Legislature(2009 - 2010)SENATE FINANCE 532

04/15/2010 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
= HB 424 G.O. BONDS:EDUC./LIBRARY/RESEARCH FACIL.
Heard & Held
= HB 369 IN-STATE PIPELINE/ MANAGER/TEAM
Heard & Held
= HCR 22 ALASKA NORTHERN WATERS TASK FORCE
Heard & Held
+ HB 294 USE, REGULATION, AND OPERATION OF BOATS TELECONFERENCED
Heard & Held
+ HB 342 EXTEND BOARD OF REAL ESTATE APPRAISERS TELECONFERENCED
Heard & Held
+ HB 376 EXTEND BD OF PSYCHOLOGIST & PSYCH. ASSOC. TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR HOUSE BILL NO. 369(FIN) am                                                                                             
                                                                                                                                
     "An Act relating to an in-state natural gas pipeline,                                                                      
     the office of in-state gasline project manager, and                                                                        
     the Joint In-State  Gasline Development Team; requiring                                                                    
     the  development of  an in-state  natural gas  pipeline                                                                    
     plan, to  be delivered  to the  legislature by  July 1,                                                                    
     2011, that  provides for a gasline  that is operational                                                                    
     by  December 31,  2015;  directing  the Joint  In-State                                                                    
     Gasline  Development  Team to  assume  responsibilities                                                                    
     under sec.  19, ch.  14, SLA 2009;  requiring expedited                                                                    
     review  and  action  by   state  agencies  or  entities                                                                    
     relating to the in-state  natural gas pipeline project;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
2:24:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MIKE  CHENAULT explained  the house  bill. He                                                                    
explained HB 369 forms a  Joint In-state Gasline Development                                                                    
Team (JIGDT). The team includes  the chief executive officer                                                                    
of the Alaska Housing  Finance Corporation (AHFC), the chief                                                                    
executive of  the Alaska Railroad,  the commissioner  of the                                                                    
Department   of   Transportation   and   Public   Facilities                                                                    
(DOT/PF),  the chief  executive  of the  Alaska Natural  Gas                                                                    
Development  Authority  (ANGDA),  and the  in-state  gasline                                                                    
project  coordinator. The  legislation describes  the duties                                                                    
of the  in-state gasline coordinator  in statute and  sets a                                                                    
deadline of July 1, 2011.  The project plan specifies design                                                                    
and  construction of  the in-state  gasline.  The plan  must                                                                    
include   specifics  to   coordinate   and  facilitate   the                                                                    
construction,  ownership, operation,  and management  of the                                                                    
pipeline.  The  development  team  must  prepare  plans  and                                                                    
designs necessary  for construction.  The route  selected is                                                                    
determined by  the development team  and must  be economical                                                                    
and  provide  gas to  residents  at  a reasonable  cost.  He                                                                    
continued  that  the  legislation establishes  an  expedited                                                                    
process for  information access and cooperation  among state                                                                    
entities. The  bill outlines the  duties of  the development                                                                    
team  yet allows  for  flexibility.  The bill  preauthorizes                                                                    
ANGDA to issue bonds for gas related programs and projects.                                                                     
                                                                                                                                
2:28:39 PM                                                                                                                    
                                                                                                                                
Representative  Chenault stated  that  the  bill allows  the                                                                    
best opportunity  for access to  in-state gas.  He continued                                                                    
that  the  Cook Inlet  gas  supply  has dwindled  and  other                                                                    
opportunities must  be sought.  The in-state use  of natural                                                                    
gas  will provide  additional employment  opportunities. The                                                                    
bill will allow  Alaska to move forward and  access a supply                                                                    
for the next 100 years.                                                                                                         
                                                                                                                                
2:30:47 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman requested  a sectional  analysis following                                                                    
questions by committee members.                                                                                                 
                                                                                                                                
Senator  Thomas appreciated  the intent  of the  legislation                                                                    
although it  does not  address all  of the  pertinent energy                                                                    
needs  for  Alaska.  He   appreciated  the  opportunity  for                                                                    
additional employment for Alaskans.                                                                                             
                                                                                                                                
Senator  Olson asked  the approximate  amount  of the  bond.                                                                    
Representative Chenault responded $250  million is the ANGDA                                                                    
portion of the bonding capacity.                                                                                                
                                                                                                                                
