SENATE RESOURCES COMMITTEE May 3, 1995 3:45 p.m. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Drue Pearce, Vice Chairman Senator Rick Halford Senator Robin Taylor Senator Georgianna Lincoln Senator Lyman Hoffman MEMBERS ABSENT Senator Steve Frank ALSO IN ATTENDANCE Senator John Torgerson COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 195(RES) "An Act repealing the laws authorizing milk marketing orders." HOUSE JOINT RESOLUTION NO. 44 Proposing postage stamps honoring wild Alaska salmon and centuries of continued use of wild Alaska salmon for subsistence, sport, and commercial fish harvesters. CS FOR HOUSE JOINT RESOLUTION NO. 43(FSH) Relating to commercial fishing and subsistence use in Glacier Bay National Park. CS FOR HOUSE BILL NO. 207(FIN) am "An Act relating to adjustments to royalty reserved to the state to encourage otherwise uneconomic production of oil and gas; and providing for an effective date." CS FOR HOUSE BILL NO. 141(FSH) "An Act relating to the appointment of members of the Board of Fisheries." PREVIOUS SENATE COMMITTEE ACTION HB 195 - No previous action to record. HJR 44 - No previous action to record. HJR 43 - No previous action to record. HB 207 - See Resources minutes dated 4/22/95, 4/26/95, 4/28/95, 5/1/95. HB 141 - See Resources minutes dated 4/22/95. WITNESS REGISTER Odette Foster, Staff to Representative Kim Elton State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on HJR 44 Amy Daugherty, Staff to Representative Alan Austerman State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on HJR 43 Ron Sommerville Juneau, AK POSITION STATEMENT: Offered information on HJR 43 Bruce Weyhrauch 302 Gold St. Juneau, AK 99801 POSITION STATEMENT: Offered information in support of HJR 43 Commissioner John Shively Department of Natural Resources 400 Willoughby Ave. Juneau, AK 99801-1796 POSITION STATEMENT: Offered information on CSHB 207(FIN) am and SCS CSHB 207(RES) Ken Boyd, Director Division of Oil & Gas Department of Natural Resources 3601 C St., Suite 1380 Anchorage, AK 99503-5948 POSITION STATEMENT: Offered information on CSHB 207(FIN) am and SCS CSHB 207(RES) Steve Lewis, Chairman & CEO Petro Star Refinery 201 Arctic Slope Ave., #200 Anchorage, AK 99518-3030 POSITION STATEMENT: Testified in support of CSHB 207(FIN) am Pam Neal, President Alaska State Chamber of Commerce 217 2nd St., #201 Juneau, AK 99801 POSITION STATEMENT: Testified in support of CSHB 207(FIN) am ACTION NARRATIVE TAPE 95-54, SIDE A Number 001 HJR 44 POSTAGE STAMP HONORING ALASKA SALMON    CHAIRMAN LEMAN called the Senate Resources Committee meeting to order at 3:45 p.m. He brought HJR 44 before the committee as the first order of business. ODETTE FOSTER, staff to Representative Kim Elton, who is prime sponsor of HJR 44, said the resolution requests the U.S. Postmaster to issue a series of five postage stamps, each depicting one of Alaska's salmon species. The postage stamp series will focus national attention on Alaska's thriving and healthy salmon fishery. Representative Elton believes that by creating more awareness of Alaska wild salmon it is easier to educate those outside of Alaska about one of our most important and economically viable resources. SENATOR LEMAN stated HJR 44 would be held until a quorum of the committee was established. Number 080 CSHJR 43(FSH) FISHING AND SUBSISTENCE IN GLACIER BAY  CSHJR 43(FSH) was before the committee as the next order of business. AMY DAUGHERTY, staff to the House Special Committee on Fisheries, said the resolution was introduced by the committee in response to concerns expressed by commercial fishermen and subsistence users. In 1991 the National Park Service promulgated draft regulations that would phase out commercial fishing in and around Glacier Bay within seven years and completely prohibit subsistence fishing. Last year a federal judge ruled that ANILCA did not prohibit commercial fishing in Glacier Bay National Park, but that ruling has been appealed to the Ninth Circuit Court of Appeals. Ms. Daugherty said elimination of the commercial and subsistence fisheries in a vast area contained in the Glacier Bay National Park would significantly harm the coastal communities of northern Southeast Alaska. Number 110 RON SOMMERVILLE said there is still a conflict over state jurisdiction of navigable waters although the state has never filed quiet title to the submerged lands within the boundaries of Glacier Bay National Park. The state has consistently taken the position in the past that it reserved the rights to file quiet title, and at the same time, exercise some jurisdiction over the resources