SENATE RESOURCES COMMITTEE February 10, 1997 3:30 p.m. MEMBERS PRESENT Senator Lyda Green, Vice Chairman Senator Loren Leman Senator Bert Sharp Senator Robin Taylor Senator John Torgerson Senator Georgianna Lincoln MEMBERS ABSENT Senator Rick Halford, Chairman COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 8 Urging the United States Congress to give an affirmative expression of approval to a policy authorizing the state to regulate, restrict, or prohibit the export of unprocessed logs harvested from its land and from the land of its political subdivisions and the University of Alaska. MOVED SJR 8 OUT OF COMMITTEE SENATE JOINT RESOLUTION NO. 9 Urging the United States Congress to pass legislation to open the coastal plain of the Arctic National Wildlife Refuge, Alaska, to oil and gas exploration, development, and production. MOVED SJR 9 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SJR 8 - SJR 8 - See Resources minutes dated 2/5/97. SJR 9 - No previous action to consider. WITNESS REGISTER Senator Drue Pearce Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SJR 9 Cam Toohey Arctic Power 4220 B Street #201 Anchorage, AK POSITION STATEMENT: Commented on SJR 9. ACTION NARRATIVE TAPE 97-11, SIDE A Number 001 SJR 8 PRIMARY MFG OF PUBLICLY OWNED TIMBER  VICE-CHAIR GREEN called the Senate Resources Committee meeting to order at 3:30 p.m. and announced Chairman Halford was excused for a family emergency. She noted the presence of Senators Taylor, Torgerson, Leman, and Sharp. The first order of business before the committee was SJR 8, sponsored by Senator Torgerson. SENATOR TORGERSON gave the following overview of SJR 8. Legislation identical to SJR 8 passed the House and Senate last year. SJR 8 asks Congress to grant approval to the State of Alaska to regulate, restrict, or prohibit the export of unprocessed logs harvested from state lands, and lands of political subdivisions and the University of Alaska. SJR 8 was introduced because after a recent sawmill closure in Seward, the State held a timber sale in a nearby area. The logs from that sale were exported to Oregon for primary manufacturing. Alaska was not included in the 1990 Congressional Act that exempted 11 contiguous western states from Commerce Clauses and extended the ban on unprocessed log exports in that area. Trees from those states cannot be purchased and sent to Alaska for primary manufacturing; primary manufacturing must occur in those regions. SENATOR TAYLOR commented in Southeast Alaska for some time, private land owners clear cut their properties, then left half of the felled logs on the land to rot because the Japanese, who were the primary purchasers of the round logs, only wanted the highest grade logs to make musical instruments, among other things. Consequently, the value-added jobs, as many are trumpeting as the cure-all for this industry, were shipped out since the mid-70's. The tragedy is that the none of the people who owned that resource had the benefit of the majority of those jobs. Even the jobs in extracting and harvesting the resource did not involve a majority of the people who owned it. Today, most of the people who own those lands are in about the same economic straights they were before they harvested the land. In retrospect, we find the resource has been depleted and the owners were only peripherally benefitted. Had a sustained use policy been used on that same land, thousands of people could have been employed forever. Once again, Alaska has to beg Congress to allow the people of Alaska to control their destinies. He discussed the case of Southcentral Timber Development, Inc. v. Wunnicke. SJR 8 will allow the state to make certain that timber jobs remain in Alaska. Number 167 SENATOR LEMAN noted he supported this legislation last year when it was before the Senate Resources Committee. The Legislature needs to do a lot more to help local economies. SJR 8 will be a small step toward that goal. He moved SJR 8 from committee with individual recommendations. VICE-CHAIR GREEN stated there was no further testimony on SJR 8, and hearing no objections to the motion, moved SJR 8 from committee. She commented the Mat-Su area is in need of a continual supply of timber. SJR 9 ENDORSING ANWR LEASING  SENATOR DRUE PEARCE explained SJR 9 is before this Legislature and addressed to Congress because both bodies are newly elected and need to take a position on oil and gas exploration in ANWR. SJR 9 encourages Congress to pass legislation for oil and gas exploration, development, and production on the coastal plain of ANWR. The Congressional delegation will continue to be active in the ongoing attempts to get Congress to take action. She is presenting SJR 9 on behalf of Arctic Power, who represents 10,000 Alaskans from every walk of life, who support opening ANWR. Arctic Power is co-chaired by Mayor Selby of the Kodiak Island Borough and Mano Frey of the State AFL-CIO. This topic of conversation has been ongoing in the Legislature since the mid 1980's, and has included controversial discussions about land