HOUSE SPECIAL COMMITTEE ON OIL AND GAS February 6, 1996 10:24 a.m. MEMBERS PRESENT Representative Norman Rokeberg, Chair Representative Scott Ogan, Vice Chair Representative Gary Davis Representative Bill Williams Representative Tom Brice Representative Bettye Davis Representative David Finkelstein MEMBERS ABSENT All members present. COMMITTEE CALENDAR * HOUSE BILL NO. 388 "An Act revising laws relating to oil and gas leasing to authorize a program of areawide leasing." - HEARD AND HELD * HOUSE BILL NO. 389 "An Act relating to `best-interest findings' for oil and gas leases." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 388 SHORT TITLE: AREAWIDE OIL & GAS LEASING SPONSOR(S): REPRESENTATIVE(S) ROKEBERG,B.Davis JRN-DATE JRN-PG ACTION 01/05/96 2368 (H) PREFILE RELEASED 01/08/96 2368 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2368 (H) O&G, RESOURCES, FINANCE 02/06/96 (H) O&G AT 10:00 AM CAPITOL 124 BILL: HB 389 SHORT TITLE: BEST INTEREST FINDINGS OIL LEASES SPONSOR(S): REPRESENTATIVE(S) ROKEBERG,B.Davis JRN-DATE JRN-PG ACTION 01/05/96 2368 (H) PREFILE RELEASED 01/08/96 2368 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2368 (H) O&G, RESOURCES, FINANCE 02/06/96 (H) O&G AT 10:00 AM CAPITOL 124 WITNESS REGISTER KENNETH A. BOYD, Director Division of Oil and Gas Department of Natural Resources 3601 C Street, Suite 1380 Anchorage, Alaska 99503-5948 Telephone: (907) 762-2547 POSITION STATEMENT: Testified on HB 388 and HB 389 GEORGE R. FINDLING, Manager Government and Public Relations ARCO Alaska, Incorporated P.O. Box 100360 Anchorage, Alaska 99501 Telephone: (907) 263-4174 POSITION STATEMENT: Testified on HB 388 and HB 389 ACTION NARRATIVE TAPE 96-8, SIDE A Number 000 The House Oil & Gas Special Committee was called to order by Chairman Norman Rokeberg at 10:24 a.m. Members present at the call to order by Chairman Norman Rokeberg were Representatives Rokeberg, Ogan, G. Davis and Williams. A quorum was present. This meeting was teleconferenced to Anchorage and Fairbanks. CHAIRMAN NORMAN ROKEBERG announced that the agenda was HB 388 and HB 389. HB 388 AREAWIDE OIL & GAS LEASING  HB 389 BEST INTEREST FINDINGS OIL LEASES  Number 118 CHAIRMAN ROKEBERG said HB 388 and HB 389 were companion bills and that it was hard to address one bill without the other. He said the two topics of HB 388 and HB 389 were separated because the subject matter was different in some ways. He added that if either HB 388 and HB 389 pass, it will be in effect a way to streamline the leasing and the best interest findings process. He referred to a work session, dated December 18, 1996, and said, at that time, HB 388 and HB 389 were developed. He said committee substitutes and sponsor substitutes were handed out this morning, and apologized. Representative Brice and Representative Finkelstein joined the committee meeting at 10:30 a.m. Number 274 CHAIRMAN ROKEBERG read from his HB 388 sponsor statement. In the Alaska statute it states that "it is the best interest of the state to encourage an assessment of its oil and gas resources, allowing maximum flexibility in the methods of issuing leases." He said the aim is to give the commissioner and his director the ability to do business with the private sector. "The provisions of this bill grant the commissioner of the Department of Natural Resources (DNR) new flexibility to meet the needs of the petroleum industry in acquiring access to lands for exploration." He added that this had been an outstanding issue for a number of years. He said HB 388 mandates annual lease sales of acreage previously offered, limits best-interest findings to substantial new information, eliminates the five year limit on "exempt" and re-offered" sales and lastly it establishes a program of areawide oil and gas leasing to cover the entirety of both the oil and the gas reservoir. He concluded that HB 388 gives the director of the Division of Oil and Gas (DO&G) discretionary authority to include such areas the director deems appropriate, such as areas onshore of the Arctic Slope and portions of Cook Inlet. CHAIRMAN ROKEBERG said the Governor introduced bills that specifically involve best interest findings in the North Slope onshore areas, north of the Umiat baseline. He said the committee will hear testimony from the Administration. The intent of HB 388 is to compliment their authority and give the director more tools to break down barriers and obstacles, as well as mandating the annualized leasing offers. Number 442 CHAIRMAN ROKEBERG then discussed HB 389. He said HB 389 involves best-interest findings, which is the written determination by the commissioner of the DNR, as written in the statutes, on whether the "interests of the state will best served," by leasing the area under consideration for proposed oil and gas activities. He said best-interest findings take into consideration all facts pertinent to the land, resources, property or interest in them and can take from six months to one or more years to complete. The period of time that a best-interest finding