Legislature(2013 - 2014)SENATE FINANCE 532

04/11/2013 09:00 AM FINANCE


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09:23:25 AM Start
09:24:34 AM HB4
10:17:16 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 4 ALASKA GASLINE DEVELOPMENT CORP; RCA TELECONFERENCED
Moved SCS CSSSHB 4(FIN) Out of Committee
+ HB 129 OIL & GAS EXPLORATION/DEVELOPMENT AREAS TELECONFERENCED
Scheduled But Not Heard
+ HB 71 AK REGIONAL ECONOMIC ASSISTANCE PROGRAM TELECONFERENCED
Scheduled But Not Heard
+ HCR 6 EST. LEG. TASK FORCE ON UNMANNED AIRCRAFT TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  SENATE FINANCE COMMITTEE                                                                                      
                       April 11, 2013                                                                                           
                         9:23 a.m.                                                                                              
                                                                                                                                
9:23:25 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the  Senate Finance Committee  meeting                                                                   
to order at 9:23 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Suzanne   Armstrong,  Staff,   Senator   Kevin  Meyer;   Rena                                                                   
Delbridge,  Staff, Representative  Mike  Hawker; David  Teal,                                                                   
Director,  Legislative Finance  Division; Jo Ellen  Hanrahan,                                                                   
Director,  Division  of Administrative  Services,  Department                                                                   
of  Commerce,  Community  and   Economic  Development;  Frank                                                                   
Richards,    Alaska    Gasline    Development    Corporation;                                                                   
Representative Mike Hawker.                                                                                                     
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSSHB 4(FIN)                                                                                                                   
          ALASKA GASLINE DEVELOPMENT CORP; RCA                                                                                  
                                                                                                                                
     SCSCSSSHB  4(FIN) was REPORTED  out of committee  with a                                                                   
     "do pass"  recommendation and  with a new  fiscal impact                                                                   
     note from  the Senate Finance  Committee for  the Alaska                                                                   
     Gasline  Development Corporation,  a  new fiscal  impact                                                                   
     note from the Senate Finance Committee for the In-                                                                         
     state Natural Gas Pipeline Fund, a new fiscal impact                                                                       
     note from the Senate Finance Committee for the                                                                             
     Department of  Environmental    Conservation,    a   new                                                                   
     fiscal  impact note  from the  Senate Finance  Committee                                                                   
     for  the  Department of  Environmental  Conservation,  a                                                                   
     new  fiscal   impact  note   from  the  Senate   Finance                                                                   
     Committee  for  the  Department  of  Transportation  and                                                                   
     Public  Facilities, and  a new fiscal  impact note  from                                                                   
     the  Senate  Finance  Committee for  the  Department  of                                                                   
     Law.                                                                                                                       
                                                                                                                                
CSHB 71(FIN)                                                                                                                    
          AK REGIONAL ECONOMIC ASSISTANCE PROGRAM                                                                               
                                                                                                                                
          CSHB 71(FIN) was SCHEDULED but not HEARD.                                                                             
                                                                                                                                
CSHB 129(FIN)                                                                                                                   
          OIL & GAS EXPLORATION/DEVELOPMENT AREAS                                                                               
                                                                                                                                
          CSHB 129(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
CSHCR 6(EDT)                                                                                                                    
          EST. LEG. TASK FORCE ON UNMANNED AIRCRAFT                                                                             
                                                                                                                                
          CSHCR 6(EDT) was SCHEDULED but not HEARD.                                                                             
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 4(FIN)                                                                           
                                                                                                                                