Senator  Olson asked  how  the  legislation compliments  the                                                                    
other proposed in-state gasline  projects such as Denali and                                                                    
TransCanada.  Representative  Chenault responded  that  this                                                                    
bill addresses  in-state gas use. He  maintained that Alaska                                                                    
cannot wait for  other projects knowing that  the gas supply                                                                    
for the Railbelt is dwindling.                                                                                                  
                                                                                                                                
2:34:42 PM                                                                                                                    
                                                                                                                                
Senator Olson  asked how other  in-state gas  line proposals                                                                    
compare  to   that  of   HB  369.   Representative  Chenault                                                                    
responded  that the  HB 369  instate gas  line's development                                                                    
team is given  the freedom to determine  the most economical                                                                    
project.                                                                                                                        
                                                                                                                                
SENATOR  LESIL  MCGUIRE, echoed  the  comments  made by  the                                                                    
Speaker  in   respect  to  the  in-state   gas  caucus.  She                                                                    
explained  that  energy  needs were  the  focus.  The  broad                                                                    
benefits  of  the in-state  gas  line  were explored  in  an                                                                    
effort  to   provide  economic   success  for   Alaska.  She                                                                    
clarified  that the  HB 369  project compliments  the Alaska                                                                    
Gasline  Inducement Act  (AGIA). She  pointed out  that with                                                                    
shale discoveries in the lower  48, open season for AGIA may                                                                    
not  amount to  the  preconceived  expectations. The  Denali                                                                    
Project  and  the  TransCanada  projects  provide  available                                                                    
options. She  explained that the  intent of  the legislation                                                                    
is  to create  a team  of Alaskans  with an  aggressive time                                                                    
line  and directive.  December 15th  is the  first timeline.                                                                    
She stated that the legislation  requests that the team meet                                                                    
with buyers  and sellers of gas  and provide a plan  on July                                                                    
1,  2011.  Private  sector partnership  is  an  option.  She                                                                    
explained  that   the  involvement   of  AHFC,   The  Alaska                                                                    
Railroad,  and   ANGDA  provide  unique   bonding  authority                                                                    
abilities.  She stressed  that the  bill  sponsors view  the                                                                    
pipeline  as  a  "steel  highway"   that  would  provide  an                                                                    
opportunity for  Alaska to progress  into the next  level of                                                                    
economic development.                                                                                                           
                                                                                                                                
2:42:05 PM                                                                                                                    
                                                                                                                                
Senator  Huggins commended  the partnership  between Senator                                                                    
McGuire and Representative Chenault.                                                                                            
                                                                                                                                
Senator Ellis  asked about ANGDA's  role in HB  369. Senator                                                                    
McGuire responded  that ANGDA  is a  member of  the in-state                                                                    
gas caucus  along with  the Alaska  Railroad, DOT/PF  and an                                                                    
in-state gas  coordinator. She pointed out  a merger drafted                                                                    
in the last  few pages of the bill formerly  known as HB 44,                                                                    
which expands ANGDA's authority  to more closely reflect the                                                                    
activities conducted  today. The latter portion  of the bill                                                                    
gives  ANGDA $250  million worth  of bonding  authority. The                                                                    
legislature would review any issued bonds.                                                                                      
                                                                                                                                
2:46:13 PM                                                                                                                    
                                                                                                                                
TOM  WRIGHT, STAFF,  MIKE  CHANAULT,  presented a  sectional                                                                    
analysis.                                                                                                                       
                                                                                                                                
       COMMITTEE SUBSTITUTE FOR HOUSE BILL 369 (FIN)                                                                            
     "An Act  relating to an in-state  natural gas pipeline,                                                                    
     the  office of  in-state gasline  project manager,  the                                                                    
     Joint In-State Gasline  Development Team; requiring the                                                                  
     development of  an in-state natural gas  pipeline plan,                                                                  
     to be  delivered to  the legislature  by July  1, 2011,                                                                  
     that  provides for  a gasline  that  is operational  by                                                                  
     December  31,   2015;  directing  the   Joint  In-State                                                                  
     Gasline  Development  Team to  assume  responsibilities                                                                  
     under sec.  19, ch.  14, SLA 2009;  requiring expedited                                                                  
     review  and  action  by   state  agencies  or  entities                                                                  
     relating to the in-state  natural gas pipeline project;                                                                  
     and providing for an effective date."                                                                                      
                                                                                                                                
     (Changes  in   the  House  Finance  version   from  the                                                                    
     Resources  Committee  Substitute  are  highlighted  and                                                                    
     underlined.)                                                                                                               
                                                                                                                                