in the water column. Mr. Sommerville said the conflict is over transient resources which are not really part of the park. Both the subsistence and commercial uses in there provide very little, if any, jeopardy to park resources. However, the National Park has consistently taken the position that it can regulate or eliminate commercial fishing and subsistence fishing within the park boundaries. So far, the courts have shown that the Park Service has and can allow commercial and subsistence within the boundaries of the park. Mr. Sommerville said it is hoped that as the National Park Service goes forward with its regulations that commercial fishing and subsistence are allowed uses in the park. Number 166 SENATOR LINCOLN asked Mr. Sommerville how he would define "subsistence use" as used in the resolution. RON SOMMERVILLE responded that the definition is exactly the same as the subsistence priority in Title 8 of federal law. Number 214 SENATOR HOFFMAN noted that one of the resolve clauses in the resolution also speaks to sport fishing, and he asked what sport fishing issue there is in Glacier Bay. RON SOMMERVILLE replied that the National Park Service allows sport fishing within its boundaries, but they have always taken the position that commercial fishing and subsistence use have to be specifically authorized by Congress. This has consistently created a problem within Glacier Bay. Number 230 BRUCE WEYHRAUCH, representing Allied Fishermen of Southeast Alaska, explained he represented that group when they intervened in a case entitled "Alaska Wildlife Alliance versus Jensen." The fishermen wanted to intervene in the case because if they were excluded from those waters it would mean several things: they would have to move operations to other fisheries and other grounds elsewhere in Southeast Alaska, which would mean increasing pressure on those other fisheries; it would have a serious social effect on the small communities in the area that have relied on that fishery; and it would have a tremendous economic effect on the region. Mr. Weyhrauch said when Allied Fishermen of Southeast Alaska intervened in this case, the only decision that Judge Holland ruled on was whether ANILCA prohibited commercial fishing in the marine waters of Glacier Bay National Park. The judge ruled that it did not and that is now on appeal to the Ninth Circuit Court. He said the Ninth Circuit Court may rule on the case at the end of the current year or early next year. Number 275 SENATOR LINCOLN asked if in Judge Holland's ruling there was any discussion on subsistence use and sport fishing in the area, and BRUCE WEYHRAUCH answered that just commercial fishing was briefed in the ruling. Number 297 There being no further discussion on CSHJR 43(FSH), SENATOR LEMAN asked for the pleasure of the committee. SENATOR PEARCE moved that CSHJR 43(FSH) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. SENATOR LEMAN brought HJR 44 back before the committee and asked for the pleasure of the committee. SENATOR PEARCE moved that HJR 44 be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. CSHB 195(RES) REPEAL MILK MARKETING LAWS  SENATOR LEMAN brought CSHB 195(RES) before the committee as the next order of business. SENATOR PEARCE read into the record a statement that the Milk Marketing Board was repealed by the 18th Legislature and this will get rid of an overabundance of useless statutes. SENATOR PEARCE moved that CSHB 195(RES) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. Number 325 CSHB 207(FIN) am ADJUSTMENTS TO OIL AND GAS ROYALTIES SENATOR LEMAN brought CSHB 207(FIN) am before the committee and requested a motion to adopt the Resources SCS. SENATOR PEARCE moved that SCS CSHB 207(RES), version "B", dated 4/29/95, be adopted as a working document. SENATOR LINCOLN objected. There not being sufficient votes present to adopt the Resources SCS, SENATOR LEMAN stated the committee would continue with testimony on the legislation. Number 335 STEVE LEWIS, Chairman of the Board & CEO of Petro Star, testified on behalf of Petro Star and the Arctic Slope Regional Corporation. Mr. Lewis stated there are several areas of concern with changing the legislation that passed the House, which they believe is a good bill and should be before the Senate for a vote. Mr. Lewis outlined the following major areas of concern which are: (1) Legislative oversight and approval of the commissioner's decisions, which they believe is adequate as it exists now. They believe it will create confidentiality problems. (2) Pools or portions of pools in a field is of particular importance to them and they