is valid is unclear in statute. CHAIRMAN ROKEBERG said HB 389 allows the DO&G to revise existing best interest findings when substantial new information is presented to the department. Currently, if there is new information, the DO&G must spend the resources and time to revise the best-interest findings. The HB 389 calls for a revision only when the new information is substantial, information that is essential and critical in regards to the best interests of the state. A revision in best interest findings would only be done when new information significantly impacted the leasing area. The revision would include a period of public comment. CHAIRMAN ROKEBERG concluded that the intent of HB 389 is to reduce the time, effort and funding required by the DO&G to meet its statutory mandate and streamline the leasing process. Number 571 CHAIRMAN ROKEBERG said HB 388 and HB 389 might need further work to bind them closer together. Number 590 KENNETH A. BOYD, Director, Division of Oil and Gas, Department of Natural Resources was first to testify. He said he had just received copies of HB 388 and HB 389, but added that he has had discussions with Chairman Rokeberg and is familiar with these issues. He said he would limit the discussion to the broad principals of legislation. He said he would avoid sections of the bill and cited Title 38 which has one section referring back to a previous section which related to another section. He said he would discuss the general principals of leasing and areawide leasing. Representative Bettye Davis joined committee meeting at 10:36 a.m. MR. BOYD said areawide leasing was born out of discussion with industry some months ago. Areawide leases offer areas of land, consistently wanted by industry, on a regular basis. Number 732 MR. BOYD showed a map of the North Slope that outlined the leases that had been offered in the past. He pointed to 80 leases that have been offered on a regular basis, absent law suits and other things. He then referred to a large section of the map and said it is a area for lease, Sale 87, in the proposed five year oil and gas schedule. He said in the middle of January he wrote a letter, to both the Speaker of the House and the President of the Senate, asking for a revision of this program. The DO&G wants to change Sale 87, to cut the portion off at the Umiat baseline and then incorporate areas to the east, ending at the boundary of Arctic National Wildlife Refuge (ANWR). He said the boundaries of this sale are already in affect. MR. BOYD said the lease sale process isn't simple because of the best-interest finding. The best interest findings is a statute requirement of DO&G requiring a published document incorporating socio-economic and other issues encompassing that area. This document includes information gathered through a process, required by statute, where preliminary findings are gathered and then published. Following this information, a 60 day comment period is held. Information is incorporated, at the discretion of the director of DO&G and the commissioner of DNR, and then the preliminary finding is modified and a final finding is published 90 days before. "There's a 20 day period of reconsideration," the director and the commissioner sign the document and reconsider any comments. If differences between the Administration and the public are not resolved at this point, then the issue will be worked out in the court system. Modifications to the findings might include changes such as new requirements to fly a certain distance over specific habitats at certain times of the year, changes in pipeline size or modifications in distances near streams. Number 897 MR. BOYD said SB 308, which passed a few years ago, expanded the best interest findings process by requiring all comments to be on the record. An issue that was not raised during the finding process cannot be taken to court without first receiving comment by the Administration. Number 1013 MR. BOYD said after the best interest findings comes out, the lease sale is relatively anti-climatic. He said areawide leasing will require a little bit bigger finding, but it won't be that difficult because of Sale 80. He said it easier to start this process on the North Slope and added that 99 percent of the state's income is derived from this area. He then referred back to Sale 80, and said that the best interest findings for that sale was done under SB 308. He cited the law under SB 308, an expanded public process and the flexibility that the director is limited to only those things that are reasonably foreseeable and non-speculative. The best interest finding was issued for Sale 80 and has not been challenged by special interest groups, the environmental community or other concerned citizens. The best interest finding stood, the sale was held and earned $3.5 million for the state of Alaska. MR. BOYD said the goal would be to take the best interest finding of Sale 80 and expand on that for an areawide lease. He said the factors of the North Slope are relatively consistent