HOUSE FINANCE COMMITTEE March 20, 2001 1:47 P.M. TAPE HFC 01 - 56, Side A TAPE HFC 01 - 56, Side B TAPE HFC 01 - 57, Side A TAPE HFC 01 - 57, Side B CALL TO ORDER Co-Chair Williams called the House Finance Committee meeting to order at 1:47 P.M. MEMBERS PRESENT Representative Eldon Mulder, Co-Chair Representative Bill Williams, Co-Chair Representative Con Bunde, Vice-Chair Representative Eric Croft Representative John Davies Representative Carl Moses Representative Richard Foster Representative John Harris Representative Bill Hudson Representative Ken Lancaster Representative Jim Whitaker MEMBERS ABSENT None ALSO PRESENT Pat Pourchot, Commissioner, Department of Natural Resources; Nico Bus, Administrative Services Manager, Division of Support Services, Department of Natural Resources and Department of Military & Veterans Affairs; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Kirk Frederickson, Deputy Commissioner, Department of Environmental Conservation; Dan Seamount, Commissioner, Alaska Oil and Gas Conservation Commission, Department of Administration; Bill Britt, Pipeline Coordinator, Department of Natural Resources; Joe Stam, Fire Program Manager, Division of Forestry, Department of Natural Resources. PRESENT VIA TELECONFERENCE Jim Clough, Energy, Division of Geological Surveys, Department of Natural Resources, Anchorage; Leroi Heaven, Mat-Su; Harold Riley, Alaska Army National Guard Installations, Department of Military & Veterans Affairs; Kelly Niccolo, State Fire Marshall, Anchorage; Stoney Wright, Department of Natural Resources. GENERAL SUBJECT(S):  Department of Natural Resources Department of Military & Veterans Affairs The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 22nd Legislative Session, contact 465- 2156. After the 22nd Legislative Session they will be available through the Legislative Library at 465-3808. #HB47  LOG SPEAKER DISCUSSION    TAPE HFC 00 - 56  SIDE A  000 CO-CHAIR WILLIAMS Called the House Finance Committee meeting to order to address capital budget requests for the Department of Natural Resources, and the Department of Military & Veterans Affairs.  100 ANNALEE MCCONNELL, Department of Natural Resources  DIRECTOR, OFFICE OF MANAGEMENT AND Introduced Commissioner Pat Pourchot from BUDGET, OFFICE OF Department of Natural Resources and other THE GOVERNOR agency representatives.  127 PAT POURCHOT, Addressed the gas pipeline project COMMISSIONER, component request in the amount of DEPARTMENT OF $10,242.8 million dollars. The project NATURAL RESOURCES would summarize State actions to be taken to facilitate the development of a pipeline for the North Slope natural gas. He added that actions include initiating work on issuing State right-of-ways; collecting data for permitting reviews; development of an overall project labor agreement to provide job opportunities for Alaskans; and reviewing of the 1977 agreement between Canada and the United States, and coordination with the Canadians to insure a collaborative approach.  421 Commissioner Expounded on the outreach work necessary Pourchot with for the gas project and the pre- application work. Commissioner Pourchot noted the permit and handling costs. He advised that during the effort, the Administration is attempting to eliminate any hurdles that occur within the large project.  593 Ms. McConnell Addressed options involved through the  projects.  723 Commissioner Noted that the Administration had Pourchot received a letter from Foot Hills, re- activating the right-of-way applications. Those applications have been dormant for a number of years.  850 Representative Inquired if the requested funds would be Harris used exclusively for the Alaska Highway route.  855 Commissioner Replied that they would, however, most of Pourchot the work could be applicable to any application. He added, that if an application was received under another route, through statute, the State would be responsible to investigate that route. He added that idea is not the intention at the current time.  911 Ms. McConnell interjected that the pre-application period is not limited to only one group. The budget assumption does assume only one application. For the work to be done, the route considered is currently the same.  1001 Representative Asked if consideration had been given to Harris the route of Valdez or Cook Inlet.  1014 Commissioner Explained that he did not know when those Pourchot decisions would be made available. There have been ideas that the gas route would move through Canada. He admitted that those are some of the questions to be addressed through the studies that are currently under way.  1057 Co-Chair Williams Questioned if the Administration was in correspondence with the gas companies at this time. Additionally, He asked how long are the permits good for.  1092 Commissioner Acknowledged that the federal government Pourchot is considering the permit question. Terms are usually good for between ten and twenty years. He noted that at this time, there are some legal questions on the table. Commissioner Pourchot addressed the "terms" associated with the permitting process. He noted that there is legislation to change the length of the permitting process.  