Legislature(2013 - 2014)

2014-03-18 Senate Journal

Full Journal pdf

2014-03-18                     Senate Journal                      Page 2035
SB 138                                                                                                                        
CS FOR SENATE BILL NO. 138(FIN) "An Act relating to the                                                                         
purposes, powers, and duties of the Alaska Gasline Development                                                                  
Corporation; relating to an in-state natural gas pipeline, an Alaska                                                            
liquefied natural gas project, and associated funds; requiring state                                                            
agencies and other entities to expedite reviews and actions related to                                                          
natural gas pipelines and projects; relating to the authorities and duties                                                      
of the commissioner of natural resources relating to a North Slope                                                              
natural gas project, oil and gas and gas only leases, and royalty gas                                                           
and other gas received by the state including gas received as payment                                                           
for the production tax on gas; relating to the tax on oil and gas                                                               
production, on oil production, and on gas production; relating to the                                                           
duties of the commissioner of revenue relating to a North Slope                                                                 
natural gas project and gas received as payment for tax; relating to                                                            
confidential information and public record status of information                                                                
provided to or in the custody of the Department of Natural Resources                                                            
and the Department of Revenue; relating to apportionment factors of                                                             
the Alaska Net Income Tax Act; amending the definition of gross                                                                 
value at the 'point of production' for gas for purposes of the oil and gas                                                      
production tax; clarifying that the exploration incentive credit, the oil                                                       
or gas producer education credit, and the film production tax credit                                                            
may not be taken against the gas production tax paid in gas; relating to                                                        
the oil or gas producer education credit; requesting the governor to                                                            
establish an interim advisory board to advise the governor on                                                                   
municipal involvement in a North Slope natural gas project; relating to                                                         
the development of a plan by the Alaska Energy Authority for                                                                    
developing infrastructure to deliver affordable energy to areas of the                                                          
state that will not have direct access to a North Slope natural gas                                                             
pipeline and a recommendation of a funding source for energy                                                                    
infrastructure development; establishing the rural capital energy fund;                                                         
requiring the commissioner of revenue to develop a plan and suggest                                                             
legislation for municipalities, regional corporations, and residents of                                                         
the state to acquire ownership interests in a North Slope natural gas                                                           
pipeline project; making conforming amendments; and providing for                                                               
an effective date" was read the third time.                                                                                     
                                                                                                                                

2014-03-18                     Senate Journal                      Page 2036
Senator Meyer moved and asked unanimous consent to abstain from                                                                 
voting due to a conflict of interest. Senator Coghill objected. Senator                                                         
Meyer was required to vote.                                                                                                     
                                                                                                                                
Senator Micciche moved and asked unanimous consent to abstain                                                                   
from voting due to a conflict of interest. Senator Coghill objected.                                                            
Senator Micciche was required to vote.                                                                                          
                                                                                                                                
Senator Coghill moved that the bill be returned to second reading for                                                           
all amendments offered today. Without objection, the bill was returned                                                          
to second reading.                                                                                                              
                                                                                                                                
Senators Dunleavy and Hoffman offered Amendment No. 1:                                                                          
                                                                                                                                
Page 2, line 11:                                                                                                                
          Delete "rural capital"                                                                                              
          Insert "Alaska affordable"                                                                                          
                                                                                                                                
Page 11, line 21:                                                                                                               
          Delete "Rural capital"                                                                                              
          Insert "Alaska affordable"                                                                                          
          Delete "rural capital"                                                                                                
          Insert "Alaska affordable"                                                                                            
                                                                                                                                
Page 12, line 1:                                                                                                                
          Delete "rural capital"                                                                                                
          Insert "Alaska affordable"                                                                                            
                                                                                                                                
Page 54, line 7, following "manner.":                                                                                           
 Insert "For those citizens for whom there is no economically                                                                   
viable infrastructure available, the plan must recommend the means                                                              
for directly underwriting the energy costs of the citizens to make their                                                        
energy costs more affordable."                                                                                                  
                                                                                                                                
Senator Dunleavy moved for the adoption of Amendment No. 1.                                                                     
Senator French objected, then withdrew his objection. There being no                                                            
further objection, Amendment No. 1 was adopted.                                                                                 
                                                                                                                                
Senators French, Ellis, Gardner, Wielechowski offered Amendment                                                                 
No. 2:                                                                                                                          