feel this is an area that should not be amended. (3) They believe the sunset provision is bad public policy and will send an adverse signal to the oil industry worldwide, not only the existing industry that exists in the state now, but any new industry as well. Concluding his comments, Mr. Lewis requested that the committee pass out the House version of the bill. Number 420 SENATOR LEMAN asked Mr. Lewis if he is aware of anywhere else in the world where previously leased and undeveloped properties become eligible for negotiated adjustments of royalties. STEVE LEWIS answered that he believes Alberta may have a similar provision on leasing. He said there is an upside and downside to this; it is asking the state to help develop marginal fields, but if those fields turn out to be much more profitable or if the price of oil changes, then the state benefits. He added that throughout the rest of the world the oil industry is going in and developing those fields, so the incentives are there over Alaska or they would be here. SENATOR LEMAN asked Mr. Lewis if he was aware that the state of Alaska has sunsets on nearly all of its boards and commissions. STEVE LEWIS responded that the boards and commissions are not trying to intrigue outside investors to put basically billions of dollars into this economy and try to develop fields when they can go elsewhere to invest their money. Number 455 SENATOR PEARCE pointed out that countries, whether it is Mexico, Columbia, Peru, China, etc., don't have democracies like ours and the sunset is the next time there is a new government. They try things and they see how they work, then they may go back and change them, or they may get rid of them altogether. She does not believe having a sunset on legislation sends the wrong signal to the world; it says we're willing to try it and then we're willing to come back to whether or not it worked. STEVE LEWIS agreed that some of these countries are more unstable as far as politics go, but they are at least offering something as far as rewards, or the returns are there. He added the state will not entice money and develop a field in three and a half years. SENATOR PEARCE said the legislature is being told that if this legislation is not passed in the next 10 days, there is not going to be a Badami field. The fields we are talking about are already there, and we're not talking about new exploration in this royalty reduction section, she said. Number 500 SENATOR LEMAN stated he has long been an advocate for royalty flexibility, continues to be so, and thinks we need to do things to help encourage the industry to invest in Alaska, but it needs to be done in such a way that it also protects the interests of Alaska. That is the purpose of the bill and the work that has been done -- trying to create adequate guidance so this can be done. SENATOR LEMAN asked Mr. Lewis if he has any particular problems with a committee of the legislature being briefed on the details of an agreement where they could go into executive session when there was information that should not be revealed to the public, and information that should not be revealed to legislators could be revealed with agents of the Legislative Budget & Audit Committee, which has a confidentiality requirement. STEVE LEWIS responded that he was more comfortable with Legislative Budget & Audit than with the legislators, who may be here for two years and then be back out in the public. Number 548 PAM NEAL, President, Alaska State Chamber of Commerce, voiced their support for CSHB 207(FIN) am. The Chamber is concerned that jobs are leaving the state due to the declining activity within the oil industry, and they believe the House version would encourage the state's largest industry to spend more of its dollars creating more activity and businesses in the support industries that supply so many of the jobs in the state today. TAPE 95-54, SIDE B Number 030 SENATOR LINCOLN asked if the State Chamber is supporting the House version because that's what the oil industry wants. PAM NEAL replied that they are not supporting it because it is what the oil industry wants. They are doing it because they understand that the oil industry is going to base a lot of its decisions as to how much money to invest in this state in the future based on this legislation. Number 085 SENATOR LEMAN invited Commissioner Shively and Ken Boyd of the Department of Natural Resources to join the committee at the table. SENATOR LEMAN said the governor's proposal for existing oil fields was to set the floor at a maximum royalty reduction of 3.8 percent, which the House