     Section 1:   Adds a  new chapter, Chapter  34: In-State                                                                  
     natural Gas Pipeline, to AS 38, Public Land.                                                                               
                                                                                                                                
     Sec. 38.34.010. In-state gasline  project manager.  (a)                                                                    
     Creates  the  position   of  in-state  gasline  project                                                                    
     manager within  the governor's  Office.   This position                                                                    
     will   continue  until   one   year  after   commercial                                                                    
     operation of the in-state  natural gas pipeline begins.                                                                    
     (b)  The   Governor  appoints  an  individual   to  the                                                                    
     position  of an  in-state  gasline manager  and may  be                                                                    
     removed  at the  Governor's  discretion. (c)  Describes                                                                    
    the duties of the in-state gasline project manager.                                                                         
                                                                                                                                
     Sec. 38.34.020.  Expedited review  and action  by state                                                                    
     agencies or entities. (a) States  that any state agency                                                                  
     or entity conducting and taking  action relating to the                                                                  
     in-state  gasline  shall be  expedited.    (b) A  state                                                                    
     agency  or  entity  may  not  include  in  any  project                                                                  
     certificate,   right   of    way,   permit   or   other                                                                    
     authorization issued to a licensee  a term or condition                                                                    
     that is  not required  by law  if the  in-state project                                                                    
     manager determines the term  or condition would prevent                                                                    
     or  impair the  expeditious construction  and operation                                                                    
     or  expansion of  the in-state  gasline.   (c) A  state                                                                    
     agency  or  entity may  not,  unless  required by  law,                                                                  
     amend  or  abrogate  any  certificate,  right  of  way,                                                                    
     permit or  other authorization issued to  a licensee if                                                                    
     the  project   manager  determines  the   action  would                                                                    
     prevent  or  impair  the expeditious  construction  and                                                                    
     operation or expansion of the in-state gasline.                                                                            
                                                                                                                                
     Sec.  38.34.030.  Joint  In-state  Gasline  Development                                                                    
     Team.    (a)  Establishes the  Joint  In-State  Gasline                                                                    
     Development Team  in the Governor's  Office.   The team                                                                    
     consists  of  the  commissioner of  the  Department  of                                                                    
     Transportation and  Public Facilities or  designee, the                                                                    
     chief   executive  officer   of  the   Alaska  Railroad                                                                    
     Corporation  or designee,  the chief  executive officer                                                                  
     of the  Alaska Natural  Gas Development  Authority, the                                                                    
     in-state   gasline  project   manager  and   the  chief                                                                  
     executive  officer   of  the  Alaska   Housing  Finance                                                                  
     Corporation.   (b)  Names  the  Alaska Housing  Finance                                                                
     Corporation's chief  executive officer  as chair.   (c)                                                                  
     Allows the  development team to hire  staff, enter into                                                                    
     contracts and  exercise other powers  to carry  out its                                                                    
     functions.                                                                                                                 
                                                                                                                                