exchanges within ANWR and calving grounds. At this point, Alaskans do know how to develop and explore for oil and gas in an environmentally sensitive way. We are very familiar with the coastal plain, and it is time for Congress and the President to make the decision, and let the State of Alaska, through the phasing process, make any mitigating decisions necessary for the flora and fauna on the 1002 coastal area. She noted letters of support from the Resource Development Council and the residents of the North Slope Borough. SJR 9 is not without controversy. Senator Pearce indicated she has worked in the past with the Arctic Slope Regional Corporation as a liaison with the Village of Kaktovik to bring Congressional members and others into the refuge. She does not believe her past involvement creates a conflict of interest, because Congress will make the decision about SJR 9. Number 266 SENATOR LINCOLN commented SJR 9 appears to have more "whereas" clauses than last year's legislation, and asked about page 2, line 26. Last year's legislation referred to 5,000 to 7,000 acres that would be affected, and one and one-half percent is now decreased to one-half of one percent in SJR 9. SENATOR PEARCE estimated the range to be below one percent. She suspected the percent change was technical. Regarding the change from 5,000 to 2,000 acres, there are 26 known structures determined by completed seismic work but that seismic work is not recent. No one knows which of those structures may hold oil and gas reserves in an amount that might be economically feasible to produce. It is likely the companies will want to do new seismic testing to find out which structures are the most prospective. It is difficult to decide, at this time, whether 2,000 or 7,000 acres might eventually be affected. Exploration always takes place in the winter, when caribou are nowhere near the area. Once the desirable areas are determined, the state could mitigate for environmental concerns. Secondly, in two years, the state has been successful in a number of areas, particularly the development plans for both the Badami and North Star fields. North Star is a huge field by lower 48 standards and is the first field in Alaska to be developed offshore. The entire field will be developed from one drilling platform because new well technology is available. Oil and gas industry people believe the development footprint will be much smaller than it would have been two years ago because the technology is developing so quickly. Two drilling sites are planned on the Alpine site that are expected to produce over 100,000 barrels per day. That site is on a delta area, much like the Canning River area, and some of the other river areas of ANWR. SENATOR PEARCE explained the "Whereas" clause on the top of page 2, regarding demand for oil, contains new numbers because the United States' demand for oil has increased considerably during the past two years. Our domestic crude production has continued to fall, and is now at 6,000 barrels per day. Our overall demand for oil has increased by 2 1/2 percent in the past year, and almost 5 percent for two years. Oil imports have risen to more than 52 percent and the price of that oil increased by over 35 percent in one year. This country could very easily be held hostage by the oil producers in other parts of the world as it was in the '70s and '80s. That clause is important to include in SJR 9 because those numbers are of increasing concern. SENATOR LINCOLN requested SJR 9 be amended on page 3, line 10, by deleting the words "to the maximum extent possible" because those words are "weasel words" and add nothing to the resolution. Number 366 SENATOR SHARP objected to Senator Lincoln's proposed amendment and commented those "weasel" words come from the Alaska Supreme Court, which decided the Legislature cannot mandate employers to use state workforces exclusively. Hopefully the Administration, the Legislature, and local governments will enforce it to the maximum extent possible. SENATOR PEARCE added SJR 9 is going to members of Congress who have taken oaths to uphold the U.S. Constitution. While Alaska may want to close its borders to outside workers, that action would fly in the face of the interstate commerce clause. Mandating state hire in SJR 9 would raise a flag in Congress. VICE-CHAIR GREEN questioned the practicality of requiring an all- Alaskan workforce since that might not be possible. SENATOR LINCOLN explained the amendment would request that "activity be conducted in a manner that protects the environment and uses the state's work force." It does not create an absolute condition or ask anyone to do anything unconstitutional. SENATOR PEARCE indicated she understood the clause "to the maximum extent possible" to refer to both environmental activities and use of the state work force with the intent of making the whole sentence stronger. Number 403 SENATOR LEMAN appreciated Senator Lincoln's concern but feared her proposed amendment could be detrimental to the intent because that clause requests optimal