and with the possible exception of some new habitats, there should not be that many additions to the best interest finding done for Sale 80. The Administration's proposal for areawide leasing is that starting in 1998, the area leased will cover the area from the Colville River to the Canning River north of Umiat baseline onshore while eliminating the portion of Sale 87 south of the Umiat baseline. He said the portion below the Umiat baseline, eliminated from this proposed sale, will be offered at a later date. This areawide leasing proposal does not disrupt the current leasing program. Sales are already on the five year program including two sales this year, Sale 86A in August and Sale 85A in December as well as several sales next year. Sale 85A is the Cook Inlet sale. Number 1190 MR. BOYD said on a yearly basis, under law, DO&G is able to offer the acreage without a new finding. The commissioner is required to write a letter requesting any new information in that area which needs to be incorporated into the finding. That information is gathered in the form of testimony, letters, public hearings. The commissioner takes that information and can change the mitigating measures or determine that these issues are not relevant and carry on with the sale. "At the end of five years it really begs the question of whether a new finding is necessary." Number 1220 MR. BOYD said he would now address HB 388 and referred to Chairman Rokeberg's sponsor statement. He said that currently DO&G does not have to mandate annual lease sales of acreage previously offered. He said he didn't see why DO&G couldn't do it, because once the finding is in place the lease sale is not a big deal and mentioned that it only takes a few hours to adjudicate the bids. He said the only problem with this aspect of HB 388, is that if you have to do something you not previously required, what are the consequences. He questioned the possibility of requiring something, that either DO&G does not want to do, should not do, or cannot do, which might bring about possible litigation. "If you mandate something, I hope you give us a way out so we don't hang ourselves with a mandate." Number 1285 MR. BOYD then referred to the section of the sponsor statement which states, HB 388 "limits best-interest findings to substantial new information." He said the word "substantial" is similar to the word "reasonable" in that it provides context for law suits because what is substantial to one person is inconsequential to another. He cited examples where a new species establishes a habitat as compared to a view shed complaint which is more likely to come under the discretion of the commissioner. He said he did not see how every possible instance could be listed under either substantial or insubstantial. He said the word, "substantial" gives another level of certainty and a tool by which the commissioner can use to say that a raised issue does not fall under a substantial consideration. Number 1380 MR. BOYD then referred to eliminating the five year limit on "exempt" and "re-offered" sales. He said this process is included in the law. Currently, when a lease sale is done, a year later, another lease sale can be proposed. The commissioner issues a letter stating this proposed lease sale in April and any comments are submitted. The commissioner makes a determination whether or not this new information requires any change such as including new stipulations on the lease. He then asked Chairman Rokeberg if the language used in HB 388 means that if you have an existing finding, and as long as changes are being made to that finding, why stop it in five years. Number 1460 CHAIRMAN ROKEBERG said that is what is meant. Number 1469 MR. BOYD said, although he had no personal objections to that language, he could not comment for the Administration. He added that the incremental changes done to a finding over a period of five years can create a messy document and suggested that at that point all pieces should be gathered together into a cohesive whole. He said there are benefits from doing a best interest findings. He said technological advances can sometimes allow things to be done that could not be done in previous years. Number 1513 MR. BOYD then referred to the section regarding the establishment of a program of areawide oil and gas leasing to cover the entirety of an oil and gas reservoir. He said he thought the intention was good, but was afraid that it created an unneeded new process. In HB 388, there are two places which would require the writing of new regulation. It would require the establishment of a new program that, Mr. Boyd thought, ran in parallel to the existing five year program. He said he did not think a new program needed to be established. He asked how HB 388 would be different from the current program and conditions currently existing in law. Number 1583 CHAIRMAN ROKEBERG asked, in the interest of time, if Mr. Boyd could comment on HB 389. He noted that Representatives Brice, Finkelstein, and B. Davis were on time to the