reduced to 1.25 percent, and the Resources SCS brings it back up to 3 percent. He asked the administration's position on where they would like to see that floor set. COMMISSIONER SHIVELY responded that they believe that the floors in the proposed committee substitute are more in line with their thinking than in the House bill, and it is a change they had suggested in the House. Number 130 SENATOR PEARCE said as far as she can see, the issue boils down to three things: the first is oversight, the second is sunset, and the third is pool versus field. She asked if the governor opposes the sunset clause, and COMMISSIONER SHIVELY responded that he does. There was extensive discussion on the issue of a pool versus a field. KEN BOYD explained that a field can be composed of two pools. Under current law, those two pools cannot be distinguished, and the royalty reduction would have to be granted to the entire field. Under the House version, the royalty reduction could be granted to either pool or to both pools. He said it is a matter of flexibility, and being able to grant this on a lease by lease basis gives the commissioner more latitude to make a real sensible decision. COMMISSIONER SHIVELY added that right now, if it wasn't economic and they really wanted to produce a field, they would be forced under the Senate bill to give a royalty to both pools in a field, but the House bill allows them to make a distinction. Proving the economics on parts of the field that are at the edges that deserve royalty reduction are going to much more difficult than looking at separate pools in the same lease where you really have economics relating right to that pool. SENATOR PEARCE said she agrees with having pool by pool latitude, but she does not want to see a different royalty at the edge of a field than we've got at the middle of a field. Number 290 SENATOR LEMAN said the immediate impetus for the (1)(A) provisions, according to testimony, is Badami and, perhaps, North Star. He asked if we didn't change that to the pool or portion of the field or pool, is there anything in the Resources SCS that would affect that project. KEN BOYD answered that wells that are drilling at Badami now are held confidential and he didn't want to comment on it, but he acknowledged that it is possible. Number 330 The committee took an at ease at 5:02 p.m. and was called back to order at 5:50 p.m. Number 335 SENATOR LINCOLN moved and unanimous consent that CSHB 207(FIN) be passed out of committee with individual recommendations. SENATOR PEARCE objected. Speaking to her motion, SENATOR LINCOLN stated a lot of testimony has been taken on the bill and people are overwhelmingly leaning towards that version of the bill. She added that amendments could be made to the House version to improve it, but she suggested it could be the vehicle in which amendments could be tacked on in the Senate Finance Committee. SENATOR LEMAN disagreed and said he thought it would slow the legislation down and may cause it to not be moved this year. SENATOR LEMAN stated there would be a roll call vote on Senator Lincoln's motion to move CSHB 207(FIN) out of committee. The roll was taken with the following result: Senators Lincoln and Hoffman voted "Yea" and Senators Leman, Pearce and Taylor voted "Nay." The motion failed. Number 400 SENATOR PEARCE moved that SCS CSHB 207(RES), version "B", dated 4/29/95, be adopted as a working document. Hearing no objection, the motion carried. SENATOR LEMAN stated the committee would take up amendments prepared by himself and Senator Pearce.  Number 430 SENATOR PEARCE moved adoption of the following Amendment No. 1 to SCS CSHB 207(RES). She said the effect of the amendment is to leave out the disclosure of financial and technical data related to marketing, which is an area of concern. Amendment No. 1 Page 4, line 14: Delete " production, transportation, and marketing " Insert " production, and transportation " Hearing no objection to Amendment No. 1, SENATOR LEMAN stated it was adopted. Number 455 SENATOR PEARCE moved adoption of the following Amendment No. 2. She said there was a concern with trying to define "social effects" and that if you tried to delineate everything that has to be in the findings and determinations, leaving the word "social" in would only lead to a lawsuit. COMMISSIONER SHIVELY stated it was the department's recommendation to delete all of paragraph (9). Amendment No. 2 Page 5, line 13: Delete " social " Page 5, line 14: Delete" ,including its effects " Hearing no objection to Amendment No. 2, SENATOR LEMAN stated it was adopted. Number 515 SENATOR PEARCE moved adoption of the following Amendment No. 3, which was suggested by the Department of Natural Resources. COMMISSIONER SHIVELY stated support for the amendment.  