2014-03-18                     Senate Journal                      Page 2037
Page 13, line 19, following "unless":                                                                                       
     Insert new material to read:                                                                                               
              "(A)  the agreement or negotiated contract provides                                                           
     that the state is the majority owner of the Alaska liquefied                                                           
     natural gas project defined in AS 31.25.390; and                                                                       
              (B)"                                                                                                          
                                                                                                                                
Page 15, line 13, following "unless":                                                                                           
     Insert new material to read:                                                                                               
              "(A)  the agreement or negotiated contract provides that                                                          
     the state is the majority owner of the Alaska liquefied natural gas                                                        
     project defined in AS 31.25.390; and                                                                                       
              (B)"                                                                                                              
                                                                                                                                
Page 24, following line 1:                                                                                                      
     Insert new bill sections to read:                                                                                          
"* Sec. 30. AS 42.08.220(b) is amended to read:                                                                               
          (b)  The commission may                                                                                               
              (1)  review and approve recourse tariffs filed by an in-                                                          
     state natural gas pipeline carrier under this chapter;                                                                     
              (2)  review and approve contracts;                                                                                
              (3)  investigate, on its own motion or after receiving a                                                          
     formal complaint, a dispute                                                                                                
                   (A)  related to rules, regulations, services, practices,                                                     
          and facilities that are not subject to the dispute resolution                                                         
          provisions in an in-state natural gas pipeline carrier's contracts                                                    
          or recourse tariff;                                                                                                   
                   (B)  presented by a complainant that does not have a                                                         
           contract with the in-state natural gas pipeline carrier;                                                            
                   (C)  related to the conduct of an in-state natural gas                                                       
          pipeline carrier's open season under AS 42.08.300; to resolve                                                         
          the dispute, the commission may order an expansion of an in-                                                          
          state natural gas pipeline or order an open season under the                                                          
          terms provided for an expansion or open season in this                                                                
          chapter or AS 38.35.121(a)(4) [AND (c)]; or                                                                           
                   (D)  related to an unreasonable diminution in quantity                                                       
          or quality in the provision of service to a public utility that                                                       
                        (i)  is a violation of the in-state natural gas                                                         
              pipeline carrier's tariff or contract with the public utility;                                                    
                        (ii)  has not been resolved by the in-state natural                                                     
              gas pipeline carrier; and                                                                                         

2014-03-18                     Senate Journal                      Page 2038
                        (iii)  will result in immediate injury, loss, or                                                        
              damage to the peace, health, safety, or general welfare of                                                        
              the public as clearly demonstrated by specific facts shown                                                        
              by affidavit or verified complaint;                                                                               
              (4)  adopt regulations that are necessary and proper to the                                                       
     performance of the duties of the commission under this chapter,                                                            
     including regulations governing practices and procedures of the                                                            
     commission; regulations adopted by the commission may not be                                                               
     inconsistent with state law;                                                                                               
              (5)  initiate, intervene in, and appear personally or by                                                          
     counsel and offer evidence in and participate in, proceedings                                                              
     before an officer, department, board, commission, or court of this                                                         
     state involving an in-state natural gas pipeline carrier and affecting                                                     
     the interests of the state; and                                                                                            
              (6)  appoint a qualified, unbiased, and impartial                                                                 
     administrative law judge with experience in the general practice of                                                        
     law to conduct hearings under this chapter; the administrative law                                                         
     judge may perform other duties in connection with the                                                                      
     administration of this chapter and other laws; an administrative                                                           
     law judge hired to conduct hearings under this chapter shall have                                                          
     been admitted to practice law for at least five years immediately                                                          
     before appointment under this paragraph.                                                                                   
   * Sec. 31. AS 42.08.300(d) is amended to read:                                                                             
          (d)  An in-state natural gas pipeline carrier shall conduct an                                                        
     open season for an expansion of its pipeline system when it has                                                            
     received one or more requests for firm transportation service from                                                         
     potential shippers that meet the pipeline's creditworthiness                                                               
     requirements and that, in the aggregate, would enable the                                                                  
     expansion of the pipeline's system on a commercially reasonable                                                            
     basis. [AN EXPANSION OF THE PIPELINE SYSTEM IS NOT                                                                         
     COMMERCIALLY REASONABLE IF THE EXPANSION                                                                                   
     WOULD CAUSE THE PIPELINE TO BE A COMPETING                                                                                 
     NATURAL GAS PIPELINE PROJECT FOR PURPOSES OF                                                                               
     AS 43.90.]                                                                                                                 
   * Sec. 32. AS 42.08.370(a) is amended to read:                                                                             
          (a)  A contract entered into by an in-state natural gas pipeline                                                      
     carrier may provide for expansion [UNLESS THE EXPANSION                                                                    
     WOULD CAUSE THE PIPELINE TO BE A COMPETING                                                                                 
     NATURAL GAS PIPELINE PROJECT FOR PURPOSES OF                                                                               
     AS 43.90]."                                                                                                                

