Legislature(2007 - 2008)HOUSE FINANCE 519

05/10/2007 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 05:30 pm Today --
+= HB 177 NATURAL GAS PIPELINE PROJECT TELECONFERENCED
Moved CSHB 177(FIN) Out of Committee
<Teleconference Listen Only>
Amendments
+ SB 27 MEDICAL ASSISTANCE ELIGIBILITY TELECONFERENCED
<Bill Hearing Postponed>
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 177                                                                                                            
                                                                                                                                
     An Act  relating to the  Alaska Gasline Inducement  Act;                                                                   
     establishing the Alaska Gasline  Inducement Act matching                                                                   
     contribution  fund;  providing  for  an  Alaska  Gasline                                                                   
     Inducement    Act   coordinator;    making    conforming                                                                   
     amendments; and providing for an effective date.                                                                           
                                                                                                                                
2:28:54 PM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  stated a  conflict  of interest  because  he                                                                   
works for  ConocoPhillips; he  asked to  be excused  from the                                                                   
Committee voting process.  Vice  Chair Stoltze OBJECTED.  Co-                                                                   
Chair Chenault  stated that Co-Chair Meyer would  be required                                                                   
to vote on amendments and the bill.                                                                                             
                                                                                                                                
Representative  Hawker   disclosed  that  his   wife  was  an                                                                   
employee at ConocoPhillips.  He  stated that he does not have                                                                 
a  direct   financial   interest  in   the  outcome   of  the                                                                   
legislation.   He  stated  it would  be  inappropriate to  be                                                                   
disenfranchised  from voting given  the interest  within each                                                                   
district.                                                                                                                       
                                                                                                                                
2:30:55 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED  to ADOPT  AGIA  1,  25-GH1060\V.2,                                                                   
Bullock, 5/10/07.  Representative Gara OBJECTED.                                                                                
                                                                                                                                
PAT GALVIN,  COMMISSIONER, DEPARTMENT  OF REVENUE,  explained                                                                   
that the amendment  clarifies that a State match  would be in                                                                   
the form  of a reimbursement.   The  licensee would  make the                                                                   
expenditure  and  then submit  a  billing  to the  State  for                                                                   
reimbursement.                                                                                                                  
                                                                                                                                
Representative Gara  WITHDREW his OBJECTION.   There being NO                                                                   
further OBJECTION, AGIA 1 was adopted.                                                                                          
                                                                                                                                
2:32:34 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED  to ADOPT  AGIA  2,  25-GH1060\V.4,                                                                   
Bullock, 5/10/07.  Representative Gara OBJECTED.                                                                                
                                                                                                                                
Commissioner Galvin  noted that the amendment  moves language                                                                   
on Page 19,  Lines 26-28, regarding payments  the State makes                                                                   
to a licensee  in order to acquire products  needed under the                                                                   
license.  The description is more expansive.                                                                                    
                                                                                                                                
Representative Gara  WITHDREW his OBJECTION.   There being NO                                                                   
further OBJECTION, AGIA 2 was adopted.                                                                                          
                                                                                                                                
2:35:19 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED  to ADOPT  AGIA  3,  25-GH1060\V.3,                                                                   
Bullock, 5/10/07.  Vice Chair Stoltze OBJECTED.                                                                                 
                                                                                                                                
Commissioner Galvin  noted the amendment  provides clarifying                                                                   
language regarding  the date when  a licensee  receives their                                                                   
certificate to move through the judicial review process.                                                                        
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 3 was adopted.                                                                                          
                                                                                                                                
2:36:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault MOVED to ADOPT  AGIA 4.  Vice Chair Stoltze                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
Commissioner  Galvin   commented  that  the   language  would                                                                   
clarify  the  section dealing  with  modification  references                                                                   
issued  by the  Alaska Oil  and  Gas Conservation  Commission                                                                   
(AOGCC).                                                                                                                        
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 4 was adopted.                                                                                          
                                                                                                                                
