Legislature(1997 - 1998)
04/24/1997 08:35 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 250 - NORTH SLOPE GAS COMM. TEAM CHAIRMAN HODGINS announced the purpose of the joint meeting was to hear House Bill No. 250, "An Act establishing a North Slope Gas Commercialization Team to develop recommendations regarding a North Slope gas project; and providing for an effective date." He advised there was a proposed committee substitute. Number 0021 REPRESENTATIVE SCOTT OGAN made a motion to adopt as a work draft version 0-GH0110\F, Chenoweth, 4/23/97. There being no objection, the committee substitute was before the House Special Committee on Oil and Gas. Number 0036 CHAIRMAN HODGINS briefly discussed changes in the committee substitute. It reduced the size of the North Slope Commercialization Team. In addition, it set up a deadline of January 12, 1998, and a sunset provision for that same date. Number 0046 WILSON L. CONDON, Commissioner, Department of Revenue, came forward to present the bill on behalf of the department and the Administration. The original version was intended to address a couple of specific issues in terms of proceeding, as the legislature indicated it wanted the Administration to proceed, as a consequence of passage of CSHCR 1(WTR) this year. He said to move the proposal along as that resolution contemplated, a lot of work needs to be done by the executive branch in working with various interested private parties. COMMISSIONER CONDON said to expedite that process, they believe it is important to make absolutely clear how the public records act and the public meetings act would apply to that work effort. That is the main problem the bill addresses. They believe it is important, with respect to records made available to the executive branch to pursue this work, that they clearly be authorized by the legislature to receive information and documents that can be maintained in a confidential status. Although they believe they currently have that authority, it is not crystal clear. Number 0099 COMMISSIONER CONDON said the public meetings act is designed to deal with a "particular kind of animal that gets created in the government process," a deliberative body that deliberates and votes, or an advisory body that is constituted to make recommendations as a consequence of a deliberative process. He stated, "And unfortunately, what happens from time to time is that folks get together and give themselves names, and then the question of whether or not the public meetings act applies gets litigated." He cited an example that occurred while he was working in the Office of the Attorney General. COMMISSIONER CONDON noted that provisions of the public meetings act requiring advance notice and imposing procedural requirements are appropriate for a deliberative body that will take testimony or vote. However they do not fit well with "a bunch of people that you're hoping will work expeditiously to get a job done." Putting notices in journals and buying advertisements in newspapers around the state in order to meet and get work done is not what they expect from a group of executive branch people who are "tasked" with putting together the kind of package that the legislative resolution contemplates. COMMISSIONER CONDON said what the Governor's proposed bill and the committee substitute do, on this front, are the same. They identify a group of people who have a specific job to do and make it clear how the public records act and the public meetings act apply to that particular job. With respect to proposed changes in the committee substitute, the Administration still favors the more expanded list of participants proposed in the original bill. He advised that the time frames changed in the committee substitute are fine. Number 0159 COMMISSIONER CONDON discussed the fiscal note, which totals $238,000. First of all, they believe it is important to continue using Dr. Pedro van Meurs as they put this package together. Commissioner Condon referred to a visit here by Dr. van Meurs, whose specialty is advising governments that are trying to structure their fiscal system to best position themselves in the oil and gas market in the world today. As Dr. van Meurs has conducted a study focusing on this project, Commissioner Condon believes it makes sense to continue to use him. COMMISSIONER CONDON advised that the state would really be buying Dr. van Meurs' time; they do not contemplate another study but putting together a package. He believes Dr. van Meurs' advice in putting that together and his availability to come and talk about what the state has and has not done, and to explain to the legislature "where we are on the map," is important. They estimate that several days a month of Dr. van Meurs' time over a year, plus the cost of bringing him up here to work "with you and with us," would cost $75,000. Number 0195 COMMISSIONER CONDON stated, "We believe that, somewhere along the line, you and we are going