue
sharing to the coastal states and their political
subdivisions under the Gulf of Mexico Energy Security
Act of 2006; and be it
FURTHER RESOLVED that the Alaska State
Legislature urges the President of the United States
to direct, to the maximum extent possible, federal
funds received from outer continental shelf
development, and not dedicated to states or other
federal programs, to federal infrastructure in
affected states"
SENATOR STOLTZE objected for discussion purposes.
CHAD HUTCHISON, staff to Senator Coghill, sponsor of Amendment
1, explained that the amendment was based on ongoing
conversations they had had with Senator Murkowski's staff, Mike
Pawlowski on how to increase Alaska's share of offshore revenue.
He said that right now, Alaska is under the authority of the
Outer Continental Shelf Lands Act (OCSL), which means that it
receives 27 percent for offshore revenues in areas 3-6 miles
away for the coast. The way it works is that the 27 percent is
taken out by the federal government for offshore leasing and
given back to the state so it can use it to increase
infrastructure on shore. The only relevant field that is privy
to this provision is the North Star Field in the Beaufort Sea,
but the expectation is that if the Liberty Field comes on, it
would increase that revenue.
Concurrent to that is the Gulf of Mexico Energy Security Act in
which the Gulf States - Alabama, Texas, Louisiana, and
Mississippi - receive 37.5 percent of the offshore revenues.
They get more for a number of reasons: because it occurred in
2006 that had the right type of political influence and a
tremendous amount of drilling and in an area that is subject to
hurricanes.
4:23:12 PM
Alaska wants to increase the amount of offshore revenue it gets
from the federal government.
SENATOR STOLTZE said this proposal replaces a contentious
provision that would have disrupted a historical argument the
state has made and made it much stronger and asked if it
requires a title change.
MR. HUTCHISON answered yes.
CHAIR GIESSEL said the title change was on the amendment page.
SENATOR COSTELLO said one congressional office has indicated
support and asked if the entire congressional delegation been
contacted about this amendment.
4:24:49 PM
MR. HUTCHISON that have had briefings with representative of
Senator Sullivan, but the primary person that is most familiar
with the oil and gas is Mr. Pawlowski and they rely on him at
this point to communicate the message to the others in the
delegation.
SENATOR COGHILL said they are trying to give a tool to
congressional delegation that adds Alaska's voice go to the
other states' that opposes distributing that 37.5 percent to
other federal or conservation programs instead of it going back
to the states.
REPRESENTATIVE SADDLER, sponsor of HJR 4, Alaska State
Legislature, Juneau, Alaska, said he supported the amendment.
SENATOR STOLTZE removed his objection.
CHAIR GIESSEL announced that Amendment 1 was adopted. Finding no
further comments, she closed public testimony.
SENATOR COSTELLO mentioned that this resolution has bi-partisan
support in the other body. It is an important issue of debate
that Congress will be having.
SENATOR STOLTZE said he appreciated that Senator Murkowski was
taking the lead on this.
SENATOR COSTELLO moved to report HJR 4, as amended, from
committee with individual recommendations and attached fiscal
note(s). There were no objections and therefore, SCS HJR 4(RES)
moved from committee.
SB 57-CLEAN AIR ACT PLAN
4:30:04 PM
CHAIR GIESSEL brought SB 57 back before the committee and
invited Mr. Rokeberg to continue commenting on the bill. [CSSB
57(NRG), 29-LS0523\G was before the committee.]
4:30:34 PM
NORMAN ROKEBERG, Commissioner, Regulatory Commission of Alaska
(RCA), Anchorage, Alaska, said his opinions on SB 57 are not
official RCA opinions. He clarified his December 1 comments on
SB 57. He said it would require the drafting of a state
implementation plan that may prohibit the submission of a set
from the state. Under the bill the state would have to develop
and proceed with a plan but then it would run into the bill's
requirements which he found troubling. For example, section
(a)(1), on page 1, line 13, indicates that this does not result
in increased electrical utility rates and it would have a
disproportionate effect on households of low to moderate
incomes.
MR. ROKERBERG said page 7 of his comments referring to the
impact of EPA's mandate because of the goals they set and their
impact of shutting down Healy's plants 1 and 2 for the 45,000
Golden Valley Electric Association (GVEA) ratepayers in
Fairbanks. The estimate of increased cost would be $.05-.07 per
kilowatt hour, bringing rates up to $.29-.31 kilowatt hour or a
26 percent increase. The analysis is extremely difficult,
because the RCA does not have the capability to be to determine
the distinction between low and moderate income from a broad
retail rate. The impacts would be $450 per year across all
retail ratepayers. One could assume that increases will impact
low and moderate ratepayers even with a plan that would decrease
greenhouse gases.
