HB 394 SHALLOW NATURAL GAS LEASING                             
                                                                              
 HANS NEIDIG, Staff to Representative Scott Ogan, said the purpose             
 of this bill is to encourage development of shallow natural gas as            
 an alternative fuel source in rural Alaska.  HB 394 accomplishes              
 this by relieving the tremendous monetary and regulatory burdens              
 that currently plague independent gas developers in Alaska.                   
                                                                               
 He said that this is important to the State because rural Alaska              
 has numerous problems in dealing with remediation of fuel tanks.              
                                                                               
 SENATOR LEMAN asked Representative Ogan if he objected to the                 
 changes in the proposed CS.                                                   
                                                                               
 REPRESENTATIVE OGAN said he didn't have any objections to the                 
 changes.  He added the State spends $20 million per year on the               
 power cost equalization.  There is an approximately $500 million              
 problem with bioremediation although we are not solely responsible            
 for that.                                                                     
                                                                               
 EARL AUSMAN said he does a lot of work in rural communities on                
 energy related matters.  He strongly supported this bill saying it            
 could have long reaching positive effects on Alaska, especially               
 people in rural Alaska.                                                       
                                                                               
 DAVE LAPPI strongly supported HB 394 saying it is good for Alaska,            
 especially rural Alaska and the independent oil and gas industry.             
 He thought this would make an impact on the State budget with the             
 oil spill problems we have in rural Alaska.  He thought it would              
 help avoid future oil spills by not barging diesel fuel up and down           
 rivers in the middle of summer (because of flooding).                         
                                                                               
 JAMES HANSEN, Division of Oil and Gas, said he thinks that shallow            
 gas leasing is a good idea, but they feel a new program like this             
 needs to be examined to insure that it does what they want it to.             
 They want a straight forward process, something that is easy,                 
 simple to implement, and not encumbered by unnecessary                        
 administrative bureaucracy.  He emphasized that it needs thorough             
 examination.  He said it would be good to not have to draft new               
 regulations for this because that is a tremendous process in                  
 itself.                                                                       
                                                                               
 REPRESENTATIVE OGAN noted that Mr. Dave Hutchins from the Alaska              
 Rural Electric Association wanted to express his support of the               
 bill, but he had to leave.                                                    
                                                                               
 SENATOR LEMAN said they would set aside HB 394 and take it up again           
 on Friday.                                                                    
                                                                               
 SENATOR LEMAN asked Mr. Ausman if he had any objections to the                
 changes proposed in the CS.  MR. AUSMAN said he had no objections             
 to the changes.