     Sec. 38.34.040.   Duties of the Development  Team.  (a)                                                                    
     Ensure a  project plan  for the  development of  an in-                                                                  
     state  gasline  is  completed   and  delivered  to  the                                                                  
     legislature by  July 1,  2011.   The project  plan must                                                                  
     specify  and document  how an  in-state gasline  can be                                                                  
     designed,  financed, constructed  and made  operational                                                                  
     by December 31, 2015.    (b) The Joint In-State Gasline                                                                
     Development Team  is to assume all  executive authority                                                                  
     over and  managerial responsibility for  all activities                                                                  
     enumerated under  sec. 19, ch. 14,  SLA 2009, including                                                                  
     work previously  completed, work  in process,  and work                                                                  
     for which  money has  been encumbered  but that  is not                                                                  
     completed  on the  effective date  of this  subsection.                                                                  
     (c) Describes  specific plans that  are to  be included                                                                  
     within the  project plan for  an in-state  gasline that                                                                  
     will serve  Fairbanks, the  southcentral region  of the                                                                  
     state,  and  other  communities  whenever  practicable,                                                                  
     connecting with or enhancing  the existing gas pipeline                                                                  
     system,   and  reaching   to   tidewater.     (d)   The                                                                
     development  team's  work  product  is  to  include  an                                                                  
     analysis of  alternative possible  routes and  select a                                                                  
     route   that   is   consistent   with   the   following                                                                  
     requirements:  (1) is  the  most  economical, (2)  will                                                                  
     provide  gas to  residents  at a  reasonable cost,  (3)                                                                  
     allows  for  connecting   lines  to  serve  industrial,                                                                  
     residential  and  utility  customers along  the  entire                                                                  
     route and  in other  regions of the  state that  can be                                                                  
     served at  commercially feasible rates, (4)  uses state                                                                  
     land and existing state highway  and railroad rights of                                                                    
     way to  the maximum extent feasible,  (5) uses existing                                                                  
     highway  and railroad  bridges,  gravel pits  equipment                                                                    
     yards  and maintenance  facilities  and other  existing                                                                    
     facilities   and  resources   to  the   maximum  extent                                                                    
     feasible. (e) With the  intent that any project-related                                                                  
     assets acquired or developed  be available for transfer                                                                  
     or  sale  to  the  entity best  able  to  complete  the                                                                  
     project,  the  development team  is  to:  (1)   prepare                                                                  
     plans  and designs  necessary for  the construction  of                                                                    
     the  in-state  gasline;  (2) coordinate  with  entities                                                                  
     qualified to  build, own and  operate the  gasline; (3)                                                                
     identify, apply for and  obtain rights-of-way and other                                                                  
     permits  for the  project route;  (4)  work with  other                                                                
     entities to  promote gas supply and  purchase contracts                                                                  
     required  for the  project to  be commercially  viable;                                                                  
     (5)   prepare  cost   estimates  for   project  design,                                                                  
     construction and  operation to determine  the project's                                                                  
     feasibility and  the projected cost  of natural  gas to                                                                  
     consumers; (6) coordinate with and  use, to the fullest                                                                
     extent, possible existing work  by other state agencies                                                                  
     and  entities before  contracting for  new reports  and                                                                  
     research   and  analysis;   (7)  determine   regulatory                                                                
     authority  over the  pipeline project  and perform  any                                                                  
     necessary  compliance  requirements; (8)  identify  and                                                                
     apply for,  or support  extension of,  existing permits                                                                  
     for  export  of  Alaska  natural  gas  if  that  export                                                                  
     improves project  economics and  will reduce  the price                                                                  
     of natural gas  to in-state consumers.   (f) Any rights                                                                
     to a gasline corridor obtained  by a state agency under                                                                  
     eminent domain may be transferred  to a private entity.                                                                  
     (g)  Describes  the  various aspects  of  the  in-state                                                                  
    gasline project the development team may consider.                                                                          
                                                                                                                                
     Sec. 38.34.050. Cooperation  and access to information.                                                                    
     (a) States  the development team  may have access  to a                                                                    
     state  entity's  information  to  include  confidential                                                                    
     information that may relate to  the in-state gasline or                                                                    
     prove  useful  in  planning,  design,  construction  or                                                                    
     operation  of the  gasline.   Confidential  information                                                                    
     received  by   the  Development  Team  shall   be  kept                                                                    
     confidential.  (b) All state  agencies are to cooperate                                                                    
     and give priority to requests  for information from the                                                                    
     Development  Team.   The Development  Team is  to avoid                                                                    
     duplicating  studies,  plans,  and  designs  that  have                                                                    
     already been  produced or  otherwise obtained  by state                                                                    
     entities.                                                                                                                  
                                                                                                                                
     Sec.  38.34.060.  Conflicts  of  interest.   (a)  If  a                                                                    
     member  of  the  Development  Team  acquires,  owns  or                                                                    
     controls a direct or indirect  interest in property, an                                                                    
     organization or business that might  be affected by the                                                                    
     in-state  gasline   project  or  other   matters  under                                                                    
     consideration   by    the   Development    Team   shall                                                                    
     immediately  disclose the  interest to  the Development                                                                    
     Team.   This disclosure  is part  of the  public record                                                                    
     and  shall be  included  in the  minutes  of the  first                                                                    
     meeting  of   the  Development  Team  held   after  the                                                                    
     disclosure.  (b) Members  of the  development team  are                                                                  
     subject to  AS 39.50  (Public Official  Disclosure) and                                                                  
     AS 39.52 (Alaska Executive Branch Ethics Act).                                                                           
                                                                                                                                
     Sec.  38.34.099.   Definitions.   Defines the  in-state                                                                    
     natural gas pipeline and the North Slope.                                                                                  
                                                                                                                                