use of the state's work force. SENATOR TAYLOR commented the adjectives will define the type of environmental protection; including the word "maximum" makes that clause stronger. SENATOR LINCOLN believed the phrase "to the extent possible" is interpreted to mean we hope you will do this. By leaving it out the message becomes "you will protect the environment and you will hire Alaska's work force." SENATOR TAYLOR repeated he interprets that phrase to mean the highest or greatest extent possible. If the word "minimum" was used rather than "maximum" it would have the impact suggested by Senator Lincoln. There being further objection to the motion, a roll call vote was taken with Senator Lincoln voting "yea," and Senators Torgerson, Taylor, Sharp, Leman and Green voting "nay." The motion to delete the phrase "to the maximum extent possible" failed. Number 459 SENATOR LINCOLN proposed to insert on page 3, after line 8, a new clause to read: FURTHER RESOLVED that the Congress join with the state to ensure the continued health and productivity of the Porcupine Caribou herd and the protection of land, water, and wildlife resources during the exploration and development of the coastal plain of the Arctic National Wildlife Refuge .... She explained that clause will not weaken SJR 9 but specifies protection of a herd that many depend upon for their lifestyle. The clause reiterates some of the concerns of the Tanana Chiefs Conference who support oil and gas development but not in the calving area of the Porcupine Caribou herd. SENATOR LEMAN commented he does not have any objection to the clause, with the exception that the Legislature join with Congress to ensure the continued health and productivity of the herd. He believes Alaska is capable of that goal itself. He suggested deleting "Congress join with" and the word "to" on the first line of Senator Lincoln's amendment. SENATOR LINCOLN did not object to that deletion. SENATOR LEMAN offered his suggested language as an amendment. SENATOR PEARCE felt all Alaskans want water, land and wildlife resources to be protected during the exploration and development phases but expressed concern that Senator Lincoln intended her amendment to mean there will be no exploration in any of the areas that have ever been used as a calving area. SENATOR LINCOLN replied that is not the intention of the amendment. Number 496 SENATOR PEARCE felt this type of language clarifies and strengthens Alaskans' intent to continue to develop the North Slope in a responsible manner. She referred to a letter from Congressman Vinto and the misconceptions it contained. SENATOR TAYLOR felt Senator Lincoln's amendment impacts the flow of the resolution and suggested striking the language "join with" and insert the word "follow" so that Congress will follow the State of Alaska's example on the TAPS line, and to include language allowing the state to continue managing the Porcupine herd and its current policies of protecting the land, water, and wildlife resources. He suggested noting the TransAlaska Pipeline because it is the same demagogues in Congress, now typified by Mr. Vinto, who came up with shrill rhetoric, when Alaska was seeking permits to build the original pipeline across Alaska. Senator Taylor stated, "I heard the same rhetoric come out, and that was the - it's almost like writing the perfect country western song - you gotta talk about pick-up trucks, you gotta talk about a train, you gotta talk about jail and a dog and so on. And what these people do is, they run right back through the same old rhetorical mantra and that is that you gotta bring in children, you gotta threaten the children's heritage, and you gotta talk about saving something that is the last that ever was, and I'm sure this thing was basically just a fund raising letter that is attached and going out to every person that's ever contributed in Orange County, California. The difficulty of it is that it's harkening upon an emotional response that is bereft of any semblance of factual basis." He wanted to reference the TAPS line in the amendment because the Central Arctic caribou herd, which was of a major concern 20 years ago, has grown tenfold during the period of time the pipeline has been in operation. Number 565 SENATOR LINCOLN asked Senator Taylor if he was speaking to her amendment. SENATOR TAYLOR replied he was because it would be a gross mistake to allow Congress to tell Alaskans what to do about the Porcupine Caribou herd because we probably have some of the world's experts in our fish and game department. The Porcupine Caribou herd has become a poster child for every environmental organization so Alaska needs to emphasize the good job it has done with the Central Arctic Caribou herd, and that it intends to do the same for both herds. SENATOR SHARP believed Senator Lincoln's proposed amendment should be a "Whereas" clause rather than a "Further Resolved" clause. VICE-CHAIR GREEN clarified Senator Sharp's suggested language is the third amendment to Senator Lincoln's amendment. SENATOR LEMAN disagreed