2014-03-18                     Senate Journal                      Page 2039
Page 25, line 9:                                                                                                                
     Delete "sec. 30"                                                                                                           
     Insert "sec. 33"                                                                                                           
                                                                                                                                
Page 31, line 18:                                                                                                               
     Delete "sec. 37"                                                                                                           
     Insert "sec. 40"                                                                                                           
                                                                                                                                
Page 53, line 14:                                                                                                               
     Delete "AS 31.25.080(f) is"                                                                                                
       Insert "AS 31.25.080(c), 31.25.080(f); and AS 38.35.121(c) are"                                                         
                                                                                                                                
Page 56, line 4:                                                                                                                
     Delete "30, 37, 39, and 55 - 61"                                                                                           
     Insert "33, 40, 42, and 50 - 64"                                                                                           
                                                                                                                                
Page 56, line 6:                                                                                                                
     Delete "Section 38"                                                                                                        
     Insert "Section 41"                                                                                                        
                                                                                                                                
Page 56, line 7:                                                                                                                
     Delete "secs. 62 and 63"                                                                                                   
 Insert "secs. 65 and 66"                                                                                                       
                                                                                                                                
Senator French moved for the adoption of Amendment No. 2. Senator                                                               
Coghill objected.                                                                                                               
                                                                                                                                
The question being: "Shall Amendment No. 2 be adopted?" The roll                                                                
was taken with the following result:                                                                                            
                                                                                                                                
CSSB 138(FIN) am                                                                                                                
Second Reading                                                                                                                  
Amendment No. 2                                                                                                                 
                                                                                                                                
YEAS:  4   NAYS:  16   EXCUSED:  0   ABSENT:  0                                                                               
                                                                                                                                
Yeas:  Ellis, French, Gardner, Wielechowski                                                                                     
                                                                                                                                
Nays:  Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel,                                                             
Hoffman, Huggins, Kelly, McGuire, Meyer, Micciche, Olson,                                                                       
Stedman, Stevens                                                                                                                
                                                                                                                                
and so, Amendment No. 2 failed.                                                                                                 
                                                                                                                                

2014-03-18                     Senate Journal                      Page 2040
Senators Wielechowski, Ellis, French, Gardner offered Amendment                                                                 
No. 3:                                                                                                                          
                                                                                                                                
Page 2, line 7, following "project;":                                                                                         
     Insert "relating to oil and gas or gas only leasing; requiring                                                           
that a minimum work commitment be included in each oil and gas                                                                
and gas only lease and that a proposed plan of development be                                                                 
included in an application for an oil and gas or gas only lease;"                                                             
                                                                                                                                
Page 15, following line 30:                                                                                                     
     Insert a new bill section to read:                                                                                         
"* Sec. 16. AS 38.05.180(h) is amended to read:                                                                               
          (h)  The commissioner shall [MAY] include terms in any                                                            
     lease that impose [IMPOSING] a minimum work commitment on                                                              
     the lessee to implement the plan of development submitted by                                                           
     the lessee under (jj) of this section. Except as provided in (m) of                                                    
     this section, these terms must be made public before the sale, and                                                         
     may include appropriate penalty provisions to take effect in the                                                           
     event the lessee does not fulfill the minimum work commitment.                                                             
     If it is demonstrated that a lease has been proven unproductive by                                                         
     actions of adjacent lease holders, the commissioner may set aside                                                          
     a work commitment. The commissioner may waive for a period                                                                 
     not to exceed one two-year period any term of a minimum work                                                               
     commitment if the commissioner makes a written finding either                                                              
     that conditions preventing drilling or exploration were beyond the                                                         
     lessee's reasonable ability to foresee or control or that the lessee                                                       
     has demonstrated through good faith efforts an intent and ability                                                          
     to drill or develop the lease during the term of the waiver."                                                              
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 16, following line 15:                                                                                                     
     Insert a new bill section to read:                                                                                         
"* Sec. 18. AS 38.05.180(x) is amended to read:                                                                               
          (x)  A lessee conducting or permitting any exploration for, or                                                        
     development or production of, oil or gas on state land shall                                                               
     provide the commissioner access to all noninterpretive data                                                                
     obtained from that lease; shall provide the commissioner access                                                        
     to all information necessary to perform an economic analysis                                                           
     under (kk)(2) of this section, including the capital, operating,                                                       