Amendment No. 3 Page 8, line 29: Delete " increase or " Delete " or otherwise adjust " Page 9, line 11: Delete " increase or " Page 9, line 12: Delete " or otherwise adjust " Page 9, line 21: Delete " increase or " Delete " or otherwise adjust " Hearing no objection, SENATOR LEMAN stated Amendment No. 3 was adopted. Number 545 SENATOR PEARCE moved adoption of the following Amendment No. 4. Amendment No. 4  Page 1, line 8: Delete "marketing" Page 2, line 19: Delete " increase ," Page 2, line 20: After " decrease " delete " , " Page 3, line 5: After " including " insert " price, " Page 3, line 6: After " recovery, " delete " or " & insert "  After " development " delete " and " & insert " , " After " operating " insert " , and transportation " Page 3, line 9: Delete " a share of net profits, " Page 4, line 26: Delete " marketing " After brief discussion on the amendment and no objection to its adoption, SENATOR LEMAN stated Amendment No. 4 was adopted. TAPE 95-55, SIDE A Number 001 SENATOR LEMAN stated Amendment No. 5 was before the committee.  Amendment No. 5 Page 3, line 19: Delete " (i) " Page 3, line 22: Delete " or " Page 3, lines 23 - 29: Delete all material. Page 4, lines 18 - 22: Delete all material and insert:  " (B) keep the data described in (A) of this paragraph confidential under AS38.05.035(a)(9) at the request of the lessee or lessees making application for the royalty increase or decrease or other royalty adjustment; the data  (i) at the direction of the majority of the members of the Legislative Budget and Audit Committee, may be disclosed by the commissioner only to the legislative auditor, the director of the division of legislative finance, and the permanent employees of their respective divisions, and to agents or contractors of the legislative auditor or the legislative finance division director who are engaged under contract to evaluate the royalty increase, decrease, or other royalty adjustment;  (ii) may not be disclosed to legislators; " Page 4, line 30, through page 5, line 2: Delete all material and insert:  " (8) shall  (A) make and publish a preliminary findings and determination on the royalty increase, decrease, or other adjustment application; if the preliminary findings and determination concerns a royalty increase, decrease, or other adjustment under (1)(A) of this subsection, the preliminary findings and determination shall also be presented to the governor for the governor's approval or disapproval; the governor may not delegate a determination to approve or disapprove a preliminary findings and determination under this subparagraph;  (B) if the governor approves the preliminary findings and determination under (A) of this paragraph,  (i) give reasonable public notice of the preliminary findings and determination;  (ii) concurrently with the issuance of the public notice, if directed by the Legislative Budget and Audit Committee, make available copies of the commissioner's preliminary findings and determination on the royalty increase, decrease, or other adjustment application and the supporting financial and technical data, including the work papers, analyses, and recommendations of any contractors retained under (7) of this subsection, to persons authorized under (6)(B) of this subsection to review the data; and  (iii) invite public comment on the preliminary findings and determination during a 30- day period for receipt of public comment; " Page 5, line 21, through page 6, line 15: Delete all material and insert:  " (10) shall offer to appear before the Legislative Budget and Audit Committee on a day that is not earlier than 10 days and not later than 20 days after giving public notice under (8) of this subsection, to provide the committee a review of the commissioner's preliminary findings and determination on the royalty increase, decrease, or other adjustment application and the supporting financial and technical data; if the Legislative Budget and Audit Committee accepts the commissioner's offer, the committee shall give notice of the committee's meeting to all members of the legislature; if, under (6)(B) of this subsection, the financial and technical data must be kept confidential at the request of a lessee or lessees making application for the royalty increase or decrease or other royalty adjustment, the commissioner may appear before the committee in executive session; " Page 6, line 31, through page 8, line 4: Delete all material and