2:37:56 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault MOVED to ADOPT  AGIA 5.  Vice Chair Stoltze                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
Commissioner  Galvin indicated  that  the amendment  provides                                                                   
clarifying  language, Page  16, Line  27, Subsection  (d)(2),                                                                   
deleting "when and as issued"  and inserting on Page 16, Line                                                                   
27, "when and as".                                                                                                              
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 5 was adopted.                                                                                          
                                                                                                                                
2:38:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault MOVED to ADOPT  AGIA 6.  Vice Chair Stoltze                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
Commissioner  Galvin  advised that  AGIA  6  was a  technical                                                                   
amendment  to Page  20, Line  20,  deleting "inducement"  and                                                                   
inserting "inducements".                                                                                                        
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 6 was adopted.                                                                                          
                                                                                                                                
2:39:45 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault MOVED  to  ADOPT AGIA  7,  #25-GH1060\V.5,                                                                   
Bullock, 5/10/07.  Vice Chair Stoltze OBJECTED.                                                                                 
                                                                                                                                
Commissioner   Galvin   explained   that  AGIA   7   provides                                                                   
clarifying  language as  it was  recognized that  TransCanada                                                                   
was  potential applicant  and language  was added  throughout                                                                   
the  bill  to define  the  certification  process and  add  a                                                                   
singular definition of certificate.                                                                                             
                                                                                                                                
Commissioner  Galvin identified  the  need  for a  "friendly"                                                                   
amendment  to  AGIA 7,  Page  2,  Line  20, after  the  words                                                                   
"Alaska or" insert  "an amendment to" and then  again on Line                                                                   
23, following "1976", delete remaining language.                                                                                
                                                                                                                                
Representative  Nelson MOVED the  amended language to  AGIA 7                                                                   
as  requested  by  Commissioner   Galvin.    There  being  NO                                                                   
OBJECTION, AGIA 7 was amended.                                                                                                  
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, amended AGIA 7 was adopted.                                                                                  
                                                                                                                                
2:43:11 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED  to ADOPT  AGIA  8,  25-GH1060\V.6,                                                                   
Bullock, 5/10/07.  Vice Chair Stoltze OBJECTED.                                                                                 
                                                                                                                                
Commissioner  Galvin said  that  the changed  language  would                                                                   
address the Regulatory Commission  of Alaska's involvement in                                                                   
the definition section of open season.                                                                                          
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 8 was adopted.                                                                                          
                                                                                                                                
2:44:27 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault MOVED  to  ADOPT AGIA  9,  25-GH1060\V.11,                                                                   
Bullock, 5/10/07.  Vice Chair Stoltze OBJECTED.                                                                                 
                                                                                                                                
Commissioner Galvin  explained that AGIA 9 provides  a series                                                                   
of  language   clean-ups  and   addresses  the   modification                                                                   
section.   He explained that AGIA  10 would not be  needed if                                                                   
AGIA 9 was passed.                                                                                                              
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 9 was adopted.                                                                                          
                                                                                                                                
2:46:58 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault WITHDREW AGIA 10.                                                                                             
                                                                                                                                
Co-Chair  Chenault  MOVED  to  ADOPT  AGIA 11.    Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Commissioner  Galvin  pointed  out  the  amendment  addresses                                                                   
issues  of abandonment,  Page 18, Lines  19-20, revising  the                                                                   
first sentence to  read:  "If the commissioners  [or] and the                                                                   
licensee do not  agree [find] that the project  is uneconomic                                                                   
[and the other  party disagrees], the".  The  language offers                                                                   
clarification.                                                                                                                  
                                                                                                                                
Representative  Gara  inquired  if the  Department  requested                                                                   
AGIA 10.   Commissioner Galvin  replied it had  been included                                                                   
in AGIA 9.                                                                                                                      
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 11 was adopted.                                                                                         
                                                                                                                                
2:49:08 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED to  ADOPT  AGIA 12.    Commissioner                                                                   
Galvin noted that  AGIA 12 was included in AGIA  9.  Co-Chair                                                                   
Chenault WITHDRAWN AGIA 12.                                                                                                     
                                                                                                                                