     "An  Act  relating  to the  Alaska  Gasline  Development                                                                   
     Corporation;    establishing    the    Alaska    Gasline                                                                   
     Development   Corporation  as   an  independent   public                                                                   
     corporation of  the state; establishing and  relating to                                                                   
     the in-state  natural gas pipeline fund;  making certain                                                                   
     information  provided  to   or  by  the  Alaska  Gasline                                                                   
     Development  Corporation  and  its  subsidiaries  exempt                                                                   
     from  inspection as  a public  record;  relating to  the                                                                   
     Joint  In-State Gasline  Development  Team; relating  to                                                                   
     the  Alaska  Housing Finance  Corporation;  relating  to                                                                   
     judicial  review of  a right-of-way  lease or an  action                                                                   
     or decision  related to the development  or construction                                                                   
     of an  oil or  gas pipeline on  state land;  relating to                                                                   
     the  lease   of  a  right-of-way  for  a   gas  pipeline                                                                   
     transportation  corridor,  including  a corridor  for  a                                                                   
     natural  gas  pipeline  that   is  a  contract  carrier;                                                                   
     relating  to the  cost  of natural  resources,  permits,                                                                   
     and leases  provided to  the Alaska Gasline  Development                                                                   
     Corporation;  relating  to  procurement  by  the  Alaska                                                                   
     Gasline   Development  Corporation;   relating  to   the                                                                   
     review  by  the  Regulatory   Commission  of  Alaska  of                                                                   
     natural  gas transportation  contracts; relating  to the                                                                   
     regulation  by the  Regulatory Commission  of Alaska  of                                                                   
     an in-state  natural gas  pipeline project developed  by                                                                   
     the  Alaska Gasline  Development  Corporation;  relating                                                                   
     to  the  regulation  by  the  Regulatory  Commission  of                                                                   
     Alaska  of   an  in-state  natural  gas   pipeline  that                                                                   
     provides    transportation    by   contract    carriage;                                                                   
     repealing  the statutes relating  to the Alaska  Natural                                                                   
     Gas   Development   Authority  and   making   conforming                                                                   
     changes;  exempting property of  a project developed  by                                                                   
     the   Alaska   Gasline  Development   Corporation   from                                                                   
     property  taxes before  the  commencement of  commercial                                                                   
     operations; and providing for an effective date."                                                                          
                                                                                                                                
9:24:34 AM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough MOVED to ADOPT the proposed committee                                                                     
substitute for HB 4, Work Draft 28-LS0021\T (Bullock,                                                                           
4/10/13) as a working document.                                                                                                 
                                                                                                                                
Co-Chair Meyer OBJECTED for the purpose of discussion.                                                                          
                                                                                                                                
SUZANNE  ARMSTRONG,  STAFF, SENATOR  KEVIN  MEYER,  discussed                                                                   
the  proposed  changes  to  HB   4  from  a  document  titled                                                                   
"Proposed  Changes  in Senate  Finance  CS  for  CS SS  HB  4                                                                   
Version  28-LS0021\T"  (copy  on  file). She  read  from  the                                                                   
document.                                                                                                                       
                                                                                                                                
     Legislative Findings & Intent Section                                                                                      
     Page 2, line 25 - 31 to Page 3, line 1                                                                                     
     Adds  intent language  that  the Board  of Directors  of                                                                   
     AGDC  commits to governing  so as  to affect  positively                                                                   
     as many Alaskans  as possible, including  those in rural                                                                   
     and  coastal  communities  and to  extend  opportunities                                                                   
     for  all  Alaskans  to  benefit  from  the  natural  gas                                                                   
     resources   of   the  state,   including   propane   and                                                                   
     associated gas-related hydrocarbons.                                                                                       
                                                                                                                                
     Page 3, lines 17-21                                                                                                        
     Adds  intent language  that  AGDC  and its  subsidiaries                                                                   
     will  wind up  and  dissolve when  no  bonds, notes,  or                                                                   
     other  obligations  are  outstanding  and  AGDC  or  its                                                                   
     subsidiaries are  no longer engaged in  the development,                                                                   
     financing,  construction,  or operation  of an  in-state                                                                   
     natural gas pipeline.                                                                                                      
                                                                                                                                
     Section  3: Amending  the Structure  of the  Corporation                                                                   
     Established by Chapter 25                                                                                                  
     Page 4, lines 27-31                                                                                                        
     Provides  that  the  corporation may  dissolve  when  no                                                                   
     bonds, notes,  or other  obligations of the  corporation                                                                   
     or  subsidiary of  the corporation  are outstanding  and                                                                   
     is  no longer  engaged  in the  development,  financing,                                                                   
     construction,  or operation of  an in-state  natural gas                                                                   
     pipeline.                                                                                                                  
                                                                                                                                
     Corporation Purpose; Beginning on Page 7, line 22                                                                          
     Provides  that   the  purpose  of  the   corporation  is                                                                   
     established for the benefit of the state.                                                                                  
                                                                                                                                
     Page 8, lines 1 - 2 and lines 7 -8                                                                                         
     Provides   that  the  corporation   shall  endeavor   to                                                                   
     develop a  natural gas pipeline or  other transportation                                                                   
     mechanism  to  deliver  natural  gas and  to  develop  a                                                                   
     natural gas  pipeline or other transportation  mechanism                                                                   
     that offers  commercially reasonable rates  for shippers                                                                   
     and access for shippers who produce natural gas.                                                                           
                                                                                                                                