to want to have a focused, responsible socioeconomic study that asks and answers the question, or puts the information on the table, I think is a better way to put it, with respect to the fiscal modifications that we might be proposing. How does that line up with respect to the costs that a project like this would impose on the transportation, governmental and social infrastructure that would have to be maintained for a construction project like this?" COMMISSIONER CONDON continued, "We all are fearful that a socioeconomic study focused on a large project like this could become a black hole in terms of spending a lot of money. I believe, and our fiscal note is based on that belief, that it makes sense to plan to do that now and do it in a very focused way. And we believe we can do that in terms of what this fiscal note contains. It's a figure of $75,000 to do that." Number 0221 COMMISSIONER CONDON said a temporary staff person has been working full time for a good part of this year doing analytical work pertaining to this project. They would like to keep him on staff until next year. Again, they have made an investment in that person and his work; they believe it would be cost-effective to continue to make use of what he knows and can do. The amount in the fiscal note reflecting the cost of keeping him on, in a temporary status, is $50,000. COMMISSIONER CONDON advised that the last item in the fiscal note is travel. He said to the extent they must deal with commercial parties, "they can come to us just as well as we can go to them." However, staff in Anchorage and Juneau must get together from time to time. It is not yet cost-effective to use video conferencing for a small number of people. In addition, they hope to interest the federal government in taking steps to help promote this project. COMMISSIONER CONDON said the entity that walks away with "the most money in their jeans" as a consequence of this project is the federal treasury, which can make relatively small up-front adjustments that would dramatically change the economics of the project. Trying to interest them in doing that is very much in their interest and the state's. But to do so requires travel to Washington, D.C., which they believe is absolutely necessary. Number 0270 REPRESENTATIVE JOE GREEN asked whether the estimate of one year was predicated on the estimated amount of work. He further asked whether that could be compressed into one-half year because of the sunset provision. COMMISSIONER CONDON replied, "It is my belief that if we come forward with this package, that members of the legislature are going to want to spend some, and maybe a significant amount of, time with Dr. van Meurs if we have used him to help put this together. And so by the time we think about the likely legislative deliberations that would go on with respect to this package, it really takes it out to a full year." COMMISSIONER CONDON said they are very hopeful the work would be done to bring before the legislature at the beginning of the session. It is entirely possibly the legislature would take care of it in the first couple of weeks. However, his own experience has been that things like this often take time. Number 0293 REPRESENTATIVE GREEN said his concern was not so much with the amount of time or money relating to Dr. van Meurs. He asked whether the hope of having it by the first of the session is strong. COMMISSIONER CONDON replied, "Yes, it is a very strong hope. It depends on, as we work through, whether what we bring to you is an agreement among representatives of the state and representatives of the commercial parties. And if what's expected from us at that point is an agreement, then we can't make other people agree. On the other hand, in terms of getting our own work done, we'll have it done." Number 0307 REPRESENTATIVE BILL HUDSON said he has seen little about potential changes in the federal tax structure or other federal changes. He asked whether Commissioner Condon had held preliminary discussions with the congressional delegation in that regard. COMMISSIONER CONDON indicated although they had held fairly extensive discussions, he did not want to say much about them. Number 0321 REPRESENTATIVE TOM BRICE asked about the appropriateness of charging this team to also make recommendations to the federal delegation, as well as trying to have some of those changes dealt with in the current congress. He suggested it was necessary to get the ball rolling as soon as possible. Number 0332 COMMISSIONER CONDON replied, "We agree that it's important to move now, and we intend to do so." REPRESENTATIVE BRICE stated, "I see a lot of charges for this commercialization team, and some of those charges deal with the state issues. I don't see where you're being, or asking to be, authorized to go to congress on some of this stuff too, and whether or not this is the appropriate vehicle for that." COMMISSIONER CONDON responded, "I believe we have