Legislature(2015 - 2016)BARNES 124

04/11/2016 01:00 PM House RESOURCES

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01:22:17 PM Start
01:23:13 PM SB170
01:39:08 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 170(RES) Out of Committee
-- Public Testimony --
            SB 170-DNR FEES FOR GEOLOGICAL SERVICES                                                                         
1:23:13 PM                                                                                                                    
CO-CHAIR TALERICO  announced that  the only  order of  business is                                                              
CS  FOR  SENATE  BILL  NO.  170(RES),   "An  Act  authorizing  the                                                              
Department  of  Natural  Resources,  division  of  geological  and                                                              
geophysical surveys,  to collect  fees for facilities,  equipment,                                                              
products,  and  services;  relating   to  accounting  for  certain                                                              
program receipts; and providing for an effective date."                                                                         
1:23:31 PM                                                                                                                    
SENATOR CATHY  GIESSEL, Alaska  State Legislature, explained  that                                                              
the Geologic Materials  Center (GMC) is located  in Anchorage, and                                                              
that  core samples  are voluntarily  donated  to the  GMC by  some                                                              
companies,  the  U.S. Army  Corps  of  Engineers, U.S.  Bureau  of                                                              
Ocean  Energy Management,  and  various  other federal  and  state                                                              
entities.   Core samples  originate from  oil and gas  exploration                                                              
or mining  projects, and  geologists can  go to  the GMC  and read                                                              
these rocks  as though  they were books  and this information  may                                                              
lead to  future discoveries  of Alaska's  resources.   Previously,                                                              
the Geologic  Materials Center  was located  in Eagle  River where                                                              
the core  samples were  kept in  conexes, which  are unheated  and                                                              
unlit  metal boxes  outside  in  the weather  and  the cores  were                                                              
deteriorating.   The new  facility in  Anchorage provides  viewing                                                              
rooms  wherein companies  or  explorers review  the  rocks.   This                                                              
bill  would enable  the  Department  of Natural  Resources  (DNR),                                                              
Division of Geologic  and Geophysical Surveys, to  charge folks to                                                              
review the  core samples, because  under current statute  there is                                                              
not the ability to receive the receipts.                                                                                        
1:25:55 PM                                                                                                                    
AKIS  GIALOPSOS,  Staff,  Senator   Cathy  Giessel,  Alaska  State                                                              
Legislature,  on behalf of  Senator Giessel,  sponsor, provided  a                                                              
sectional  analysis of  CSSB 170(RES).   He  paraphrased from  the                                                              
following   written  sectional   analysis  [original   punctuation                                                              
     *Section  1.   Provides  that  fees  collected   by  the                                                                   
     Department  of Natural Resources  (department) under  AS                                                                   
     41.08.045,  added by bill section  3, will be  accounted                                                                   
     for separately  and that appropriations from  these fees                                                                   
     are not made from the unrestricted general fund.                                                                           
     *Section 2.  Conforms AS 41.08.030  to the changes  made                                                                   
     to AS 41.08 by section 3 of the bill.                                                                                      
     *Section 3.  Adds a new  section to AS 41.08  permitting                                                                   
     the    department's   division    of   geological    and                                                                   
     geophysical  surveys  to  charge and  collect  fees  for                                                                   
     facilities,  equipment, products,  or services that  the                                                                   
     division  offers. Institutes a  fee waiver for  students                                                                   
     using  the facilities, equipment,  products or  services                                                                   
     for educational purposes.                                                                                                  
     *Section   4.  Amend  uncodified   law  to  permit   the                                                                   
     department to  adopt regulations necessary  to implement                                                                   
     changes made by the Act.                                                                                                   
     *Section 5. Makes section 4 effective immediately.                                                                         
     *Section  6. Gives  sections  1-3 an  effective date  of                                                                   
     July 1, 2016.                                                                                                              
MR. GIALOPSOS explained  that under existing statute  the division                                                              
can charge  for the  purchase of maps  and certain materials,  but                                                              
that revenue goes  directly into the general fund.   Because these                                                              
proceeds  eventually  go  into   the  receipt  authority  account,                                                              
[Section 2]  deletes to conform  to Section 3.   Section 3  is the                                                              
heart of the  bill - it creates  the new section in  AS 41.08 that                                                              