2:49:37 PM                                                                                                                    
                                                                                                                                
Representative  Kelly MOVED  to ADOPT  AGIA 13.   Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Commissioner  Galvin  stated  that  the  amendment  addresses                                                                   
language on  Page 2, Line  18, deleting "five"  and inserting                                                                   
"seven", providing a reimbursement time line.                                                                                   
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 13 was adopted.                                                                                         
                                                                                                                                
2:52:40 PM                                                                                                                    
                                                                                                                                
Representative  Thomas MOVED to  ADOPT AGIA  14.  Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Commissioner Galvin explained  that the amendment was made to                                                                   
Page  2, Line  30, deleting  "80"  and inserting  "90".   The                                                                   
language  identifies the  risk  profile &  possibility of  an                                                                   
unsuccessful open season.                                                                                                       
                                                                                                                                
Co-Chair  Chenault  inquired  why  100% had  not  been  used.                                                                   
Commissioner Galvin  responded that it is important  that the                                                                   
licensee has involvement.   He hoped that the  split would be                                                                   
less than 90/10; it is important  to allow applicants a sense                                                                   
of ownership.   Co-Chair Chenault  encouraged that  the State                                                                   
take  their  role  of  being   stewards  of  Alaskan's  money                                                                   
seriously.   There will be economic  gain for any  partner in                                                                   
the project.                                                                                                                    
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 14 was adopted.                                                                                         
                                                                                                                                
2:56:43 PM                                                                                                                    
                                                                                                                                
Representative  Kelly MOVED  to ADOPT  AGIA 15.   Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Commissioner  Galvin  discussed   AGIA  15.    The  amendment                                                                   
attempts to  capture legislative  interest regarding  how the                                                                   
State  can receive  reimbursement for  the contributions,  if                                                                   
the project is  successful.  There could be  a possibility of                                                                   
profit  sharing,  in  which  the State  would  share  in  the                                                                   
proceeds  of  the revenue  generated  by  the project.    The                                                                   
amendment  proposes  opening   the  door  for  passive-equity                                                                   
interest.   It  does  not change  the  provision of  in-State                                                                   
contributions.   Any payment  offers would  not increase  the                                                                   
tariff or be passed on to the shippers.                                                                                         
                                                                                                                                
Representative Gara summarized  that the goal is to guarantee                                                                   
that  the State  become  an equity  owner.   He  said if  the                                                                   
project is successful, the producers  would be willing to pay                                                                   
back some or  all of the $500 million dollars.   Commissioner                                                                   
Galvin  agreed, clarifying  that if  there was  a linkage  of                                                                   
their payment  to the  State and  the contribution,  it could                                                                   
not be done through offering contribution  considered a loan.                                                                   
The  contribution must  be  deducted from  the  tariff &  not                                                                   
included in the rate base.                                                                                                      
                                                                                                                                
Vice Chair  Stoltze WITHDREW his  OBJECTION.  There  being NO                                                                   
further OBJECTION, AGIA 15 was adopted.                                                                                         
                                                                                                                                
3:02:12 PM                                                                                                                    
                                                                                                                                
Representative  Kelly MOVED  to ADOPT  AGIA 16.   Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
REPRESENTATIVE  RALPH  SAMUELS  explained  that  the  Federal                                                                   
Energy Regulatory  Commission (FERC) made a  presumption that                                                                   
they  would  have  rolled-in  tariffs.    The  Administration                                                                   
feared that  those regulations could  be changed so  that the                                                                   
presumption of rolled-in tariffs  would no longer exist.  The                                                                   
bill clarifies that  as long as the presumption  is there and                                                                   
the pipeline  entity exists, individual shippers  could argue                                                                   
their own economic interest.                                                                                                    
                                                                                                                                
Representative  Gara asked  how the  current language  works.                                                                   
Commissioner  Galvin  explained  that  if  the  shipper  took                                                                   
advantage of  the upstream inducements  offered in  the bill,                                                                   
as a  condition of  receiving those  inducements, they  would                                                                   
have to  commit to  not oppose  the application of  rolled-in                                                                   
rates.   The amendment removes  the commitment to  not oppose                                                                   
those.                                                                                                                          
                                                                                                                                