meeting, but had left the committee room while the majority caucus finished. Number 1646 MR. BOYD asked for an explanation of the differences between HB 388 and HB 389. He restated that he felt the word "substantial" was a good modifier because it gave the director of DO&G and the commissioner of DNR more power to make decisions on what is substantial and in the interest of the state. Number 1700 CHAIRMAN ROKEBERG said, at this point, HB 388 and HB 389 are very similar and work will be needed to be done to differentiate them. He asked Mr. Boyd to comment on the Administration's position in terms of the "bills introduced in both bodies by the Governor" in terms of best-interest findings and limitations in regard to geography and core areas. MR. BOYD said the "Administration's bill" is relatively simple. The DO&G believes that they have a lease sale program which allows areawide leasing. He said they were already doing areawide leasing, but had not referred to it by that name. He said DO&G was authorized to do areawide leasing with some minor adjustments. He said "the Governor's bills, and I don't remember the numbers, but they are identical on the House and the Senate side," streamline the best interest finding in regard to instances where the land is not available to the state, the best interest finding is done, and then at a later time, if the land becomes available in the interim, the land can then go up for sale. Number 1796 MR. BOYD said, in regards to the core areas, the Governor wants to start on the North Slope to see if it works and whether it is of interest to industry. He said it gives the Administration an opportunity to have, on a year to year basis, an area that is accepted by the public. This is a project on which it is felt expansion can happen. He said one of the twists in offering this land for lease, is the title work. One of the concerns the Division of Land had, along with the person in DO&G who works with the title program, was how a title was going to be written on an area that is 3.5 million acres. Meetings between industry and among the Administration have concluded that title work will be done after the sale. He said there are very few title issues on the North Slope, with the exception of the rare Native Allotment issues which are very easy to resolve when they occur. He said DO&G does not warrant title today in a lease sale. He cited the process that would occur, at the conclusion of a lease sale money will be held in escrow until the title is clear. He said a sale consisting of 3.5 million acres, might only result in a sale of 500,000 acres. Therefore, title work would only need to happen for those 500,000 acres. He said because of the factors, in the North Slope, this title work would take a short time. Number 1870 MR. BOYD said he felt this program could work anywhere, but he said it needed to start somewhere and the North Slope was the place to begin this process. He said, the North Slope is where you have the least resistance and where you have established findings of good standing. He then referred to the area with the Cook Inlet. He said areas in the Cook Inlet obviously have substantial interest to both the industry and the state of Alaska. He said currently the preliminary finding is being worked on for Sale 85A in Cook Inlet and is due out in March with a proposed sale in December of 1996. He said that all acreage allowed in Cook Inlet is being incorporated into that sale and added that it is an exempt sale. At the request of industries in that region, the commissioner is considering a 140,000 acres in the lower Kenai Peninsula. The commissioner has held public hearings and round table discussions to gather comments which will be incorporated in the March preliminary finding document. He again referred to the steps of the process, the 60 day comment period, the revision and reexamination of comments into a final finding. Mr. Boyd, said he hoped, that as the Administration has for Sale 80, a good base best interest finding will be established for Cook Inlet. When that occurs, an areawide leasing program could be incorporated into the Cook Inlet region. He then referred to the North Slope area as the best place to work the bugs out of a program with the least chance of having the program stalled or stopped. Number 1957 GEORGE R. FINDLING, Manager, Government and Public Relations ARCO Alaska, Incorporated said he just received the committee substitutes this morning, so he wanted to focus his comments on his reactions to the committee substitutes. He stated that he has given input towards HB 388 and HB 389 on previous occasions. CHAIRMAN ROKEBERG said the committee would be holding over HB 388 and HB 389 until Thursday to give everyone a chance to look at the committee substitutes and to see if any modifications need to be made. He asked everyone to look at the section of the committee substitute focusing on the need for areawide leasing and best interest finding exemptions in onshore areas of the North Slope. MR. FINDLING said he