4:34:27 PM
Texas, for instance, believes an in-state plan will raise costs
10 percent, but if the EPA does it, it will be 44 percent.
Similarly with the state of Ohio at 36 percent.
Additionally, subsection 2 regarding electrical reliability,
resource adequacy and transmission, is very vague and difficult
to understand. Closing the coal plants in Fairbanks would
exacerbate the problems they have now in terms of reliability.
Additionally, number three, a big part of the EPA plan is to
introduce a greater amount of renewables, but particularly
energy efficiencies and this will clearly impair existing
electrical generation capacity. Number four, obviously if there
is any reduction in Healy 1, GVEA has indicated they are
scheduling its potential retirement sometime around 2023. He was
not sure how that would impact the meaning of the bill, but it
would cost in terms of employment. These hurdles may prohibit or
restrict the ability of the state to do a plan and it is hanging
over the heads of the folks doing it and may have an impact on
the quality of their work.
MR. ROKEBERG said the RCA could look into the areas specific to
electric power, but doing all the rest of the things creates an
extra burden on them. The goal is to just get an exemption from
the EPA and to write a plan that Alaska can live with.
Further, he said Alaska has a long history of fighting against
federal intrusion on policy issues. He also differed on the
notion that not filing a plan would be beneficial to the mining
industry. He didn't think it would be helpful at all. Alaska
needs to write a plan it can live with.
SENATOR STEDMAN said he heard Mr. Rokeberg say that Rule 111(d)
would not impact the North Slope oil basin, but he hears
differently from the companies up there.
MR. ROKEBERG responded that at this point the 111(d) provision
only impacts five utilities on the Railbelt; it has no impact on
the North Slope. That is one of the problems. In every other
state, these designs are statewide, but in Alaska enforcement is
restricted to the Railbelt area. Efficiencies made in renewable
and energy efficiencies there are not even being counted by the
EPA. In addition, the Railbelt has an entire new generation
fleet and the EPA rule applied in 2012. So, a plan needs to be
written that would account for those new plants.
SENATOR STEDMAN said that energy is Alaska's biggest industry
and his understanding from the industry is that it will affect
them.
4:40:51 PM
CHAIR GIESSEL said the EPA is already in Alaska and she had
received letters of support for SB 57 from Alaska's Railbelt
Cooperative Transmission and Electric Company (ARCTEC), the
Alaska Chamber, the Teamsters, the Fairbanks Chamber, Consumer
Energy Alliance, the Miners Association, and more diverse groups
and she wasn't sure what Mr. Rokeberg was advocating for. The
bill advocates for a waiver at the very onset and to have the
rest of the data available to the legislature before any kind of
plan would be submitted seems only transparent.
MR. ROKEBERG said she had done an excellent job of getting
support for the bill, but he believed that the bill is based on
the premise that submitting a plan is not good and that the
requirements do not ultimately serve Alaska's purposes in
seeking an exemption. It adds work and analysis cannot even be
performed for many sections of the bill by the departments,
because they don't have economists on staff, which gave rise to
the fiscal note. In addition, it also gives authority to the DEC
whereas the original comments were developed by a working group
that cuts across numerous agencies that have expertise in doing
that. Putting the authority in DEC could create the need for
further fiscal notes.
CHAIR GIESSEL responded that, in fact, DEC has an economist on
staff and the new zero fiscal note comes about because of HB 140
that passed last year requiring departments to produce a good
faith estimate on the cost of implementing regulations. Federal
actions that require compliance were explicitly written into the
statute through HB 140. That funding, amounting to $278,000 in
FY16 provides for the procurement of an economist III position
as well as contractual assistance for the development of cost
estimates including data collection, analysis, and report of
findings in the amount required for the contract.
SENATOR GIESSEL said it is spelled out on page 2 of the fiscal
note. SB 57 requires the DEC to perform this analysis; they have
the money and it is unencumbered for FY16. The original fiscal
note estimated about $100,000 over the two fiscal years for the
contractual assistance and that would be included in what was
passed last year. So, in fact, this bill has a zero fiscal note.
4:45:37 PM
SENATOR STEDMAN said he is generally hesitant when committees
start zeroing out fiscal notes to avoid the Finance Committee.
CHAIR GIESSEL said this fiscal note came from the Division of
Legislative Finance.
SENATOR COSTELLO asked if the Department of Law (Department of
Law) could say whether the EPA has the authority under the
111(d) rule to regulate in this manner. In a way they are
recognizing that it has this authority by responding to it in a
manner this legislation does, which is to allow Alaska to seek
an exemption. How does that work?