Representative Gara commented  that the shippers [the majors]                                                                   
would be  receiving a  good deal  from the  State with  a tax                                                                   
lock-in.   In exchange,  he hoped  to see  a commitment  that                                                                   
they not  get rolled-in  rates.   The tariff  should be  held                                                                   
down in  order that new  explorers will  be able to  get into                                                                   
the pipeline.   He acknowledged  that the difference  between                                                                   
the  bill and  the  amendment is  a small  degree.   He  felt                                                                   
strongly  to  make  the  shippers stand  with  the  State  to                                                                   
produce the gas.   Rolled in rates keep the  tariff lower for                                                                   
the new shippers.                                                                                                               
                                                                                                                                
Representative  Hawker  understood  that  the  Administration                                                                   
supports AGIA  16.  Commissioner  Galvin recognized  there is                                                                   
an  issue,  however,  the Administration  believes  that  the                                                                   
concern could keep  producers from making a  commitment.  The                                                                   
Administration  will  support   the  amendment,  a  gradation                                                                   
issue.                                                                                                                          
                                                                                                                                
Representative Gara maintained his OBJECTION.                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Thomas, Crawford, Foster, Hawker, Joule,                                                                         
               Kelly, Nelson, Stoltze, Chenault, Meyer                                                                          
OPPOSED:       Gara                                                                                                             
                                                                                                                                
The MOTION PASSED (10-1).                                                                                                       
                                                                                                                                
3:12:04 PM                                                                                                                    
                                                                                                                                
Representative Kelly MOVED to  ADOPT AGIA 17, 25-GH1060\V.10,                                                                   
Bullock, 5/10/07.  Representative Crawford OBJECTED.                                                                            
                                                                                                                                
Representative  Kelly  explained  that  the  amendment  takes                                                                   
language from a prior version that was more inclusive.                                                                          
                                                                                                                                
Representative  Crawford  emphasized  that the  amendment  is                                                                   
very  important.    Project Labor  Agreements  (PLA)  do  not                                                                   
preclude non-Union workers from  working.  PLA's do guarantee                                                                   
that everyone  working on a project  makes the same  wage and                                                                   
same  working   conditions;  everyone  is   treated  equally.                                                                   
Collective  bargaining  is  the only  thing  that  guarantees                                                                   
local  Alaska  hire; if  there  is no  collective  bargaining                                                                   
agreement, the door remains open for out-of-state labor.                                                                        
                                                                                                                                
Co-Chair Chenault voiced support  for the amendment, agreeing                                                                   
on the  need for a  project labor  agreement.  He  understood                                                                   
that villages need  job opportunities and that  no one should                                                                   
be excluded; all Alaskans need  to have a job.  He referenced                                                                   
the   construction   project   of  the   proposed   pipeline,                                                                   
commenting  that the language  should  remain open enough  to                                                                   
cause no  concern for  either non-Union  or Union  companies.                                                                   
No one should be left out.                                                                                                      
                                                                                                                                
Representative   Gara   accepted   the  response   from   the                                                                   
Administration.  Current language  guarantees that there will                                                                   
be a project labor agreement for  the right of Union labor on                                                                   
the work site.   The risk is  that the Courts will  not agree                                                                   
to the  provision of Alaskan hire  requirements.  One  way to                                                                   
guarantee  Alaska-hire is  through the  PLA.   Representative                                                                   
Gara reiterated the need for Alaska  hire.  He projected that                                                                   
there would  be people  coming from out  of State,  living in                                                                   
the communities and  then leaving the State  when the project                                                                   
is complete.  There will be social costs.                                                                                       
                                                                                                                                
Co-Chair  Chenault  commented   on  his  previous  experience                                                                   
hiring out of Union halls.  He  believed that the issue is to                                                                   
make sure  the agreement  is open  enough that every  Alaskan                                                                   
has the opportunity to work.                                                                                                    
                                                                                                                                
3:23:30 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  clarified  his  intent  that  every                                                                   
qualified person  in Alaska be  considered to work first.   A                                                                   
collective   bargaining   agreement  would   guarantee   that                                                                   
Alaskans are first.                                                                                                             
                                                                                                                                