empowers the division  to enable a fee structure.   It was also in                                                              
this section that  the committee substitute was  created, pursuant                                                              
to an  amendment offered by  Senator Wielechowski  and unanimously                                                              
adopted, to  explicitly waive fees  for any student  utilizing the                                                              
facilities  for  educational  purposes.    Section  4  amends  and                                                              
codifies the law  and permits the department to  adopt regulations                                                              
to conform to  Section 3 of the  bill.  Section 5 makes  Section 4                                                              
effective  immediately  and Section  6  makes  July 1,  2016,  the                                                              
effective date of the Act.                                                                                                      
1:27:58 PM                                                                                                                    
REPRESENTATIVE  HERRON requested  Mr. Masterman  to put on  record                                                              
what  the  life  expectancy  of  this facility  will  be  when  it                                                              
reaches full capacity.                                                                                                          
STEVEN  MASTERMAN,   Director  &  State  Geologist,   Division  of                                                              
Geological   &   Geophysical  Surveys,   Department   of   Natural                                                              
Resources (DNR)  advised that, initially,  the facility  was about                                                              
one-third full from  the collection that was held  in Eagle River.                                                              
Since  that  time  the  GMC  has   received  the  U.S.  Geological                                                              
Survey's  (USGS) entire  collection,  a large  donation from  "BP"                                                              
and  "ConocoPhillips,"  as well  as  several sizable  but  smaller                                                              
donations  from  mining companies.    Currently,  the facility  is                                                              
about  42-43  percent  full.    At  the  current  rate,  there  is                                                              
approximately  one  decade's  worth  of  space  left  before  more                                                              
shelves will be required or expansion is considered.                                                                            
1:29:47 PM                                                                                                                    
REPRESENTATIVE JOHNSON  asked the cost  for someone to  review the                                                              
core samples.                                                                                                                   
MR. GIALOPSOS  deferred to Dr.  Masterman to answer  the question,                                                              
but  noted  that  Dr. Masterman  has  discussed  a  fee  structure                                                              
within the median of other facilities in North America.                                                                         
DR.  MASTERMAN replied  that a  national review  was performed  of                                                              
fee structures  from other  facilities charging  for this  type of                                                              
service.   There are  10 facilities  that are  either close  to or                                                              
bigger than  Alaska's facility  and, once  the Alaska  facility is                                                              
charging  fees, then  9  of the  10  facilities  will be  charging                                                              
fees.   Alaska's  facility would  be  priced in  the mid-point  of                                                              
those  other  fee schedules  such  that  the fees  would  generate                                                              
revenue  but not  detract from  people  using the  facility.   The                                                              
division is cognizant of having realistic fees.                                                                                 
REPRESENTATIVE JOHNSON inquired as to the specific number.                                                                      
DR. MASTERMAN responded  that the draft fee schedule  is prepared,                                                              
but  must  be  reviewed  by  the  commissioner's  office  and  the                                                              
Department of Law  and will then go out for public  comment before                                                              
the division  promulgates  regulations.   An example was  provided                                                              
in the  bill packet  wherein an  individual goes  to the  Geologic                                                              
Materials Center (GMC),  pulls a collection of core  boxes off the                                                              
shelf and asks that  some samples be taken.   The [proposed] price                                                              
in this scenario  would be $250, which is at the  lower end of the                                                              
price range for the other facilities nationally.                                                                                
1:32:23 PM                                                                                                                    
REPRESENTATIVE TARR  surmised that some of the  donations are from                                                              
the  same companies  that  may  come  in to  the  GMC  to use  the                                                              
materials  later.   She asked whether  any push  back is  expected                                                              
from these companies when they ask to see the samples later.                                                                    
1:32:40 PM                                                                                                                    
MR. GIALOPSOS answered  it is Senator Giessel's  understanding, in                                                              
speaking with  the stakeholder  groups and  the division,  that it                                                              
is the norm  for the entity to  pay full fees whether  or not that                                                              
entity has donated  those samples.  He advised  that this actually                                                              