insert:  " (12) shall, within 30 days after the close of the public comment period under (8) of this subsection,  (A) prepare a summary of the public response to the commissioner's preliminary findings and determination;  (B) except as to a final findings and determination proposed for a royalty increase, decrease, or other adjustment under (1)(A) of this subsection, make a final findings and determination; the commissioner's final findings and determination prepared under this subparagraph regarding a royalty increase, decrease, or other adjustment is, as to the lessee or lessees applying for the royalty increase, decrease, or other adjustment, final and not appealable to the court;  (C) as to a final findings and determination prepared for a royalty increase, decrease, or other adjustment under (1)(A) of this subsection, make a final findings and determination and present it to the governor for the governor's approval or disapproval; the governor may not delegate a decision to approve or disapprove a final findings and decision presented under this subparagraph; the commissioner's final findings and determination regarding a royalty increase, decrease, or other adjustment prepared under this subparagraph, if approved by the governor, is, as to the lessee or lessees applying for the royalty increase, decrease, or other adjustment, final and not appealable to the court; " Reletter the following subparagraphs accordingly. Page 8, line 6: Delete " (A) or (B) " Insert " (B) or (C) " SENATOR PEARCE, speaking to Amendment No. 5, which she had drafted, explained that the amendment changes the scheme for royalty adjustments in fields that have never been produced, but does not require legislative oversight. Instead, the preliminary findings have to be developed by the commissioner and then approved by the governor, and that approval cannot be delegated to any other individual. Those findings then go to public comment, as was already in the scheme, and they also go to the Legislative Budget Audit Committee. After the public comment period and everybody comes back with a final determination and a final decision, once again, the decision on that royalty reduction is signed by the governor and that authority cannot be delegated. If any confidential information comes along with the preliminary findings, it would be available to the staff who would fit under the same confidentiality laws that the commissioner's staff fits under. However, that confidential information would not be available directly to the legislature, but the legislature would still be privy to the same amount of information that it would normally hear on tax matters in an executive session. SENATOR PEARCE moved adoption of Amendment No. 5. SENATOR LINCOLN objected and stated that she had not have time to review the amendment. Number 050 COMMISSIONER SHIVELY commented that the administration has not had an opportunity to discuss the concept outlined by Senator Pearce, and he is personally unaware of other decisions that are made in government that the governor signs. He was unsure of what the legal ramifications of the amendment would be. Number 100 SENATOR LEMAN clarified that the amendment does not totally remove legislative oversight. It removes the ability of the legislature to approve or disapprove, but it keeps oversight in through the Legislative Budget & Audit Committee. It provides further protections regarding confidential information. It addresses the four concerns that have been identified to the committee by those in the oil industry. He added that he believes the amendment crafts a solution that is acceptable. There being no further discussion on Amendment No. 5, SENATOR LEMAN stated a roll call vote on its adoption would be taken. The roll was taken with the following result: Senators Leman, Pearce and Taylor voted "Yea" and Senators Hoffman and Lincoln voted "Nay." SENATOR LEMAN stated Amendment No. 5 was adopted. Number 160 SENATOR PEARCE restated her concern with a royalty reduction for a well just because it is on the fringe of a field that is a highly profitable field. She said the commissioner has told her that language is needed to fix the problem so that he would have the ability to go in and take care of a pool, but not a field. SENATOR PEARCE then moved the adoption of the following Amendment No. 6 with conforming amendments where "or pool" may have to be added throughout the document. Amendment No. 6 Page 2, lines 10, 11, 14, 16 & 18: After "field" add "or pool" Hearing no objection to Senator Pearce's motion, SENATOR LEMAN stated Amendment No. 6 was adopted. Number 