2014-03-18                     Senate Journal                      Page 2041
     production, and development costs and an estimate of total                                                             
     reserves; and shall provide copies of that data and information,                                                   
     as the commissioner may request. The confidentiality provisions                                                            
     of AS 38.05.035 apply to the information obtained under this                                                               
     subsection."                                                                                                               
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 17, following line 23:                                                                                                     
     Insert new subsections to read:                                                                                            
          "(jj)  The commissioner shall require each bidder for an oil                                                          
     and gas lease or gas only lease and each lessee applying for an                                                            
     extension or renewal of an oil and gas lease or gas only lease to                                                          
     submit a plan of development for exploring, developing, and                                                                
     producing from the lease within the period of the lease or the                                                             
     extension or renewal of the lease. The commissioner shall review                                                           
     each plan of development and determine whether the proposed                                                                
     plan of development is reasonably expected to develop the lease in                                                         
     the best interest of the state. The plan of development shall be                                                           
     included in a lease along with penalties for failing to comply with                                                        
     the plan of development and other terms of the lease. A bidder                                                             
     may not be a "qualified bidder" for the purposes of (f)(1) of this                                                         
     section if the commissioner finds that the bidder has not submitted                                                        
     a proposed plan of development that is in the best interest of the                                                         
     state or that the person that submitted the plan of development is                                                         
     not reasonably capable of implementing the plan.                                                                           
          (kk)  The commissioner shall                                                                                          
              (1)  review each oil and gas lease or gas only lease each                                                         
     year for the purpose of determining whether a lease is being                                                               
     developed in the best interest of the state, whether the lessee is                                                         
     complying with the plan of development applicable to the lease,                                                            
     and whether revision of a development plan, including the planned                                                          
     rate of development, would provide the maximum benefit to the                                                              
     people of the state;                                                                                                       
              (2)  every five years, perform an economic analysis on                                                            
     each participating area and determine whether the participating                                                            
     area is capable of increased production in paying quantities over                                                          
     the current rate of production or plan of development;                                                                     
              (3)  enforce the terms of each oil and gas lease or gas only                                                      
     lease, including imposing any applicable penalty or other remedy                                                           

2014-03-18                     Senate Journal                      Page 2042
     for noncompliance, within a reasonable time after finding that a                                                           
     lessee is out of compliance with the terms of the lease;                                                                   
              (4)  submit a report to the legislature before the first day                                                      
     of each regular session that lists each oil and gas or gas only lessee                                                     
     that is found to be out of compliance and the action by the                                                                
     commissioner to bring the lessee back into compliance or to                                                                
     terminate the lease.                                                                                                       
          (ll)  For the purposes of (jj) and (kk) of this section, a plan of                                                    
     development for a cooperative or unit under (p) of this section is                                                         
     the plan of development for a lease within the cooperative or unit,                                                        
     except where a different plan of development is established for a                                                          
     lease within the cooperative or unit.                                                                                      
          (mm)  For purposes of (kk) of this section,                                                                           
              (1)  "participating area" means that part of an oil and gas                                                       
     lease unit area to which production is allocated in the manner                                                             
     described in a unit agreement;                                                                                             
              (2)  "production in paying quantities" means production                                                           
     in quantities sufficient to yield a return in excess of drilling,                                                          
     development, and operating costs."                                                                                         
                                                                                                                                
Page 17, line 24:                                                                                                               
     Delete "sec. 17"                                                                                                           
     Insert "sec. 19"                                                                                                           
                                                                                                                                
Page 21, line 16:                                                                                                               
     Delete "sec, 27"                                                                                                           
     Insert "sec. 29"                                                                                                           
                                                                                                                                
Page 25, line 9:                                                                                                                
     Delete "sec, 30"                                                                                                           
     Insert "sec. 32"                                                                                                           
                                                                                                                                
Page 31, line 18:                                                                                                               
     Delete "sec. 37"                                                                                                           
     Insert "sec. 39"                                                                                                           
                                                                                                                                
Page 53, following line 14:                                                                                                     
     Insert a new bill section to read:                                                                                         
"* Sec. 60. The uncodified law of the State of Alaska is amended by                                                           
adding a new section to read:                                                                                                   