with the placement suggested by Senator Sharp because the state is presently managing appropriately and is resolving it will continue to do so. SENATOR TAYLOR clarified Senator Leman's amendment is the only one on the table at this time. VICE-CHAIR GREEN stated Senator Leman's amendment reads:  FURTHER RESOLVED that the state ensure the continued health and productivity of the Porcupine Caribou herd and the protection of land, water, and wildlife resources during the exploration and development of the coastal plain of the Arctic National Wildlife Refuge... TAPE 97-11, SIDE B Number 000 SENATOR TAYLOR continued his objection because he believed the clause should be a "Whereas" clause to keep the primary resolve of SJR 9 clean and simple. VICE CHAIR GREEN announced the motion was to adopt Senator Leman's amendment to Amendment #2, with the "FURTHER RESOLVED" language. Senators Lincoln, Torgerson, Leman voted for the amendment, and Senators Taylor, Green and Sharp voted against it, therefore the motion failed. SENATOR SHARP called for the question to adopt Amendment #2. SENATOR TAYLOR continued his objection. Senators Green, Leman, Sharp, Taylor and Torgerson voted "nay" and Senator Lincoln voted "yea," therefore the motion failed. Number 559 SENATOR SHARP referred to a map of ANWR in committee packets, and asked for clarification of the purple area designated as "Historic Oil Leases" between Venetie and Arctic Village. CAM TOOHEY , Executive Director of Arctic Power, answered the map is of the 1002 area and details the land status. The light purple area is a lease sale that was held in about 1980 within Gwich'en lands for oil and gas exploration. VICE-CHAIR GREEN asked if actual exploration occurred. MR. TOOHEY replied a lease was entered into but he was not sure of the extent of the exploration. SENATOR SHARP commented that area appears to be as large as the entire 1002 area. SENATOR TAYLOR referred to the pink areas. MR. TOOHEY pointed out the Gwich'in historic oil lease area and noted other areas are oil and gas activities within Canadian boundaries. SENATOR LINCOLN confirmed no exploration occurred on the Gwich'in lease area. SENATOR TAYLOR questioned whether the pink area he was pointing to (both offshore and onshore) at the top of the map contains Canadian leases. MR. TOOHEY said yes, those are historic leases that occurred in the Canadian Arctic. He was unsure of the recent status of those leases but noted there has been a tremendous amount of oil and gas exploration activity in that region. SENATOR TAYLOR asked if the Porcupine Caribou herd moves across a specific area of the border. MR. TOOHEY said it does. SENATOR PEARCE clarified the black dots are the wells that have been drilled on the historic leases. SENATOR TAYLOR asked if that is the area the caribou wander through. MR. TOOHEY said it is. Number 518 SENATOR LEMAN referred to the issue of using the state's work force, and pointed out his intent is that Alaskan businesses that hire Alaskans be used, as well as the state's labor force. SENATOR PEARCE agreed that is the intent of that language. Many Alaskan support industry companies have massive expertise in Arctic oil exploration, development and production, and it is important those companies be used to the maximum extent possible. SENATOR TAYLOR moved and asked unanimous consent that SJR 9 be moved from committee with individual recommendations. VICE-CHAIR GREEN announced SJR 9 is not accompanied by any fiscal notes, and the Senate Resources Committee will be preparing a zero fiscal note. SENATOR LINCOLN objected and asked, with the passage of SJR 9, whether a delegation would travel to Washington, D.C. as one did last year, and whether there will be a fiscal note at some point to allow legislators or others to move the legislation along. SENATOR PEARCE stated two years ago a number of legislators traveled to Washington, D.C. to lobby Congress. The legislators' travel was paid for by the Legislature as part of its regular operating expenses. At that time, there was also a reappropriation of ANWR dollars that were appropriated for the first time early in the Hickel Administration. Part of the remainder of those dollars was appropriated to the Governor's Office for their efforts. Part of that money was granted to Arctic Power who used those dollars for efforts in target states. She was unaware of the Governor's plans for the upcoming fiscal year. SENATOR LINCOLN clarified she was questioning whether the intent is to have legislative members involved in pursuing SJR 9 in Congress. SENATOR PEARCE answered the two are unrelated; this resolution will be provided so the Congressional delegation has it for their files. If the Governor and/or the Legislators want to be a part of some effort again this year, that decision will be made by the leadership. VICE CHAIR GREEN asked if there was continued objection to the motion to move SJR 9 from committee. There being no objection, SJR 9 moved from committee with a zero fiscal note. VICE CHAIR GREEN adjourned the meeting at 4:37 p.m.