1244 Co-Chair Williams Inquired about the correspondence underway with the oil companies.  1261 Commissioner Responded that the producers are serious Pourchot in their efforts to get an application, however, there has not been a guarantee of whether to proceed.  1317 Co-Chair Williams Referenced the Borax Mine in Ketchikan and how that company walked away from the project leaving the town in a "bad" place.  1356 Ms. McConnell Spoke to the employee concerns. She noted that some of the employee would be from within the departments and that some would be new. Once the project was completed, those departmental employees would return to their original jobs. She stressed that there is a lot to do, in order that the projects are not slowed down.  1435 Representative Croft Asked if any applications had yet been received.  1445 Commissioner Explained that there has been an Pourchot application "on the desk" since 1992, from Foot Hills. He added that the Administration is working with the Department of Law addressing right-of-way concerns.  1498 Commissioner Continued, the State has been using Pourchot studies from the supply/demand modality.  1552 Representative Croft Questioned the route chosen by the Administration.  1578 Commissioner Responded that it is assumed there will Pourchot be an application, which is acceptable. Most of the work to be done will center on both geological and surveying information provided through various studies. He added that much of the work is not specific to the route. He was not aware of other optional routes besides "over the top". The Administration does not believe that route would suit the needs of the people of Alaska.  1682 Representative Croft Questioned how the State could fund the beginning portion of the request without determining the route. He asked what part of the capital request should be deleted.  1738 Ms. McConnell Noted that there is more information available on the Yukon Delta Route. Most of the work that the request includes shares a common portion of route. She stressed that in order to accomplish the scope of the work, there are only three seasons in which the project can be undertaken.  1840 Representative Spoke to preserving the State's Davies "options". He inquired what money is anticipated to be used in order to guarantee that the lines are feasible  with the regulatory structure. He believed that the Stranded Gas Act would not allow for those concerns.  1925 Commissioner Was not comfortable answering those Pourchot questions at this time. He recommended that the Department come forward to address those concerns. Commissioner Pourchot acknowledged that was a subject of much concern and noted that it was being addressed statewide through the Gas Policy Council.  2051 Representative Hoped that the State was actively Davies pursuing some form of regulatory staging. He commented that there should be some "public driver". He asked that within the proposed expenditure, how much would be directed toward State ownership or "hub" concepts.  2118 Commissioner Noted that one of the studies had been Pourchot undertaken by the Department of Revenue to address those concerns.  2151 Representative Asked if any supported the fast track Davies supplemental funding.  2160 Ms. McConnell Replied that it was through State ownership concerns in the fast track supplemental.    TAPE HFC 01 - 56,  Side B  001 Ms. McConnell Stated that it had not been placed into the FY02 budget.  032 Representative Questioned who did not want to loose Whitaker another field season.  070 Commissioner Replied that the producers and the Pourchot agencies did not want to.  101 Representative Asked about the permitting proposition Whitaker and application process.  119 Commissioner Noted that it is a right-of-way Pourchot application which includes many aspects.  166 Representative Voiced his concern with the State's best Whitaker interest and the routing that has been chosen. He requested information regarding the Administration's decision.  209 Commissioner Explained that there are alternatives for Pourchot the highway route. One would be an "over the top" route or the Canadian route. He enumerated the benefits of each route and spoke to what would be in the best interest for Alaska.  353 Representative Asked about the unfavorable economics Whitaker associated with the situation.  