would prevent a person from being charged to donate.                                                                            
DR.  MASTERMAN confirmed  there  is  not a  charge  for people  to                                                              
donate materials.   But, if companies wish to  store their samples                                                              
at  the  facility, the  GMC  will  accept  the samples,  and  then                                                              
charge  for  the  viewing  of those  samples.    Alternatively,  a                                                              
company can  have its own facility  and maintain its samples  in a                                                              
confidential and  private manner, but obviously the  company would                                                              
have to foot the  bill for its own facility.   Therefore, there is                                                              
substantial  advantage to  industry  to house  these materials  in                                                              
this facility.                                                                                                                  
1:34:17 PM                                                                                                                    
CO-CHAIR  TALERICO  opened public  testimony  and  then closed  it                                                              
after ascertaining that no one wished to testify.                                                                               
1:34:44 PM                                                                                                                    
REPRESENTATIVE  CHENAULT drew  attention  to the  fiscal note  and                                                              
requested an  explanation of the  public building fund (PBF).   He                                                              
observed from the  fiscal note that the cost would  be $400,000 to                                                              
allow the GMC facility to enter into the PBF.                                                                                   
DR. MASTERMAN  replied that the  division's plan is to  enter into                                                              
the public  building fund, which is  a fund that provides  for the                                                              
long-term maintenance  and operation of  a facility such  as this.                                                              
Items  that do  not fall  under  GMC's operating  budget, such  as                                                              
roof  or furnace  replacement,  would  be  handled by  the  public                                                              
building fund  and amortized over  the life of the  improvement or                                                              
maintenance  item.   Currently, GMC  cannot afford  to enter  into                                                              
the  PBF  because   its  operating  budget  does   not  allow  it;                                                              
therefore, the  bill proposes a  fee schedule to  generate revenue                                                              
that will provide  for the long-term maintenance  and operation of                                                              
the facility.  In  the event the facility does not  enter into the                                                              
PBF,  if  the roof  required  replacement  or  there was  a  large                                                              
maintenance  item,  [the  division]  would then  have  to  request                                                              
funding  from the legislature  for  those items.   The bill  would                                                              
provide a mechanism to maintain the building over the long term.                                                                
1:36:55 PM                                                                                                                    
REPRESENTATIVE  CHENAULT  referred  to the  2/29/16  question-and-                                                              
answer document  included  in the committee  packet titled,  "FAQS                                                              
related to  Senate Bill 170."  Turning  to page 3 of  the document                                                              
and the  question, How  do the  operations of  the GMC  compare to                                                              
other core  facilities of its kind  in other states?"  he observed                                                              
in the  answer that  there are ten  facilities over  25,000 square                                                              
feet  and that  Alaska's GMC  is 100,000  square feet.   He  asked                                                              
whether the figure of 100,000 is correct.                                                                                       
DR.  MASTERMAN  confirmed  the GMC's  interior  space  is  100,000                                                              
square feet and noted it is one of the largest in the nation.                                                                   
REPRESENTATIVE  TARR pointed  out  that this  facility  is in  her                                                              
district and has  been a great addition because it  is no longer a                                                              
big empty  box store and its  full-time employees  are frequenting                                                              
local  businesses for  lunch.   She offered  her appreciation  for                                                              
the GMC's presence.                                                                                                             
1:38:26 PM                                                                                                                    
CO-CHAIR NAGEAK  moved to  report CSSB  170(RES) out of  committee                                                              
with  individual  recommendations   and  the  accompanying  fiscal                                                              
notes.   There  being  no objection,  CSSB  170(RES) was  reported                                                              
from the House Resources Standing Committee.                                                                                    

Document Name Date/Time Subjects
SB0170-Version A.PDF HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Version W.PDF HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Sponsor Statement.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Supporting Document-Letter-DNR-DGGS.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Supporting Document-FAQs from DNR-DGGS.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Sectional Analysis-Version W.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Fiscal Note-DNR-DGGS-3-11-2016.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-Explanation of Changes-Version A to Version W.pdf HRES 4/11/2016 1:00:00 PM
SB 170
SB0170-List of Presenters.pdf HRES 4/11/2016 1:00:00 PM
SB 170