the authority to do that, although it's not spelled out here." He said this hooks up to the job the executive branch has been told to do. Number 0349 REPRESENTATIVE CON BUNDE asked how spending another $238,000 would change what the Administration is already "tasked" to do. Number 0354 COMMISSIONER CONDON replied, "You have asked us to move this matter along on a fast track. And in terms of the resources that are available to do that, we don't have, and here I am the commissioner of Revenue, which is hardly, under normal circumstances, what you would think of as the center of an effort to try to bring a gas project into being. And the only reason that it's centered in the Department of Revenue is because it happens to be something that I'm very interested in and know a fair amount about." COMMISSIONER CONDON continued, "We don't have the resources in our department's budget ... to pay for the continued service of Dr. van Meurs, and I think that that is ... every bit as important for the legislative deliberations on this as it is for the work that the executive would do. Similarly, I think that moving now to do a socioeconomic study, if we get in and do a good job and do it efficiently, we're likely to get what we want for something like the amount I've talked about, rather than spending a half a million dollars or a couple of million dollars, which is what I think it might well turn into if we do it a couple of years down the line." He said that is a judgment call. In terms of travel, again, the kind of traveling that goes to get this job done is not budgeted for him or his staff. Number 0379 REPRESENTATIVE BUNDE commented that the bill and increased funding are predicated on speeding up the process. He suggested if they were less concerned about that, normal state functions could be used. Number 0385 COMMISSIONER CONDON said Representative Bunde was partially correct. In terms of the temporary staff position, their own staff could do that over a longer time. In terms of having an outside consultant like Dr. van Meurs, which he believes is necessary, that money must be spent somewhere along the line. Similarly, a socioeconomic study is something the staffs of several agencies could do over time. However, he believes it will be treated as more credible if done by a contractor. In his experience with energy project proposals and developments, they had always turned to an outside contractor to pull that sort of thing together. Number 0401 REPRESENTATIVE GREEN asked whether they ran the chance that either bill infringes upon jurisdictional boundaries. Although passed by the legislature, they direct members of the executive branch to act. COMMISSIONER CONDON stated his belief that it is perfectly appropriate for the legislature to "tell the executive to go get a job done." Number 0409 REPRESENTATIVE GREEN noted that it does not request something of the Governor but specifies parts of his staff. Although a great idea, he wonders whether it is treading on thin ice. COMMISSIONER CONDON replied that there is a point where micromanaging crosses over into the realm of the executive. "I just don't think that's true here," he stated. Number 0416 REPRESENTATIVE REGGIE JOULE referred to the make-up of the team. He asked Commissioner Condon to address how the difference between the two bill versions may affect the outcome. COMMISSIONER CONDON replied that it is a judgment call. The two commissioners in the Governor's bill that were removed in the committee substitute are from the Department of Labor and the Department of Commerce and Economic Development (DCED). The commissioner of the former was included because of the shared policy goal between the executive and legislative branches to try to maximize opportunities for Alaskan hire. If that commissioner is not included, they will still turn to the commissioner to pursue that objective. COMMISSIONER CONDON said they are talking about promoting the export of an Alaska resource into a foreign market; that area has been the responsibility, over the last couple of decades, of the DCED, which is therefore included. If that commissioner is not on the task force, they would still turn to the DCED for their expertise and contribution. COMMISSIONER CONDON acknowledged having too many people in the process could slow it down. He said he understands that judgment call. Although he did not know whether that was the consideration for the committee substitute, it was a consideration in drafting the bill. Number 0450 CHAIRMAN HODGINS asked how focused the socioeconomic study would be and on what areas. COMMISSIONER CONDON replied that it should pull together the material and allow legislators and interested citizens to weigh the costs and benefits of making changes in the fiscal system against the effects of a large construction project. It should take maximum advantage of what happened when the oil pipeline was constructed and what people want to happen differently