370 Commissioner Explained that the Administration Pourchot believes that no one would be willing to  buy the gas for the price that the gas would cost if other routes were used.  386 Representative Disagreed. He believed that the State Whitaker should be cautious of these marketing opportunities. He believed that it would be in Alaska's best interest to have maximum exposure. He reminded the Commissioner that State law requires that the Legislature make that final determination.  478 Co-Chair Williams Noted that he intended to schedule a meeting to address solely the gas line issues.  506 Ms. McConnell Interjected that at this time, there are people on line to address these concerns.  592 KIRK FREDERICKSON, Spoke to the Department's fieldwork with DEPUTY COMMISSIONER, regard to the proposed gas pipeline. He DEPARTMENT OF referenced Page 4 of the handout. [Copies ENVIRONMENTAL on File]. He stated that the Department CONSERVATION plays an important role in projects such as the proposed gas pipeline. The Department is responsible for ensuring that impacts to the environment and human health are minimized. The project would require numerous permits, plan approvals, State certification of federal permits or approvals to operate under established general permits of regulations.  776 Ms. McConnell Mentioned the concerns voiced by the Department of Fish and Game noting that spokesperson was not able to stay but would be willing to testify at a later date.  878 Co-Chair Williams Asked if the agencies had already begun to prepare for the gas line to happen.  895 Ms. McConnell Commented on the pipeline preparation routes.  938 Representative Asked if the requested monies would help Lancaster with the re-permitting.  955 Commissioner Replied that would not generally happen, Pourchot however, there are overlaps such as the mapping within the Department of Natural Resources.  977 Representative Followed-up. The industry has asked the Hudson State's personal to help address obstacles. He asked if program receipts would be used for those services.  1082 Representative Suggested that some of the expenses for Hudson the mine geologist could be underwritten.  1104 Commissioner Responded that it would be difficult to Pourchot assess costs and reimbursements without an application.  1163 Co-Chair Williams Stressed that the producers are not talking to the Legislature. He emphasized that everyone wants to see the gas line go, but were not willing to spend money until there are more assurances. There are no guarantees that the producers are going to come in and make this happen.  1242 Ms. McConnell Stressed that some tasks need to be initially undertaken and cannot be billed to the industry. The statute is clear that post application expenses would be reimbursed. Pre-application costs are unclear. She stressed that the process should not be slowed by a lack of funds. She suggested that half of the expenses could be covered with statutory designated program receipts (STPR). She added that funding could be resolved in a supplemental.  1360 Co-Chair Williams Questioned if the costs could be incorporated in the current agencies budgets, and then be reimbursed in a supplemental, if the project goes forward.  1443 Ms. McConnell Observed that the State cannot control the producers, and that the State did not want to miss a years worth of activity.  1515 Ms. McConnell Noted that there are some differences between within the Governor's request for supplemental funding.  1552 Co-Chair Williams Reiterated support for the project. He questioned if funding could occur through Legislative Budget and Audit (LBA) Committee.  1579 DAN SEAMOUNT, AOGCC is required to evaluate the cost of COMMISSIONER, ALASKA production gas on oil production. Mr. OIL AND GAS Seamount discussed the reasons why the CONSERVATION study should be done early.  COMMISSION (AOGCC), DEPARTMENT OF ADMINISTRATION 1765 Representative Questioned how much of the gas pipeline Davies overlaps with the Alyeska renewal.  1811 Commissioner Noted that the State had not yet received Pourchot an application.  1842 BILL BRITT, PIPELINE Noted that Alyeska had done environmental COORDINATOR, work, which is expected again in a DEPARTMENT OF renewal application.  NATURAL RESOURCES 1967 Commissioner In response to a question by Pourchot Representative Davies, mentioned that the State is looking into a 50/50 share of the costs.    TAPE HFC 01 - 57,  Side A  024 Mr. Britt Discussed reimbursement.  152 Commissioner Noted that no firm reimbursement Pourchot decisions had been reached.  239 Commissioner Discussed Oil and Gas Royalties and the Pourchot accounting industry electronic reporting. He concluded that the project has saved funds and that it would develop standardized electronic formats.  