     Section 2:  Amends AS  39.25.110, Exempt service.  Adds                                                                  
     the  in-state gasline  project  manager  to the  exempt                                                                    
     service list.                                                                                                              
                                                                                                                                
     Section 3:  Immediate effective date.                                                                                    
                                                                                                                                
2:53:13 PM                                                                                                                    
                                                                                                                                
Senator Thomas asked about  confidential information and the                                                                    
team's administration  of public  notice where  meetings are                                                                    
concerned.                                                                                                                      
                                                                                                                                
Mr. Wright  responded that the  team is not exempt  from the                                                                    
Open Meetings Act. The team  is allowed executive session to                                                                    
discuss finances  or operations that might  have a potential                                                                    
effect   on  the   state  or   during   the  discussion   of                                                                    
confidential information.                                                                                                       
                                                                                                                                
Co-Chair Hoffman mentioned three  fiscal notes, one from the                                                                    
governor's office for  $350,700 in general funds  to hire an                                                                    
in-state   gasline   coordinator,   one  from   DOT/PF   for                                                                    
$1,451,100  in general  funds for  right of  way permitting,                                                                    
and one  from the DOR  for $21,340,600 in general  funds for                                                                    
AHFC.                                                                                                                           
                                                                                                                                
Mr.  Wright pointed  out that  the fiscal  note from  DOT/PF                                                                    
does  not apply  as the  AHFC fiscal  note incorporates  all                                                                    
state agencies.                                                                                                                 
                                                                                                                                
2:55:56 PM                                                                                                                    
                                                                                                                                
BARBARA  TUCKNESS,  DIRECTOR  OF  GOVERNOR  AND  LEGISLATIVE                                                                    
AFFAIRS,  TEAMSTERS UNION  testified in  support of  HB 369.                                                                    
She   pointed  out   that  the   bill   lacks  a   provision                                                                    
guaranteeing  that Alaskan  citizens  will  be employed  for                                                                    
this project.  She noted that  the bill makes no  mention of                                                                    
training. She  appreciated consideration of  Alaskan workers                                                                    
for the project.                                                                                                                
                                                                                                                                
Senator  Ellis  asked  for  a   statement  from  Mr.  Heinze                                                                    
regarding his role in the project.                                                                                              
                                                                                                                                
2:59:10 PM                                                                                                                    
                                                                                                                                
HAROLD HEINZE,  CEO, ALASKA NATURAL GAS  AUTHORITY responded                                                                    
that ANGDA  supports the legislature's direction  in HB 369.                                                                    
He opined  that the bill  provides the guidance  required by                                                                    
the  team. He  emphasized  that ANGDA  is  amenable to  team                                                                    
participation. He  stated that he feels  comfortable working                                                                    
under the leadership of Dan Fauske.                                                                                             
                                                                                                                                
Co-Chair Hoffman  requested that  Dan Fauske be  allowed the                                                                    
same  opportunity to  explain  his role.  He  asked how  the                                                                    
position would affect his primary position with AHFC.                                                                           
                                                                                                                                
DAN  FAUSKE, ALASKA  HOUSING FINANCE  CORPORATION, expressed                                                                    
excitement  about the  project  opportunity.  He noted  that                                                                    
arrangements will be  made to carry out his  duties at AHFC.                                                                    
He spoke to  the capability of his staff at  AHFC. He stated                                                                    
that  he  looked  forward  to   the  partnerships  and  team                                                                    
atmosphere.                                                                                                                     
                                                                                                                                
Co-Chair  Hoffman  asked if  the  job  will deter  from  his                                                                    
weatherization  and energy  efficiency duties  at AHFC.  Mr.                                                                    
Fauske stated no.                                                                                                               
                                                                                                                                
3:02:27 PM                                                                                                                    
                                                                                                                                
JOHN  BINKLY, CHAIRMAN,  ALASKA RAILROAD  ASSOCIATION echoed                                                                    
the sentiments  of Mr. Heinze  and Mr. Fauske.  He expressed                                                                    
excitement regarding  participation in  the project  and the                                                                    
team.                                                                                                                           
                                                                                                                                
Co-Chair  Hoffman  asked   if  he  missed  his   work  as  a                                                                    
legislator and  chair of the  Senate Finance  Committee. Mr.                                                                    
Binkly responded that  he preferred the view  from the other                                                                    
side of the table.                                                                                                              
                                                                                                                                
HB  369  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

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