4:48:31 PM
EMMA POKON, Assistant Attorney General, Department of Law (DOL),
Anchorage, Alaska, responded that the state is currently
participating in litigation in the Washington, D.C., Circuit
challenging Rule 111(d) and EPA's authority to issue the
proposed regulation. This legislation would be outside of the
legal question she is prepared to answer. EPA is continuing to
say that they believe they have the authority for this and the
rule will be issued this summer; the court will decide in the
end whether or not EPA has the authority.
SENATOR COSTELLO said she sits on the Department of Law's budget
subcommittee and earlier this week she asked the Attorney
General Craig Richards what the state's plan is on pushing back
against Rule 111(d). His memo in response says that the Clean
Power Plan rule is an example of an area where the state felt it
necessary to push back against the EPA. It went on to say that
the state is essentially submitting comments dealing with the
EPA's interpretation and how they believe it is wrong. She said
the state attached a legal analysis explaining why it believes
the EPA's proposed interpretation is improper. It mentions the
state is intervening in a lawsuit. Her concern is that the
Department of Law (DOL) is already engaged in this issue, but
maybe it should wait until the legislature weighs in.
4:52:24 PM
MS. POKON said the litigation was started a while ago in the
last administration and she couldn't say which branch of
government should be first to make a statement about the EPA's
authority.
CHAIR GIESSEL commented that this bill is the second line of
defense if the lawsuit should fail.
SENATOR WIELECHOWSKI asked if the state passes this and then
tries to put a plan in place, what happens if the feds reject
it.
MR. POKON replied that the feds would implement a plan.
SENATOR WIELECHOWSKI asked the likelihood that the state would
receive an exemption.
MS. POKON replied that Alaska has been given a lot of
exemptions.
4:54:44 PM
SENATOR WIELECHOWSKI asked if anyone else had asked for an
exemption.
MS. POKON replied that she had not seen specific request for an
exemption or waiver from the rule, but other states have
objected to EPA's authority or commented in a negative fashion.
SENATOR WIELECHOWSKI asked if it is possible that Alaska could
fail to produce an SIP in accordance with our own stringent
criteria and in turn cause ourselves to be subjected to a
federal implementation plan.
MS. POKON answered that her reading of SB 57 is that it would
require DEC to make affirmative determinations of the effect of
the state plan and it would not be submitting a state plan for
approval to the EPA until the determinations could be made. If
DEC could not make those determination then they wouldn't be
submitting a state plan, which under the terms of the Clean Air
Act would result in a federal implementation plan.
SENATOR WIELECHOWSKI said in other words, the legislature could
be making it so hard for DEC to come with a plan that meets
federal requirements such that the federal government rejects it
and then implements a federal plan.
MS. POKON replied that is a possible outcome.
SENATOR COGHILL said he liked what SB 57 was trying to do, but
maybe this should go into effect if the feds start giving us a
hard time on the exemption rather than doing it before the
exemption request is settled. Has the state already applied for
an exemption?
4:58:09 PM
SENATOR STOLTZE asked whether the 111(d) provisions are
implemented or in the development process and that might change
the relevancy of their approach.
4:58:41 PM
ALICE EDWARDS, Deputy Commissioner, Department of Environmental
Conservation (DEC), Anchorage, Alaska, responded that the EPA
has not finalized the rule making for 111(d); the state
submitted comments on December 1, which was at the end of the
comment period. The EPA has indicated that they will finalize
ruling making this summer. In the multi-agency (RCA, Alaska
Energy Authority (AEA), DEC and the Governor's Office) comments
to EPA, the state requested an exemption for this rule making
along with other associated comments. They don't know for
certain whether or not an exemption will be granted.
SENATOR COGHILL questioned the constitutionality of the proposed
rule and thought we need to focus there as long as possible, and
asked if SB 57 would back up their comments or weaken that
position.
MS. EDWARDS answered that state comments take three approaches;
they start with the legal aspects, which Department of Law spoke
about; it asks for the exemption and then depending on where EPA
landed they also put in information that might address some of
the ruling making issues if they moved forward and either of the
options came through. Then the real question becomes: in the end
it is not known how the final rule will look or how the state's
comments or litigation is going to be resolved. If the state
fails to get an exemption, the question becomes how the state
will develop a state plan and if the bill will allow development
of it and meeting the requirements.
5:02:40 PM
SENATOR STEDMAN clarified that the Senate Resources Committee
prepared the fiscal note is.
CHAIR GIESSEL said it may say that, but the consultant to it was
Legislative Finance.
SENATOR COSTELLO asked if the department could comment on her
concern, which is that the state cannot submit a plan that shows
there is no retail electric service rate increase. Every state
realizes that the consumer is the one who will pay and saying
that the state has to submit a plan that has no effect on
increased retail service rates could be tying our hands.
Finding no further questions, Chair Giessel held SB 57 in
committee.
5:04:45 PM
CHAIR GIESSEL adjourned the Senate Resources Committee meeting
at 5:04 p.m.