Representative Thomas  commented that his district  is mostly                                                                   
non-Union.   He thought  that the  amendment would  leave the                                                                   
door open for Alaska hire.  He  addressed the fiscal note for                                                                   
the State Training Employment  Program (STEP) attached to the                                                                   
bill.   Representative  Crawford pointed  out that the  State                                                                   
already  spends over  $10  million dollars  a  year to  offer                                                                   
training  for   Alaskans.    Those  are   statewide  outreach                                                                   
programs;  he did not  think that  the amendment would  close                                                                   
the  door.   Non-Union workers  are  not being  discriminated                                                                   
against.                                                                                                                        
                                                                                                                                
Vice Chair Stoltze noted that  he was committed to voting for                                                                   
a PLA and was sensitive to Alaska  hire.  He pointed out that                                                                   
the Governor has  a strong moral ethic and force  to push the                                                                   
Alaska hire.                                                                                                                    
                                                                                                                                
Representative  Joule summarized  that all Committee  members                                                                   
were  hoping for  the  same goal,  which  is having  Alaskans                                                                   
hired to build the pipeline.                                                                                                    
                                                                                                                                
3:35:26 PM                                                                                                                    
                                                                                                                                
Representative Gara  asserted that the amendment  reduces the                                                                   
chance for  Alaska hire.   The State  can not mandate  Alaska                                                                   
hire.   Unions  are the  only entity  that can  be forced  to                                                                   
provide Alaska hire.   The stronger the PLA,  the more likely                                                                   
the State will be able to enforce Alaska hire.                                                                                  
                                                                                                                                
Co-Chair  Chenault interjected  that the  agreement would  be                                                                   
negotiated when the project was sanctioned.                                                                                     
                                                                                                                                
3:38:11 PM                                                                                                                    
                                                                                                                                
Representative Kelly  noted that the intent  of the amendment                                                                   
is to send  a message to  all Alaskans regarding the  hire of                                                                   
Union  and non-Union.   He  stated  that negotiations  should                                                                   
occur  in statute.    He pointed  out  that  Unions are  well                                                                   
represented  in the  State's capitol.    The message  remains                                                                   
that  all  Alaskans  be  represented in  the  process.    The                                                                   
legislation does not "put shackles" on Unions.                                                                                  
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Foster, Hawker, Kelly, Stoltze, Thomas,                                                                          
               Chenault, Meyer                                                                                                  
OPPOSED:       Crawford, Gara, Joule, Nelson                                                                                    
                                                                                                                                
The MOTION PASSED (7-4).                                                                                                        
                                                                                                                                
3:40:48 PM                                                                                                                    
                                                                                                                                
Co-Chair  Chenault  MOVED  to  ADOPT  AGIA 18.    Vice  Chair                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
REPRESENTATIVE BOB ROSES spoke  to the amendment, which would                                                                   
insert "50 percent of" on Page  15, Line 25 and Page 19, Line                                                                   
27.   He  provided  members with  a  spreadsheet.   (Copy  on                                                                   
File).                                                                                                                          
                                                                                                                                
Representative  Roses explained if  the project proved  to be                                                                   
uneconomic, the State could buy  them out of the project.  If                                                                   
a licensee  spent $200  million dollars  during open  season,                                                                   
they would have a 50/50 split.   After open season, the split                                                                   
would go  to 90/10, equating to  $450 million dollars  with a                                                                   
$500 million dollar limit.  The  licensee would be up to $200                                                                   
million  dollars.   He  asserted  that  provision  encourages                                                                   
investors  to spend  less up-front  and then  the State  pays                                                                   
more.  The amendment provides  a 50% pay-out at the net cost.                                                                   
He provided examples.                                                                                                           
                                                                                                                                
3:46:39 PM                                                                                                                    
                                                                                                                                
Commissioner  Galvin stated that  the Administration  opposes                                                                   
AGIA  18, which  they  believe  will drive  applicants  away.                                                                   
Under  the current  bill, the  State would  have to make  the                                                                   
expenditure in  order to own the  asset.  The  licensee would                                                                   
have nothing  but the cost  of their time.   He did  not feel                                                                   
that they would take advantage of that option.                                                                                  
                                                                                                                                