200 SENATOR PEARCE stated she supports a sunset date, but realizes that the governor does not. However, she thinks the March 15, 1999 date is perhaps too early and she suggested changing the date to July 1, 2000, which she believes will give ample time for the fields that are not presently under production. She then moved adoption of the following Amendment No. 7. Amendment No. 7 Page 2, line 10: Delete "March 15, 1999" and insert "July 1, 2000 Number 250 SENATOR LINCOLN requested Commissioner Shively's comments on the amendment. COMMISSIONER SHIVELY responded that this is one of areas where they have some disagreement with Senator Pearce and others. He added that he understands the arguments of the senators to want to revisit this, but on the other hand, timing in oil fields is not quick. They do know of some fields, today, that are delineated, that they think could qualify under this legislation if the economics were there. But for fields that are far out in the future, or even fields that would be leased relatively soon, they are really far out in the future in terms of their development, and they believe that this sunset date would send a message to the oil industry that the state is not receptive to the industry's needs. SENATOR PEARCE said with this bill she is not necessarily trying to encourage new exploration; she is trying to encourage the development of fields that we already have. She believes we should focus this year on keeping the people and the work that we already have in Alaska here, and to continue working on exploration elsewhere. Number 340 SENATOR HOFFMAN moved to amend Amendment No. 7 to eliminate the sunset provision. SENATOR PEARCE objected to the amendment to Amendment No. 7. SENATOR LEMAN called for a hand vote. Senators Hoffman and Lincoln voted "Yea" and Senators Pearce, Taylor and Leman voted "Nay." SENATOR LEMAN stated the motion failed. Number 376 SENATOR LEMAN then called for a hand vote on the adoption of Amendment No. 7. Senators Taylor, Pearce and Leman voted "Yea" and Senators Lincoln and Hoffman voted "Nay." SENATOR LEMAN stated Amendment No. 7 was adopted. Number 385 SENATOR PEARCE then moved the adoption of Amendment No. 8 as proposed by Senator Leman. SENATOR LEMAN explained the amendment shortens up the phraseology and makes it much clearer. Amendment No. 8 Page 7, line 6 - 11: Change sub-subparagraph (ii) to read as follows: (ii) make a final findings and determination which is final and not appealable to the court by the lessee or lessees; COMMISSIONER SHIVELY stated the administration has no objection to the amendment. Hearing no objection to Amendment No. 8, SENATOR LEMAN stated it was adopted. Number 425 SENATOR TORGERSON stated that although he did not have a proposed amendment, he has concern with subparagraph (B) on page 5, lines 7 - 12. He said it speaks to actual capital investment or other beneficial spending. In some cases, such as platforms in Cook Inlet where the production levels might be very low, they might request reductions in royalties to keep alive without making an increased capital investment or beneficial spending. His concern is that these areas also be eligible for royalty reduction if they were to maintain the status quo to keep that field going. SENATOR LEMAN responded his intent is that the Cook Inlet fields and the continued extension of them would qualify just the same as if doing new projects. COMMISSIONER SHIVELY agreed, but said that this was exactly why they wanted to delete paragraph (9) altogether. In looking at this in the House, it was found that when trying to set these kinds of standards for the commissioner to look at, there are different kinds of decisions, different kinds of fields, pools, etc., and it results in the same kind of problem that Senator Torgerson pointed out. SENATOR PEARCE proposed a conceptual Amendment No. 9 to page 5, lines 3 - 20, that the delineation of what needs to be addressed in the findings and determination would apply only to the adjustments under subparagraph (A) on page 2, which are the oil or gas fields that have been delineated but have not previously produced oil or gas. She explained this would take care of Senator Torgerson's concern about aged Cook Inlet fields, and it will make the commissioner's job less onerous but still give the public the understanding and the faith that there will be a complete determination and findings. SENATOR PEARCE moved her conceptual Amendment No. 9. SENATOR TAYLOR objected and asked if the amendment would resolve Senator Torgerson's problem. COMMISSIONER SHIVELY acknowledged that the amendment