this time. If that information is pulled together correctly, then citizens and legislators can decide whether it is worth it. Number 0473 CHAIRMAN HODGINS asked whether anyone else wished to testify. He suggested keeping the fiscal note as-is, as any adjustments could be made in the House Finance Committee. Number 0482 REPRESENTATIVE BRICE stated his wish, given the focus of the committee substitute on Alaskan hire and the safety of Alaskan workers, to discuss whether the commissioner of the Department of Labor should be added back in. He asked whether there was a particular reason that department was removed. CHAIRMAN HODGINS replied that their philosophy was keeping the team as small and concise as possible, understanding that, as Commissioner Condon said, they will utilize other departments for needed information. The emphasis was on getting the agreement, finding out who the producers and players were, and going forward. This will come back for review with the legislature, and there will be time for interaction between other departments. Number 0501 REPRESENTATIVE BRICE agreed the smaller the team, the more successful they will be. He advised that he would not offer an amendment to add back the commissioner of the Department of Labor but would bring it up at another time. He stated that to have a good representation of Alaskan workers on this team, it is important to consider adding the Department of Labor, specifically as an advocate to hire Alaskan workers and use Alaskan businesses. Number 0511 CHAIRMAN HODGINS suggested there would be plenty of opportunity to make those adjustments in the future. Number 0513 CO-CHAIRMAN OGAN said they need to know they have a project and that the players are identified before negotiating labor agreements. At the appropriate time, they would be brought into the loop. REPRESENTATIVE HUDSON commented that if they were trying to put together a team that can analyze the Alaskan hire situation or major public policy changes, such as changes in state or federal tax structures, it would be wise to think of the Alaska Industrial Development and Export Authority (AIDEA), because this is the kind of thing they do. REPRESENTATIVE HUDSON stated, "And I think, Mr. Chairman, somewhere before we're done here, there ought to be at least somebody from the House and somebody from the Senate on an ad hoc basis, not necessarily a part of the ongoing day-to-day, but so that the legislature, who is ultimately going to have to vote on the public policy issues here, as to whether or not it's in our best interest to make these recommendations to the full body next year, that we have a representation as it develops." He advised that those were issues he and Co-Chair Ogan could look at in the House Resources Standing Committee. Number 0530 CHAIRMAN HODGINS stated, "We looked at the idea of having just such a structure of ad hoc or actual members of the legislature sitting on this. And we felt that there should be a division, a separation of powers. The Administration would come forward with their recommendations and we as a legislature will hear it." He indicated as chairman, he intends to hold meetings of the House Special Committee on Oil and Gas through the interim "and to be a monitor and a focus for a public forum for what is going on with the negotiations and with the commercialization team." REPRESENTATIVE HUDSON responded that he had suggested ad hoc members because the legislature would not be at the table. He expressed the hope that this would remain an open issue. Number 0541 CO-CHAIRMAN OGAN made a motion to move the committee substitute, 0-GH0110\F, Ch Oil and Gas, with the attached fiscal note and individual recommendations. He asked unanimous consent. Number 0544 REPRESENTATIVE BUNDE objected. He stated, "As I indicated by my earlier remarks, I don't see anything that this committee is going to do that couldn't be accomplished through the regular legislative process. Certainly the socioeconomic study is something that ought to take place in committee and through the legislative process. The only reason in this day and age of cutting budgets to spend this extra money is if you buy into the notion that it's an extreme time limit here. I do not. I think these are not bananas that will go overripe and have to be thrown away. I think our gas will increase in value in the foreseeable future, and I don't agree that we have to spend money and rush to judgment." Number 0552 CO-CHAIRMAN OGAN stated his desire that the House Finance Committee scrutinize the fiscal note and address the spending. "And I hope they make that absolutely minimum," he added. Number 0556 CHAIRMAN HODGINS requested a roll call vote. Voting for moving CSHB 250(O&G) out of committee were Representatives Brice, Ryan, Ogan and Hodgins. Voting against it was Representative Bunde. Representatives Kemplen and Rokeberg were absent. So CSHB 250(O&G) moved out of the House Special Committee on Oil and Gas.