When the Alaska Legislature gaveled in Jan. 17 in Juneau, it returned to two oil and gas issues which dominated the 2012 session — oil taxes and coastal management.
House Bill 110, Gov. Sean Parnell’s proposed changes in ACES, Alaska’s Clear and Equitable Share, the state’s oil and gas production tax, was passed by the House last year but stalled in the Senate.
Much the same could be said for coastal zone management. After much work the House, the administration and stakeholders reached an agreement on changes to the program and the bill passed the House unanimously.
But the House failed to concur in changes the Senate made in the bill and the program died.
Local communities who wanted to see the coastal zone management restored began a petition drive and on Jan. 17, before legislators gaveled in, the Alaska Sea Party turned in what appeared to be a sufficient number of signatures to put a strong coastal zone management program on either the August primary ballot or the November general election ballot.
As Juneau Mayor Bruce Botelho, a lead sponsor of the initiative, said at a Jan. 17 press conference, the state constitution requires 120 days between the end of the legislative session and the appearance of an initiative on the ballot, so if the session ends within 90 days the initiative would appear on the August ballot; if the session extends by more than three days, then the initiative would be on the November election ballot.
If a bill with a program substantially the same as the ballot initiative is passed and signed, then the ballot initiative wouldn’t appear on the ballot.
Botelho said there were still some outstanding bills, but he expected the cost of the initiative campaign would be about $100,000. A campaign for votes if the initiative appears on the ballot is expected to cost about $500,000, he said.
Neither body interested
Leaders in the House and Senate tossed the ball back and forth on the issue of who might initiate legislation.
Asked if the House would deal with the issue or leave it to the ballot initiative, House Speaker Mike Chenault, R-Kenai, said in a House Majority press availability the morning of Jan. 17 that that conversation hadn’t occurred yet. He said he understood the initiative signatures would be turned in before the Legislature gaveled in and said the House would have to look at it and see how they want to address it.
Chenault said any member could introduce coastal zone legislation, but Rep. Craig Johnson, R-Anchorage, the House Rules chair, said he’d much rather see a bill come from the Senate.
In a Jan. 18 Senate bipartisan working group press availability, Gary Stevens, R-Kodiak, the Senate president, said that based on the House’s lack of support last year for the Senate’s version of coastal management, “it would make no sense for the Senate to pass a piece of legislation again to the House and just have them defeat it.”
Stevens said that if something happens in this session on coastal zone management, “it really has to be generated in the House.”
Sen. Lyman Hoffman, D-Bethel, said based on the initiative, which “says that basically we will go back to pre-Murkowski days and that is very, very different than what the Senate had passed and what the House has passed” his “first concern is can we, either body, pass a piece of legislation that is similar” to what is proposed in the initiative.
New tax bill
In his Jan. 18 state of the state address Gov. Sean Parnell asked legislators to vote in favor of “meaningful” oil tax reform; he did not mention coastal zone management.
The governor said companies have pledged at least $5 billion in new investments if “meaningful tax reform” passes, and said the state would “likely see billions more.”
The governor’s goal is to increase throughput in the trans-Alaska oil pipeline to 1 million barrels per day in 10 years time (in mid-January production averaged 625,000 bpd).
Parnell said that in addition to meaningful tax reform, which would attract investment, the administration is also working to streamline the state’s permitting process and improve access through the Roads to Resources initiative.
The Senate bipartisan working group held its press availability after the governor spoke, and Sen. Joe Thomas, D-Fairbanks, said he would like to see a roadmap for the increased production the governor wants. Thomas said that in discussions he’s had with industry, he’s not found anyone who thinks the 1 million barrel goal, an increase of about 400,000 bpd, “was even a realistic number.” He said what he’s been told is that an increase of 200,000 bpd “was something that could be achieved.”
Sen. Hollis French, D-Anchorage, referred to a steady production decline at the Kuparuk River field between 1996 and 2006, when the production tax for that field under ELF, the previous tax system (economic limit factor) dropped from 12 percent to almost zero. He called that a “10-year real-time experiment using the governor’s theory that if you just drop taxes, you’ll get more investment and more production,” and called for tying “tax relief to specific projects that put more oil in the pipe.”
A new bill
Stevens said he is “pretty certain” that a bill changing the oil production tax will move through the Senate, but said, “It will probably not be House Bill 110,” the governor’s bill which passed the House last year.
He said the co-chairs of the Senate Resource Committee, Tom Wagoner and Joe Paskvan, were working to begin the process in their committee and send a bill on to the Finance Committee.
Paskvan said there was no timetable for an oil production tax bill. He said a number of options are on the table and he believes “we have a better foundation to act upon now than we did a year ago.”
He said a bill could come out of the Resources Committee or out of the Finance Committee, but said “here’s no timetable on when a bill will be introduced.”
Stevens said he couldn’t provide a timeline either, but said the Senate recognizes “the importance of getting the legislation to the House in time for them to fully vet it and fully consider it, so we are under a bit of a time crunch and we want to make sure that it gets there … so they’ll have all the time they need to deal with it.”