would be focusing their review on HB 388 in its establishment of a new program. He said he agreed with Mr. Boyd's comments in regards to that issue. In HB 389, on page two, lines 12 through 18, he asked whether that section is (indiscernible-paper shuffling) a parcel that has been through the exempt sale and would come out again. He also requested clarity to the reference to the commissioner comparing a revised best interest finding under G.2 and why that reference is in (indiscernible) and why it is not in the I clause as well. CHAIRMAN ROKEBERG asked him to hold those questions in abeyance. Number 2097 REPRESENTATIVE GARY DAVIS asked if there needed to be one bill incorporating HB 388 and HB 389 or whether there should be two separate bills. CHAIRMAN ROKEBERG commented that research needs to be done in regards to that question. He said he wanted to get the Administration position. The committee substitutes attempt to strike a balance between the Administration, Senate and the position of industry. He said that it is necessary to refer to the areawide leasing program, as it is laid out in HB 388 to make the best interest finding bill, HB 389, work properly. Number 2219 REPRESENTATIVE BILL WILLIAMS asked Mr. Boyd if the Administration was already doing areawide leasing. Number 2230 MR. BOYD said yes it is doing areawide leasing, but it needs clarification such as can be provided in the original HB 388, but not found in the committee substitute. He said a fiscal note comes into play if a new program were to be established requiring more people to accomplish that task. Number 2256 REPRESENTATIVE DAVID FINKELSTEIN asked if the provision mentioned, where non-state lands which have a best interest finding and later become state lands are exempt from having to repeat a best interest finding process, is located in HB 388 or HB 389. Number 2285 CHAIRMAN ROKEBERG said neither HB 388 or HB 389 incorporate that provision. Number 2290 REPRESENTATIVE FINKELSTEIN asked how often that occurred and if it was specifically a North Slope phenomena. Number 2299 MR. BOYD said it is applicable to the North Slope. He said there is still land to be patented and transferred. As time passes, more and more land comes into state ownership. He said he would have to consult with title experts, but he believed it was a rare occurrence. Number 2312 REPRESENTATIVE FINKELSTEIN asked if the five year best interest finding limit was a hinderance to DO&G or if five years was a natural time period when the Administration would be rethinking these areas anyway. Number 2329 MR. BOYD said it has been his six year experience, that the five year reevaluation has mostly been a matter of new or updated mitigation measures because of new information being afforded the DO&G such as a seasonal drilling restriction or a new standard of awareness by the public. In his experience, there has not been any substantial rewrite of a best interest finding because of that process. It is unlikely that there would be a change of wildlife habitat. Number 2387 REPRESENTATIVE FINKELSTEIN asked if the history of the areawide lease offerings in the North Slope, have been small areas or whether there have been large amounts available. Number 2405 MR. BOYD said he believed Sale 80 would be the largest. He said that the term, areawide leasing, has made people focus on the issue and said if the Administration had simply said they would combine this parcel with that parcel, he believed that no one would have objected, but because it was called areawide leasing people perceived that it was something different. Number 2450 CHAIRMAN ROKEBERG pointed to information available in the committee packet in reference to federal areawide leasing in the Gulf of Mexico which has proved to be extremely successful. TAPE 96-8, SIDE B Number 000 CHAIRMAN ROKEBERG referred to the fact that in this sale, the term that was used was areawide leasing. He said HB 388 and HB 389 is his attempt to draw a compromise or a bill which will give the Administration more tools and offer more land to industry. Number 040 REPRESENTATIVE FINKELSTEIN said that within Sale 80 there is already leased lands. He asked that within the Administration's best interest finding an economic analysis is included as to what the state could have made on leasing smaller areas adjacent to the existing leases in comparison to a large scale sale. Number 080 MR. BOYD said this economic briefing occurs in a confidential meeting between the commissioner and the DO&G staff. He believed the results from this briefing are published, but not the actual analysis. He said intuitively, it shouldn't matter. He said the advantage to areawide leasing is that it avoids edges where possible. He said, when you draw edges, you run the risk of cutting off an edge of a structure that the company wants to protect its interest. Number 150 REPRESENTATIVE FINKELSTEIN said he questioned the concept of mandates when you are required to sell large leases. Number 166 MR. BOYD said you can put different terms on specific