558 Commissioner Reviewed the seismic data acquisition and Pourchot interpretation to promote oil exploration and the leasing request. The request would fund the acquisition of data on leases where the data is not required to be submitted to the State. The total amount of the request is $138 thousand general fund dollars.  750 Commissioner Discussed the emergency title defense-the Pourchot Prince William Sound request. He observed that State lands, which were submerged, have risen higher. The survey would prove that the land belongs to the State. The requested amount is $120 thousand general fund dollars.  841 Commissioner Reviewed the request for State park Pourchot emergency repairs. There is $42 million dollars in deferred park maintenance needs. The request would only address emergency health and safety repairs. The requested amount would be $400 thousand general fund dollars.  920 Commissioner Discussed the request for fire truck Pourchot engine replacements, which is an on-going expense. The State would like to hire two trucks. The amount of the request would be $200 thousand general fund dollars.  975 Representative Questioned if the Department participates Davies in the State fleet program.  NICO BUS, Noted that the State does participate in ADMINSTRATIVE the State fleet process, but that the SERVICES MANAGER, funding is separate. He noted that there DIVISION OF SUPPORT are insufficient funds in that fund. The SERVICES, DEPARTMENT Department pays for the customization of OF NATURAL RESOURCES funds. The State Fleet Fund only pays for the chaise.  1090 JOE STAM, FIRE Noted that there would be additional CPI PROGRAM MANAGER, requests for subsequent years.  DIVISION OF FORESTRY, DEPARTMENT OF NATURAL RESOURCES 1180 Commissioner Reviewed the request for the Fairbanks  Pourchot office facility roof maintenance and repairs request in the amount of $200 thousand general fund dollars.  1209 Commissioner Discussed the airborne geological and Pourchot geophysical mineral inventory request. The intent is to do 1,000 square miles each year. The amount of the request would be $250 thousand general fund dollars.  1300 Commissioner Reviewed the snow-machine trail Pourchot development and program grants request. He observed that the cost of registration would be used to support the grants as accordance with legislative intent. The amount of the request would be $200 thousand general fund dollars.  1362 Commissioner Reviewed the Chena Pump Road boat launch Pourchot river access purchase request. He noted that this is the only boat launch in the Fairbanks Tanana River area. The amount of the request would be $101.5 thousand general fund dollars.  1464 Mr. Bus Discussed the Recorder's Office equipment upgrades and records preservation. The Recorder's Office collects funds for operation. The request is based on passage of legislation and would be switched to program receipts if not passed. The amount of the request would be $225 thousand general fund dollars.  1532 Representative Spoke in support of the request.  Hudson 1548 Mr. Bus Discussed the Alaska Minerals Information At Risk Program: mining claims automation. He noted that the allocation would improve public access to public record systems. The amount of the request is $700 thousand federal receipt dollars.  1607 Mr. Bus Discussed the Agricultural Revolving Loan Land and Assets disposal. The funding would provide for disposal of the assets in the Interior and Southcentral Alaska. The requested amount would be $100 thousand agricultural loan fund dollars.  1636 Mr. Bus Addressed the National Fire Plan and the managing impacts of wildfires on communities and the environment. The requested amount would be $3.460 million federal dollar receipts and $2.178 million State designated receipt dollars.  1665 Representative Asked if the project was restricted to Davies the Kenai Borough.  1676 Mr. Bus Explained that more would be added.  1691 Mr. Bus Spoke to the Alaska post entry plant quarantine facility establishment request in the amount of $1.350 million federal receipt dollars.  1732 Mr. Bus Addressed the agriculture plant material center seed lab construction requested funding in the amount of $3,070.0 federal fund receipts. He noted that it is a State owned and operated facility. The present space in not capable of meeting the demands for seed testing and technology development.  1757 Mr. Bus Discussed the agricultural land sales for the agriculture industry request in the amount of $145 thousand State land dollars. The funding would provide staff and support services to sell agricultural land in Interior and Southcentral Alaska.  1798 Mr. Bus Spoke to the historic preservation and restoration projects, the US Army public works program request in the amount of $600 thousand federal receipt dollars. The State Office of History and Archeology is working in partnership with the Department of Army on historic preservation planning and restoration projects.  