Legislature: What happened on that final day? Personal-use cabins added to oil and gas bill

State analysts are still picking through the Legislature’s actions in its last two days looking at bills that passed, sometimes in odd combinations.

Mat-Su Rep. George Rauschers’ House Bill 349 passed, removing a obsolete requirement in state law that made drilling of new oil and gas wells less efficient.

But on the last day of the legislative session, on May 18, language from other bills assuring transfer of ownership to personal use cabins on state lands and conveying lands to the city and borough of Juneau were added to HB 349.

Rauscher’s bill had passed the House 40 to 0 on May 11 and was sent to the Senate. Meanwhile, the original personal use cabin bill, Sen. Peter Micciche’s SB 219, was in the House after passing the Senate 19 to 0 on April 27.

Micciche’s personal use cabin bill finally reached the floor of the House May 18, but for unknown reasons was bumped to the bottom of the calendar, meaning low on the rung for action. Also, several amendents were proposed, which would further slow the bill.

It’s likely that problems developed simply because it was Micciche’s bill, who is Senate President.

With time short, and to ensure the bill passed, senators added the language from SB 219, which appeared hung up in the House, to HB 349, which was in the Senate.

When the Senate voted on the new, combined bill it went back to the House for a vote on the floor of that body to concur in the Senate change. That finally happened late on May 18, the last day.

The maneuver was not unusual in itself – the same thing was done when the early learning and reading bill, SB 111, was inserted into a House-passed bill – but the critical timing of the actions on the last day was a nail-biter.

Rauscher’s original bill dealt with state approval of oil and gas drilling units, or groupings of state and gas leases that allowed for efficient drilling of wells. Units eliminate the traditional requirement for a well to be drilled on each lease by allowing one or more wells to produce oil from several leases where the underground reservoir crossed lease boundaries.

HB 349 dealt with a problem that was complicating the planning for new drilling, however. State statutes require a public hearing to be held if a well were drilled near lease boundary so that the owner of an adjacent lease could voice objections if there was a possibility “drainage,” or oil moving across the boundary through underground rocks.

The original statute was enacted at a time when traditional “vertical” wells were drilled, or those straight down to the reservoir from the surface. The industry’s technology has changed, however, and now there are new types of horizontal and multi-lateral wells where several wells are drilled laterally underground from a single vertical well to the surface.

With many of these new types of wells drilled the requirement for a public hearing for new wells became an impediment to routine lease development by delaying approval for a the drilling unit until the hearing could be held by the Alaska Oil and Gas Conservation Commission, or AOGCC.

These require public notice in advance of the hearing and a period following for a decision to be made, as well as provisions for appeals. The procedure was redundant because the AOGCC can sort out any issues with the drilling internally before the hearing would be held.

On personal use cabin permits, the language added to HB 349 provides for the transfer of permits for cabins on state land to family members in the case of premature death of a permit holder.

Current law holds a personal use cabin permit valid only during the lifetime of the original holder of the permit and does not allow it to be transferred or assigned.

HB 349 changes this to allow a permit to be assigned if an individual who originally holds the permit does not live to his or her average life expectancy, as determined by the National Center for Health Statistics.

The transferred permit would remain valid for the period between the time of death and the normal expected times to death according to the national averages.