leases which gives flexibility to offer a speculative area at a lower rate and a better area at a higher rate. Number 190 REPRESENTATIVE FINKELSTEIN asked if you could put on different requirements for different bids, some of them being bonus bids, some of them being royalty bids, within the same sale. Number 198 MR. BOYD said yes, and has been done in the past and cited examples. Number 215 CHAIRMAN ROKEBERG asked for clarification of the Umiat baseline and was told that it was 69.30 North. He then asked whether there was an exemption in the Administration bill, SB 245, on doing a best interest finding. Number 264 MR. BOYD said SB 245 does not exempt best interest finding, it says that land can be offered for sale if you do a finding for it, even if you have not offered it for sale previously. He said that there are cases where a tract of land, which is surrounded by areas having best interest findings, becomes available, and common sense would tell you that those tracts of land are not that different from the surrounding land therefore the best interest finding could be applicable to those lands as well. CHAIRMAN ROKEBERG said he wanted to clarify his intent on this legislation, that he did not wish to create a new program which causes the Administration to lose resources, but rather codify what is being done. He received clarification that SB 245 does not cover the Cook Inlet region and then asked if it would want to be covered by legislation in the future. Number 355 MR. BOYD said that the Cook Inlet is a much more complicated land ownership position. He said that the Administration is currently in the process of selling large tracts of land in its lease program. Number 324 CHAIRMAN ROKEBERG asked, that when the Administration wanted to include the Cook Inlet in the areawide legislation, whether it would take two years for it to be put on their schedule. Number 385 MR. BOYD said they just have to notify the legislature that they are changing or adding a sale, especially if it is a re-offering sale. If the land was previously offered for sale, then the Administration can offer it immediately within the five year limitation. He said it took a long time to get to the point where this can happen, due to law suits. Number 422 CHAIRMAN ROKEBERG asked if the DO&G was reluctant to take on the Cook Inlet because of environmental concerns as well as the fisheries concerns in the Cook Inlet region. MR. BOYD said the DO&G attempts to meet the needs of the public and the state, he said the division does not have enough people to do two large findings. He again stated that the North Slope is the better place to learn about how the process will work, because a finding is already in place that the DO&G feels can stretch throughout the North Slope. He said he hopes to have an established finding in the Cook Inlet by the end of this year. He stated that it is a matter of building a good foundation first. Number 469 CHAIRMAN ROKEBERG asked if the Administration is then looking at an areawide lease program and best interest finding for the Cook Inlet area. Number 480 MR. BOYD said that over time he hopes to put together reasonable mitigation measures that satisfies the needs of all concerned parties in both areas. He restated that it needs to start on the North Slope. CHAIRMAN ROKEBERG stated that it would appear that DO&G would need to come back to a future legislature to get authority to get the same thing in the Cook Inlet unless we pass HB 388 and HB 389. MR. BOYD said he believed that it could happen now. CHAIRMAN ROKEBERG asked if that included the best interest finding as well. MR. BOYD said there would be some bumps in that, but that is what he is hoping could be fixed. CHAIRMAN ROKEBERG discussed the lifetime of a best interest finding. He said there is no statutory stipulation for the five year life of the best interest finding. There are provisions in the exempt sale and the re-offering provisions that indicate that you can only go back five years, so there is a de facto five year life in those circumstances. Number 551 MR. BOYD agreed that in current law there is a five year life. He said in general terms, it might be good to extend the life of the best interest finding. He then asked if it was useful to go back and revisit the finding to recreate it. He said, he was unclear what the Administration's position would be on that point, but if the division is being diligent, as is required under current law, then at five years, it is a question of repackaging the information. MR. BOYD at Chairman Rokeberg's request cited the case where law suits caused the lease sale program to stop for a period of time in the Cook Inlet region, he said this example is where revisions and modifications of the best interest finding might have caused this to happen. He said the end result was the creation and adoption of SB 308 which changed the law regarding the finding process and added that, as events unfold, new modifications in the finding interest will need to occur to get to the