Legislature(2003 - 2004)

05/05/2003 03:10 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 283-ACREAGE FOR COAL LEASES                                                                                                
                                                                                                                                
Number 0275                                                                                                                     
                                                                                                                                
CHAIR FATE  announced that  the next order  of business  would be                                                               
HOUSE  BILL NO.  283, "An  Act  relating to  limitations on  coal                                                               
leases."                                                                                                                        
                                                                                                                                
CHAIR FATE, sponsor, asked his staff to present the bill.                                                                       
                                                                                                                                
Number 0360                                                                                                                     
                                                                                                                                
JIM  POUND,  Staff  to Representative  Hugh  Fate,  Alaska  State                                                               
Legislature,  highlighted the  large amount  of coal  reserves in                                                               
Alaska,  noting  that  throughout  the years  this  resource  has                                                               
provided  power  for homes  and  employed  many people.    Today,                                                               
however, the  state is at a  juncture.  Intended to  increase the                                                               
amount  of state  acreage available  for coal  leases, HB  283 is                                                               
written  to open  the door  to economic  opportunity.   Companies                                                               
that currently are  working will be able to expand,  and new ones                                                               
will be more  feasible.  Suggesting the state will  gain from new                                                               
and expanded  leases, Mr. Pound  called this a  win-win situation                                                               
for  both the  state  and the  coal industry.    He concluded  by                                                               
saying   HB  283   doesn't   change   the  strict   environmental                                                               
requirements   for  companies,   but  simply   makes  more   land                                                               
available.                                                                                                                      
                                                                                                                                
Number 0478                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO, expressing curiosity  as to how the numbers                                                               
were determined, asked:   If it's a win-win  situation and 92,160                                                               
acres is better than 46,080 acres, why is there any limitation?                                                                 
                                                                                                                                
CHAIR FATE suggested Charlie Boddy  could answer after presenting                                                               
his testimony.                                                                                                                  
                                                                                                                                
Number 0558                                                                                                                     
                                                                                                                                
CHARLIE   BODDY,  Vice   President  of   Governmental  Relations,                                                               
Usibelli  Coal Mine,  Inc.,  told  members HB  283  has the  full                                                               
support  of  his  company  as   well  as  other  resource-related                                                               
organizations around the state.  He explained:                                                                                  
                                                                                                                                
     This legislation is vital to  our company if we plan to                                                                    
     expand operations  outside of  the Interior  of Alaska.                                                                    
     Our  recently unveiled  200-megawatt  Emma Creek  coal-                                                                    
     fired  power-generation  facility   was  proposed  only                                                                    
     after we  secured additional leases  in the  Healy area                                                                    
     through a competitive sale just  over a year ago.  That                                                                    
     leasehold acquisition brought  our leased state acreage                                                                    
     holdings to 37,952 acres.                                                                                                  
                                                                                                                                
     It's  our belief  that Alaska  has great  potential for                                                                    
     export,  both  domestically  and  internationally,  and                                                                    
     that  this proposed  legislation will  accord ourselves                                                                    
     and others the opportunity to pursue those options.                                                                        
                                                                                                                                
Number 0668                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK observed  that  the fiscal  note [from  the                                                               
Department of  Natural Resources (DNR)] says  that the department                                                               
supports  the  bill; that  the  change  in allowable  acreage  is                                                               
consistent with  a recent  change in  federal law  that increased                                                               
the  aggregate  acreage  of  federal  coal  leases  held  by  one                                                               
company; and that there is  no fiscal impact [predicted for] this                                                               
bill.    She said  the  bill  will  create  a better  chance  for                                                               
businesses to develop resources, and spoke in support of it.                                                                    
                                                                                                                                
Number 0733                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked  Mr. Boddy how the  92,160 [acres] was                                                               
arrived at.                                                                                                                     
                                                                                                                                
MR. BODDY answered that it  changes the leasable acreage from two                                                               
full townships to four.                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTO  asked:  If  four is better than  two, isn't                                                               
six even  better?  And  isn't an  infinite amount better  than no                                                               
amount?                                                                                                                         
                                                                                                                                
MR. BODDY said Alaska is probably  one of the few states with any                                                               
limitations on  state leaseholds;  however, most  states couldn't                                                               
collectively put together  46,000 acres.  He added,  "Most of the                                                               
coal  that we  would be  competing against,  for example,  in the                                                               
Western  United States,  is the  Department of  the Interior,  is                                                               
federal coal.   And that ...  was the acreage that  was increased                                                               
in 2001."                                                                                                                       
                                                                                                                                
Number 0845                                                                                                                     
                                                                                                                                
CHAIR  FATE  asked Mr.  Boddy  whether  one  reason for  this  is                                                               
because of the competitive nature of  the ground opened up by the                                                               
Department of the Interior in the Lower 48.                                                                                     
                                                                                                                                
MR. BODDY  said that's correct.   Noting that he'd  discussed the                                                               
issue  with the  National Mining  Association in  March, he  said                                                               
some  of the  markets  that would  be looked  at  are West  Coast                                                               
markets currently supplied by some  Western states.  He indicated                                                               
that this  [bill] would  provide an  opportunity to  advance coal                                                               
that would  probably be  closer to  tidewater than  his company's                                                               
Healy operations.                                                                                                               
                                                                                                                                
CHAIR  FATE  surmised  that  the   acreage  doesn't  have  to  be                                                               
contiguous.                                                                                                                     
                                                                                                                                
MR. BODDY said that's correct.  He added:                                                                                       
                                                                                                                                
     I  don't think  it's  any great  secret  that after  17                                                                    
     years, we  had a hard time  continuing our relationship                                                                    
     with exporting  coal to South  Korea.  A large  part of                                                                    
     that was, we were having  to "rail" ... the product all                                                                    
     the way from Interior Alaska to  a port at Seward.  And                                                                    
     although Alaska  Railroad certainly  stayed ...  in the                                                                    
     hunt as  long as we  did, to  try to keep  that program                                                                    
     viable, we simply could not  meet the market conditions                                                                    
     by shipping coal from the Interior of Alaska.                                                                              
                                                                                                                                
Number 0981                                                                                                                     
                                                                                                                                
CHAIR FATE  asked, "In the  event that you  wanted to do  some of                                                               
your own  exploration for shallow-well  or coal bed  methane, you                                                               
would come  under different regulations  relative to  shallow gas                                                               
than you would to mining coal, would you not?"                                                                                  
                                                                                                                                
MR. BODDY answered in the affirmative.                                                                                          
                                                                                                                                
CHAIR FATE  offered his understanding,  "You would have  to still                                                               
get your  license or permit to  go after the gas;  it's just your                                                               
lease for coal ... wouldn't cover the gas."                                                                                     
                                                                                                                                
MR. BODDY said that's correct.                                                                                                  
                                                                                                                                
Number 1049                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK moved  to report  HB 283  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note;  she  asked   for  unanimous  consent.     There  being  no                                                               
objection, HB 283 was reported  from the House Resources Standing                                                               
Committee.                                                                                                                      

Document Name Date/Time Subjects