SJR 5-OFFSHORE OIL & GAS REVENUE  4:49:59 PM CHAIR GIESSEL announced that the next order of business would be SJR 5. 4:50:40 PM MICHELLE SYDEMAN, staff to Senator Bill Wielechowski, sponsor of SJR 5, presented it on behalf of the sponsor. She said everyone is aware of the vast oil and gas potential in the federal waters off our coasts (OCS) - more than a billion acres on more than 6,000 miles of coastline. This area is believed to contain the largest undiscovered energy resources in the United States, estimated to be 25 billion barrels of oil and 132 tcf/natural gas; more than the current estimates for the Atlantic and Pacific regions of the OCS combined. The potential for development is obviously enormous as is the potential benefit to the U.S. Treasury. A University of Alaska study found that energy production off Alaska could generate 35,000 jobs on average annually over a 50 year period; the total payroll an estimated $80 billion. Since statehood, the federal government has held numerous lease sales off our coasts and collected more than $8 billion for them. Unfortunately, Alaska has received little revenue in contrast to what happens when the federal government leases within the state's boundaries, in which case the host state receives 50 percent of the revenue - to compensate for any impacts they may bear as a result of that development. This is an automatic process that occurs off-budget at the federal level. The same should hold true for offshore development where costs and risks are often much greater. MS. SYDEMAN said in 2006, the federal government recognized the inequity and gave four states a 37.5 percent share of revenues generated from offshore development; that did not include Alaska. It did include Mississippi, Louisiana, Texas, and Alabama, and it makes to no sense for us to be left out of that sort of arrangement. She said fortunately the stars are coming closer in alignment in Washington, D.C. The Senate Energy and Natural Resources Committee is being by Senator Mary Landrieu, who has been a huge advocate of OCS revenue sharing. She has joined forces with Senator Lisa Murkowski and introduced a bill called Fixing America's Inequities with Review Act (FAIR). The White House is opposing this act and the primary reason is the cost and concern over the federal deficit. Senator Murkowski said this was short sighted because revenue sharing will enable the states to support offshore development by investing in roads, ports, and other necessary facilities, and to invest in the infrastructure that will enable that development to be safe and environmentally responsible. More off shore development will lead to greater revenues for the federal government. 4:55:22 PM MS. SYDEMAN said they had developed a committee substitute (CS) after consulting with Mr. Adrian Herrera oh Arctic Power who walked them through the White House's main concerns and those were addressed in the CS. He advised that action very soon would be helpful because Senator Landrieu would be pushing this in the near term; and having a resolution sponsored by a Democratic member of the state legislature would be helpful, because they were trying to convince a Democratic administration. SENATOR GIESSEL opened public testimony. 4:57:03 PM ADRIAN HERRERA, Coordinator, Arctic Power, Anchorage, Alaska, testified in support of SJR 5. He said their sole purpose is to argue for the environmentally responsible development of the federal lands in the Alaska Arctic, both on and offshore. He cautioned that the resolution must address the White House's specific concerns as laid out by the Congressional Budget Office Secretary during the hearings for the FAIR Act last year. Senior members of the committee support the bill and he expects it to move this year. It is also supported by Senator Begich who has a similar bill on revenue sharing but it is region specific. He said the FAIR Act had one hearing last year in July and will need another one. They have not come up with $6 billion, which the Congressional Budget Office warns the bill asks to pay, but it is spread over ten years. The White House's argument has to do with the reduction of funds going to the national Treasury. The President wants to use offshore revenues to fund the Land Water Conservation Fund (LWCF) nationwide and other environmental projects. But there is no intent to take a penny away from LWCF; so for SCR 5 to succeed, it has to address this concern. 5:00:30 PM He opined that both sides can be aligned, but it's a case of the state providing a rebuttal to the White House's arguments against this to say we understand your concerns, but you can fund LWCF and arrange the funding to states so that environmental projects are mitigated. He explained that the 37.5 percent is made up of two sectors: 27.5 percent goes to the state and then the state would have to apply to the Treasury for an additional 10 percent, which could only be spent on alternative energy development or environmental mitigation. Until the Treasury was satisfied of the projects submitted for money, it wouldn't award that 10 percent. He said this 10 percent is going for projects that are exactly the same as those in the LWCF and the President's other environmental projects. The new chairwoman has stated that these projects will be much better mitigated on a state level than by the Treasury of Department of Interior on a national level, since states are much more efficient at environmental mitigation and spending money appropriately with regard to OCS development. 5:02:30 PM SENATOR GIESSEL, finding no questions, thanked him for his testimony and closed public testimony. SENATOR GIESSEL thanked Ms. Sydeman for updating them on this legislation and said she was considering some amendments; therefore, SJR 5 would be held in committee. SENATOR MCGUIRE expressed her frustration about how Alaska is viewed by the federal government and she would love to see a few more whereases about what has been done in the state already to relocating villages to prevent coastal erosion, funding the Arctic University in Fairbanks, helping look at affordable housing in villages, and looking at funding for deep water ports. It's important to educate the federal government about what the state is doing with these funds and what it is already doing. For 20 years they had been asking for a Polar-class ice breaker and haven't gotten one and they had been asking for help developing the Arctic. Alaska has dug into its own coffers to do this and it would be nice to have some additional revenue sharing the way other Gulf Coast states have. She said $250 billion in infrastructure needs had been identified for the people of Alaska; it comes down to the potential for oil spills occurring in the Bering Sea that has fed the earth almost a billion tons of Pollock. SENATOR GIESSEL said those were excellent comments. [SJR 5 was held in committee.]