3:48:41 PM                                                                                                                    
                                                                                                                                
Representative Gara  noted that if  a producer did  back out,                                                                   
their  certificate  would  not   be  worth  that  much.    He                                                                   
acknowledged the cost savings  but expressed concern that the                                                                   
message  to  investors would  be  that  if producers  do  not                                                                   
provide  the  gas they  would  stand  to  lose 50%  of  their                                                                   
investment.                                                                                                                     
                                                                                                                                
Representative  Roses argued that  the State does  have "skin                                                                   
in the game", pointing out that  the State would be left with                                                                   
a  less  than   marketable  product.    The   intent  is  the                                                                   
incentive.   If  the  potential  licensee looses,  they  will                                                                   
fight  harder than  if they have  no risk;  past that  point,                                                                   
there is a 100%  guarantee.  Once the licensee  goes to FERC,                                                                   
the risk is over.                                                                                                               
                                                                                                                                
3:52:25 PM                                                                                                                    
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Foster, Gara, Hawker, Joule, Kelly, Nelson,                                                                      
               Stoltze, Thomas, Crawford, Meyer                                                                                 
OPPOSED:       Chenault                                                                                                         
                                                                                                                                
The MOTION PASSED (10-1).                                                                                                       
                                                                                                                                
                                                                                                                                
AT EASE:       3:53:37 PM                                                                                                     
RECONVENE:     5:47:08 PM                                                                                                     
                                                                                                                                
                                                                                                                                
Representative  Gara MOVED to  ADOPT AGIA 19,  25-GH1060\V.8,                                                                   
Bullock, 5/10/07.  Vice Chair Stoltze OBJECTED.                                                                                 
                                                                                                                                
Representative  Gara stated  that  AGIA 19  provides for  the                                                                   
Alaska  hire provision,  with the intention  to maximize  the                                                                   
number  of those  hired in  State  when it  is "feasible  and                                                                   
economic".                                                                                                                      
                                                                                                                                
Co-Chair Chenault  MOVED to AMEND  AGIA 19, changing  Page 19                                                                   
to  Page 9.   Commissioner  Galvin recognized  the intent  to                                                                   
maximize Alaska  hire and the  use of Alaska businesses.   He                                                                   
did not  see any  issues with  the language  & is  consistent                                                                   
with the intent of the provision.                                                                                               
                                                                                                                                
5:51:33 PM                                                                                                                    
                                                                                                                                
Representative  Hawker  asked   if  the  amendment  had  been                                                                   
sponsored by  the Administration.   Commissioner  Galvin said                                                                   
it  had  not.   Representative  Hawker  worried  about  using                                                                   
"economic";  he   recommended  using  "economical"   instead.                                                                   
Representative Gara accepted that recommendation.                                                                               
                                                                                                                                
Representative  Hawker MOVED a  conceptual amendment  to AGIA                                                                   
19, deleting "economic" on Page  1, Lines 2 & 5 and inserting                                                                   
"economical".  There being NO OBJECTION, it was amended.                                                                        
                                                                                                                                
Representative Hawker spoke against  the amended AGIA 19.  He                                                                   
stated that the  language reaches beyond layers  of counsel &                                                                   
worried about  forthcoming court  cases.  He reiterated  that                                                                   
he did not support the amendment.                                                                                               
                                                                                                                                
5:54:40 PM                                                                                                                    
                                                                                                                                
Representative   Gara   commented   that   current   language                                                                   
encourages hiring  qualified residents.   He thought  that an                                                                   
applicant  could claim  that the  language  does not  require                                                                   
maximizing  the use  of Alaska  labor.   Commissioner  Galvin                                                                   
responded   that  the   manner   in  which   the   Department                                                                   
interpreted  the language  was  "to the  extend permitted  by                                                                   
law", intended  to dictate the  level of the  State's ability                                                                   
to   obligate  to   commit  to   make  the   promise.     The                                                                   
Administration  recognizes that they  cannot require  them to                                                                   
hire Alaskans.   Creating some sense of  maximum-extent could                                                                   
help  accomplish   that  by  adding  "maximum"   on  Line  16                                                                   
following "the".                                                                                                                
                                                                                                                                