standards of SB 308. Number 693 CHAIRMAN ROKEBERG said it appeared that a great deal of money, effort and time in the DO&G was spent every five years to reinvent the wheel. He questioned how many best interest finding have to be done in the North Slope. Number 717 MR. BOYD said he agreed with him, but then cited an example of getting an encyclopedia with yearly updates. He asked how many supplements are you going to need to get before you want to buy a whole new set. He said, if the revisions can be incorporated into the best interest finding document, he saw no problem with this proposal. He said that in some sense, revisions are supplements because they are issued as stipulations or mitigating measures. The whole best interest finding document would not be published again until the next best interest finding process. He reiterated that the best interest finding is a public process. Number 780 REPRESENTATIVE TOM BRICE asked the difference between incorporating the data that would be collected in that five year period into a document rather then doing a whole new best interest finding. Number 810 MR. BOYD said, at the end of five years, the whole process does not need to be done, especially on the North Slope or possibly everywhere, as long as every time a sale is held information is being gathered. He said as a practical matter, incorporation might make sense. Number 860 REPRESENTATIVE BRICE said incorporation is one thing versus going through a whole other process where the end result is the same. He asked if after five years it needs to go through the whole redefinition. MR. BOYD said it does, because under current law there is not much use for a six year old finding. Number 907 REPRESENTATIVE SCOTT OGAN said he felt it would be a good idea to have a permanent best interest finding in order to prevent an anti- development agenda. He then cited an example where a new administration might raise concern over a decline in the caribou herds, which is a cyclic phenomena, rather than a issue of concern. Number 964 MR. BOYD said a permanent best interest finding eliminates the public process. An issue can be raised, but the Administration has opportunity to respond to that. He said the legislature can choose to eliminate this process, but said his contention was that the best interest finding process gives you a chance to get it out on paper and discuss it. Number 1000 CHAIRMAN ROKEBERG said "we are not changing" the public input and comment process, but there is recognition that the best interest findings document is an ongoing process and that a five year period is a short period of time. He added that this period of time has been an issue of complaint from businesses, who can not plan far enough in advance with this time constraint. He suggested having an annual program that re-offers core areas which would allow the industry to do capital expansion. Number 1104 REPRESENTATIVE FINKELSTEIN said the work you need to do ahead of time (indiscernible due to glass being set down next to the microphone) in order to meet your schedule. Number 1132 MR. BOYD said the five year schedule program goes back five years, in order to give industry a chance to comment. He said the first three years of the process are long and spread out, allowing for industry to get onto the schedule the acres they wish to include in the sales. He said, in an areawide lease process, that schedule falls away because the land does not need to be nominated. Number 1306 REPRESENTATIVE FINKELSTEIN asked what the next step would be for offshore leasing in the Beaufort Sea. Number 1325 MR. BOYD repeated the importance of laying a good foundation in areawide leasing. He said the process should start onshore in the North Slope, because it is the easiest area. From that foundation you have two options, either to focus on the Beaufort Sea or the Cook Inlet. He said findings need to be done for both those areas, and are scheduled to be done within the next two years to resolve mitigating issues. At that point a determination of the industry interest should be done, and then incorporate that area, shown the most interest, next. Number 1354 REPRESENTATIVE FINKELSTEIN asked, in regards to this leasing project in the Beaufort Sea, whether there would be zones and then asked if most available acreage in the Cook Inlet had been offered. MR. BOYD said most acreage has been offered. He then said most of the offshore areas in the North Slope have been offered from Barrow to Demarcation Bay. The whole offshore area around ANWR has been leased and said he would check the date of that sale, but said it was sometime in the 1980s. REPRESENTATIVE FINKELSTEIN asked if that area is being shown the greatest interest these days. MR. BOYD said he did not have any comment on that. Number 1400 CHAIRMAN ROKEBERG said HB 388 and HB 389 would be held over until the Thursday committee meeting. ADJOURNMENT There being no further business to come before the House Oil & Gas Special Committee, Chairman Rokeberg adjourned the meeting at 11:45 a.m.