would address Senator Torgerson's concern, but there still could be problems with subparagraph (B) on page 2. TAPE 95-55, SIDE B Number 025 After extensive discussion on the amendment, SENATOR TAYLOR removed his objection. SENATOR LEMAN stated a hand vote would be taken. The roll was taken with the following result: Senators Lincoln, Hoffman and Pearce voted "Yea" and Senator Leman voted "Nay." SENATOR LEMAN stated conceptual Amendment No. 9 was adopted. The committee then took an at ease at 7:00 p.m. and was called back to order at 7:30 p.m. Number 045 SENATOR PEARCE moved that the committee rescind it previous action in adopting conceptual Amendment No. 9. Hearing no objection, SENATOR LEMAN stated the committee had rescinded it action in adopting Amendment No. 9, which brought the amendment back before the committee. SENATOR PEARCE moved and asked unanimous consent that she be allowed to withdraw conceptual Amendment No. 9. Hearing no objection, the motion carried. Number 055 SENATOR PEARCE moved the following Amendment No. 10. Amendment No. 10 Page 5, line 6: After "adjustment" delete ; and add "on the  state's revenue; Hearing no objection to Amendment No. 10, SENATOR LEMAN stated it was adopted. Number 070 SENATOR PEARCE moved the following Amendment No. 11. Amendment No. 11 Page 2, lines 18 - 20: Delete existing language and replace with the following language: (B) to prolong the economic life of an oil or gas field or pool as cost per barrel or per barrel equivalent increase such that future production would not otherwise be economically feasible; or Hearing no objection to Amendment No. 11, SENATOR LEMAN stated it was adopted. Number 090 SENATOR LINCOLN offered the following Amendment No. 12. Amendment No. 12 Page 5, line 3 - 20: Delete paragraph (9) in its entirety and renumber accordingly. SENATOR LINCOLN moved Amendment No. 12 and SENATOR PEARCE objected. A hand vote was taken with the following result: Senators Hoffman and Lincoln voted "Yea" and Senators Leman, Taylor and Pearce voted "Nay." SENATOR LEMAN stated the motion failed. Number 115 There being no further amendments to SCS CSHB 207(RES), SENATOR LEMAN asked for the pleasure of the committee. SENATOR PEARCE moved that SCS CSHB 207(RES), as amended, be passed out of committee with individual recommendations. SENATOR LINCOLN objected and stated the committee had not addressed the minority's concerns with the sunset clause and the legislative oversight. SENATOR LEMAN responded that the committee had been working for four hours on the bill and had addressed every one of the major concerns. He then called for a roll call vote. The roll was taken with the following result: Senators Pearce, Taylor and Leman voted "Yea" and Senators Lincoln and Hoffman voted "Nay." SENATOR LEMAN stated the motion to move SCS CSHB 207(RES) from committee failed because it lacked the necessary four votes to move it. SENATOR TAYLOR moved that the committee reconsider its action in failing to move SCS CSHB 207(RES), as amended, from committee. Hearing no objection, SENATOR LEMAN stated the motion to move SCS CSHB 207(RES), as amended, from committee was back before the committee. SENATOR LINCOLN objected. The roll was taken with the following result: Senators Halford, Taylor and Leman voted "Yea" and Senators Lincoln, Hoffman and Pearce voted "Nay." SENATOR LEMAN stated the motion failed and that the bill would be set aside. Number 190 CSHB 141(FSH) TERM OF FISH BOARD MEMBERS SENATOR LEMAN brought CSHB 141(FSH) before the committee as the next order of business. However, there being no witnesses present to testify on the bill, he stated it would be set aside. Number 200 SENATOR LEMAN stated the committee would stand in recess to a call of the Chairman. He then recessed the meeting at 7:40 p.m. The meeting was called back to order at 11:35 p.m. However, because only Senator Leman and Senator Taylor were in attendance and lacked a quorum to deal with HB 207 and HB 141, SENATOR LEMAN recessed the meeting at 11:36 p.m. until the following day to a call of the Chairman. TAPE 95-56, SIDE A Number 001 The meeting was called back to order at 2:10 p.m. on May 4. SENATOR TAYLOR moved that SCS CSHB 207(RES), as amended, be passed out of committee with individual recommendations. SENATOR HOFFMAN objected. The roll was taken with the following result: Senators Pearce, Taylor and Leman voted "Yea" and Senator Hoffman voted "Nay." SENATOR LEMAN stated the motion failed. SENATOR LEMAN stated the committee would stand in recess at 2:12 p.m. The May 3 Senate Resources Committee meeting was formally adjourned on May 5.