2014-03-18                     Senate Journal                      Page 2043
     APPLICABILITY. AS 38.05.180(h), as amended by sec. 16 of                                                                   
this Act, and AS 38.085.180(jj), enacted by sec. 19 of this Act, apply                                                          
to a proposed lease sale and the renewal or extension of a lease on or                                                          
after the effective date of secs. 16 and 19 of this Act."                                                                       
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 53, lines 24 - 25:                                                                                                         
     Delete "sec. 23"                                                                                                           
     Insert "sec. 25"                                                                                                           
                                                                                                                                
Page 56, line 4:                                                                                                                
     Delete "16, 17, 23 - 27, 29, 30, 37, 39, and 55 - 61"                                                                      
     Insert "17, 19, 25 - 29, 31, 32, 39, 41, and 57 - 64"                                                                      
                                                                                                                                
Page 56, line 6:                                                                                                                
     Delete "Section 38"                                                                                                        
     Insert "Section 40"                                                                                                        
                                                                                                                                
Page 56, line 7:                                                                                                                
     Delete "secs. 62 and 63"                                                                                                   
 Insert "secs. 65 and 66"                                                                                                       
                                                                                                                                
Senator Wielechowski moved for the adoption of Amendment No. 3.                                                                 
Senator Coghill objected.                                                                                                       
                                                                                                                                
The question being: "Shall Amendment No. 3 be adopted?" The roll                                                                
was taken with the following result:                                                                                            
                                                                                                                                
CSSB 138(FIN) am                                                                                                                
Second Reading                                                                                                                  
Amendment No. 3                                                                                                                 
                                                                                                                                
YEAS:  5   NAYS:  15   EXCUSED:  0   ABSENT:  0                                                                               
                                                                                                                                
Yeas:  Ellis, French, Gardner, Hoffman, Wielechowski                                                                            
                                                                                                                                
Nays:  Bishop, Coghill, Dunleavy, Dyson, Egan, Fairclough, Giessel,                                                             
Huggins, Kelly, McGuire, Meyer, Micciche, Olson, Stedman, Stevens                                                               
                                                                                                                                
and so, Amendment No. 3 failed.                                                                                                 
                                                                                                                                

2014-03-18                     Senate Journal                      Page 2044
Senators French, Ellis, Gardner, Wielechowski offered Amendment                                                                 
No. 4:                                                                                                                          
                                                                                                                                
Page 13, line 18, following "project;":                                                                                     
     Insert "the licensee receiving the license issued under AS 43.90                                                       
or an affiliate of the licensee that received the license under                                                             
AS 43.90 may not, without competitive bidding, be a party to a                                                              
contract under this paragraph that takes effect after the effective                                                         
date of this paragraph and provides for the state to acquire an                                                             
equity interest in a North Slope natural gas project or for the                                                             
transportation of natural gas received by the state as royalty-in-                                                          
kind or under AS 43.55.014;"                                                                                                
                                                                                                                                
Page 15, line 11, following "project;":                                                                                         
 Insert "the licensee receiving the license issued under AS 43.90 or                                                            
an affiliate of the licensee that received the license under AS 43.90                                                           
may not, without competitive bidding, be a party to a contract under                                                            
this paragraph that takes effect after the effective date of this                                                               
paragraph and provides for the state to acquire an equity interest in a                                                         
North Slope natural gas project or for the transportation of natural gas                                                        
received by the state as royalty-in-kind or under AS 43.55.014;"                                                                
                                                                                                                                
Senator French moved for the adoption of Amendment No. 4. Senator                                                               
Coghill objected.                                                                                                               
                                                                                                                                
The question being: "Shall Amendment No. 4 be adopted?" The roll                                                                
was taken with the following result:                                                                                            
                                                                                                                                
CSSB 138(FIN) am                                                                                                                
Second Reading                                                                                                                  
Amendment No. 4                                                                                                                 
                                                                                                                                
YEAS:  7   NAYS:  12   EXCUSED:  0   ABSENT:  1                                                                               
                                                                                                                                
Yeas:  Egan, Ellis, French, Gardner, Olson, Stedman, Wielechowski                                                               
                                                                                                                                
Nays:  Bishop, Coghill, Dunleavy, Fairclough, Giessel, Hoffman,                                                                 
Huggins, Kelly, McGuire, Meyer, Micciche, Stevens                                                                               
                                                                                                                                
Absent:  Dyson                                                                                                                  
                                                                                                                                
and so, Amendment No. 4 failed.