Representative Gara WITHDREW AGIA 19.                                                                                           
                                                                                                                                
5:58:33 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  interjected  that the  language  is                                                                   
"academic" and that the law qualifies  that the State can not                                                                   
require Alaska  hire.  The  only enforceable option  would be                                                                   
to have an enforceable quota licensed through a PLA.                                                                            
                                                                                                                                
Representative  Gara MOVED  to  ADOPT AGIA  19(a),  inserting                                                                   
"maximize", Page 9, Line 16.   There being NO OBJECTION, AGIA                                                                   
19(a) was adopted.                                                                                                              
                                                                                                                                
6:00:42 PM                                                                                                                    
                                                                                                                                
Representative Gara agreed with  Representative Crawford that                                                                   
the Alaska hire provision is important  and that the only way                                                                   
to accomplish it would be through federal law.                                                                                  
                                                                                                                                
6:01:32 PM                                                                                                                    
                                                                                                                                
Representative Kelly MOVED to  ADOPT AGIA 20, 25-GH1060\V.12,                                                                   
Bullock, 5/10/07.  Representative Hawker OBJECTED.                                                                              
                                                                                                                                
REPRESENTATIVE  PAUL SEATON commented  that the amendment  in                                                                   
Section (B), clarifies that the  State of Alaska would remove                                                                   
their ability to  take royalty in-kind as long  as the leasee                                                                   
agrees to  sell gas at  that value and  rates and  to provide                                                                   
gas for in-State residential & commercial uses.                                                                                 
                                                                                                                                
He noted that he  had worked through the language  and if the                                                                   
leasee had  failed to provide  at those rates or  below, then                                                                   
it  would  switch to  the  previous  90-day situation.    The                                                                   
Committee worked  with the Administration  to make  sure that                                                                   
there  were  no unintended  consequences  to  up-stream  unit                                                                   
agreements.  He  pointed out that two of the  major producers                                                                   
are no  longer worried  about  switching and  do not see  the                                                                   
value in  the language.  It  would not provide  a significant                                                                   
bar.                                                                                                                            
                                                                                                                                
Representative Seaton requested that AGIA 20 be withdrawn.                                                                      
                                                                                                                                
6:05:48 PM                                                                                                                    
                                                                                                                                
Representative Nelson  asked the definition of  the acronyms.                                                                   
Representative  Seaton  apologized,   clarifying  Royalty  in                                                                   
Value (RIV) and Royalty in Kind (RIK).                                                                                          
                                                                                                                                
6:07:24 PM                                                                                                                    
                                                                                                                                
Representative Kelly WITHDREW AGIA 20.                                                                                          
                                                                                                                                
6:07:53 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  noted  that  he  supports  the  gas                                                                   
pipeline,  however, without  including a  strong Alaska  hire                                                                   
provision, he would be a no vote.                                                                                             
                                                                                                                                
6:09:29 PM                                                                                                                    
                                                                                                                                
Representative Foster MOVED to  REPORT CS HB 177 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying   fiscal   notes.      Representative   Crawford                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Hawker, Joule, Kelly, Nelson, Stoltze,                                                                           
               Thomas, Foster, Gara, Meyer, Chenault                                                                            
OPPOSED:       Crawford                                                                                                         
                                                                                                                                
The MOTION PASSED (10-1).                                                                                                       
                                                                                                                                
CS HB  177 (FIN)  was reported  out of  Committee with  a "do                                                                   
pass"  recommendation  and with  a  new  fiscal note  by  the                                                                   
Department  of  Natural  Resources,   zero  note  #1  by  the                                                                   
Department of Administration,  zero note #2 by the Department                                                                   
of Commerce, Community  & Economic Development,  zero note #3                                                                   
by the  Department of  Natural Resources,  fiscal note  #5 by                                                                   
the Department  of Revenue, fiscal  note #6 by the  Office of                                                                   
the Governor, and fiscal note #7 by the Department of Labor                                                                     
& Workforce Development.                                                                                                        

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