1827 Mr. Bus Continued, addressing the national historic preservation fund federal grant program FY02 request in the amount of $1,250 million dollars. The fund is a federal matching grant project with a 60% federal and 40% State match.  1852 Mr. Bus Spoke to the Mental Health Trust Land development and value enhancement request in the amount of $950 thousand mental health trust fund dollars. The office would contract for services related to the enhancement of parcel-specific trust land and resource assets.  1870 Mr. Bus Discussed the abandoned mine lands reclamation federal program request in the amount of $1.5 million federal receipt dollars. The Legislature enacted the Alaska Surface Coal Mining Control and Reclamation Act in 1983.  1888 Mr. Bus Addressed the boating safety, federal program request in the amount of $660 thousand federal receipt dollars.  1899 Mr. Bus Spoke to the land and water conservation fund federal grants request in the amount of $1.6 million federal receipt dollars.  He emphasized that outdoor recreation opportunities is very important for Alaskans. The request would provide a wide variety benefits including improved physical and mental health, activities for children to prevent delinquency, leadership and teamwork development and economic opportunities for individuals and local communities.  2072 Mr. Bus Discussed the national recreational trails federal program, an on-going project using federal receipts. The request amount would be $710 thousand federal receipt dollars.  2098 Mr. Bus Addressed the forest legacy federal grant program. He pointed out that it would be a new project. The ability to use the program to protect forested areas would not be limited to State park lands. The requested amount would be $500 thousand federal receipt dollars.   TAPE HFC 01 - 57, Department of Military & Veterans Affairs  Side B  001 Mr. Bus Spoke to the Army Guard facilities deferred maintenance request in the amount of $800 thousand dollars of which $600 thousand federal funds and $200 thousand general fund dollars. The funding would be used for deferred maintenance and scheduled renewal of the Army Guard facilities around the State.  060 Mr. Bus Noted the Air Guard facility deferred maintenance additional request in the amount of $600 thousand dollars of which $450 thousand federal receipt dollars and $150 thousand general fund dollars.  108 Mr. Bus Discussed the facilities spill prevention and countermeasures request in the amount of $120 thousand dollars with a State match required of $15,600 dollars.  165 Representative Questioned where the federal receipts Lancaster would come from.  184 Mr. Bus Replied from the Army Guard.  193 Mr. Bus Spoke to the federal scout readiness centers energy projects request in the amount of $300 thousand federal receipt dollars. The funds would be used to replace doors, windows, insulate floors and re-skin roof and walls with insulating panels in the existing centers.  230 Mr. Bus Addressed the Bethel readiness center planning and design request in the amount  of $750 thousand general fund dollars. He noted that funding was required as the nd initial design of a new center for the 2 Battalion, headquartered in Bethel.  298 Mr. Bus Addressed the federal scout readiness center energy projects in the amount of $300 million federal receipt dollars.  350 Mr. Bus Discussed the Alaska National Guard counter drug support program request in the amount of $100 thousand federal receipt dollars. He noted that the program participates in the US Department of Justice Forfeiture Program to help deter crime by depriving criminals of profits and proceeds from their illegal activities.  391 Mr. Bus Spoke to the Alaska Veterans' housing and health needs survey request in the amount of $200 thousand general fund dollars. He commented that this would be a one- time project.  435 Representative Asked if the request depended upon the Hudson passage of the pioneer home legislation.  453 Mr. Bus Replied that the study investigates all available options. Mr. Bus emphasized that Alaska does not have a veteran's home at this time.  496 Representative Asked if it was contained not in HB 88, Lancaster when could it be expected to be completed.  509 Mr. Bus Replied in early next year.  525 Representative Spoke about replacing the Juneau National Hudson Guard Armory. He noted that a site had been selected. He noted that it would be an armory in concert with the University of Alaska, Southeast. He pointed out that it had not been included in the proposed budget.  573 Mr. Bus Responded that new facility would need more funding. The Department is attempting to include it in the military budget of defense.  612 Co-Chair Williams ADJOURNMENT The meeting was adjourned at 4:10 P.M.  #