     Corporation Powers & Duties: Beginning on page 8                                                                           
     At  line 18,  provides that  the  corporation may  plan,                                                                   
     finance,  construct,  develop,  acquire,  maintain,  and                                                                   
     operate  a  pipeline  system   or  other  transportation                                                                   
     mechanism to  facilitate the production,  transportation                                                                   
     and  delivery of natural  gas or  other related  natural                                                                   
     resources. This  provision also applies to  the creation                                                                   
     of  subsidiaries   by  AGDC   to  carry  out   the  same                                                                   
     activities (found at page 14, line 28).                                                                                    
                                                                                                                                
     Page 9, line 30-31- Page 10, line 1                                                                                        
     Removes language  from the previous version  of the bill                                                                   
     that would  limit AGDC's ability  to borrow money  for a                                                                   
     construction project that may last multiple years.                                                                         
                                                                                                                                
     Page 10, line 13-18                                                                                                        
     New subsection  (g) [corrected  to subparagraph  22] was                                                                   
     added  to provide  AGDC with  the  opportunity to  sway,                                                                   
     hedge,  cap,   or  other  enter  into   other  contracts                                                                   
     providing  for payments  based on  levels of or  changes                                                                   
     in interest  rates or  indices or in  the cost  or price                                                                   
     of  any commodity,  supply  or  expense expected  to  be                                                                   
     used  or incurred  in connection  with the  acquisition,                                                                   
     construction, or  operation of any facility  or property                                                                   
     owned, leased or operated by the corporation.                                                                              
Ms. Armstrong noted the error after "Page 10, line 13-18",                                                                      
new subsection (g) should read, "Subparagraph 22." She                                                                          
continued with the explanation of changes.                                                                                      
                                                                                                                                
     Page 10, beginning line 19-30                                                                                              
     Provides  that upon commencement  of construction  of an                                                                   
     in-state  natural gas  pipeline,  the corporation  shall                                                                   
     analyze  potential  natural   gas  pipelines  and  other                                                                   
     transportation  mechanisms   in  other  regions  of  the                                                                   
     state, and that,  if the method is in  the best interest                                                                   
     of  the   state,  may   move  forward  with   financing,                                                                   
     constructing,  or operating  a natural  gas pipeline  or                                                                   
     other transportation mechanism.                                                                                            
                                                                                                                                
     Page 11, lines 13- 16                                                                                                      
     Provides that  after the  conclusion of an  open season,                                                                   
     if  the  corporation  determines  that  the  commitments                                                                   
     received during  the open  season are not  sufficient to                                                                   
     allow  the   corporation  to   move  forward   with  the                                                                   
     development or  construction of a natural  gas pipeline,                                                                   
     the corporation  shall report to the  Legislature within                                                                   
     30  days.  The  subparagraph  also  discusses  what  the                                                                   
     corporation  shall  do if  commitments  are received  to                                                                   
     acquire  firm  transportation  capacity during  an  open                                                                   
     season.                                                                                                                    
                                                                                                                                
Ms.  Armstrong  reiterated  that  notification  of  the  open                                                                   
season's results  will be forwarded  to the President  of the                                                                   
Senate, the Speaker  of the House, and the  public within ten                                                                   
days  of   accepting  and   executing  the  agreements.   She                                                                   
continued her discussion.                                                                                                       
                                                                                                                                
     Page 11, lines 17-26                                                                                                       
     Provides  that the corporation  shall, without  delaying                                                                   
     the  progress  of  an  in-state   natural  gas  pipeline                                                                   
     project  or without  causing  the  in-state natural  gas                                                                   
     pipeline  project to  become a  competing project  under                                                                   
     AGIA,  coordinate with  developers  of a  large-diameter                                                                   
     in-state  natural  gas  pipeline  by  planning  for  the                                                                   
     development and  use of common pipeline  facilities from                                                                   
     the  North  Slope  to  the Livengood  area,  and  for  a                                                                   
     pipeline  which may  be constructed  south to  tidewater                                                                   
     either in Prince William Sound or Cook Inlet.                                                                              
                                                                                                                                
     Refunding Obligations  of the Corporation:  Beginning on                                                                   
     Page 23                                                                                                                    
     Page 24, lines 8-11                                                                                                        
     Removes the  limitation that  was currently in  the bill                                                                   
     on  AGDC  investing  bond   proceeds  in  U.S.  Treasury                                                                   
     bills.   Removal  of  the   language  allows   increased                                                                   
     flexibility for AGDC.                                                                                                      
                                                                                                                                
     General Provisions Pertaining to the Corporation                                                                           
     Page 26, lines 1-5                                                                                                         
     Provides  that after  a decision  of the corporation  to                                                                   
     dissolve, the  corporation shall provide a  final report                                                                   
     to the  Governor, the Legislature,  and the  public that                                                                   
     summarizes   the   reasons   for  dissolution   of   the                                                                   
     corporation.  A  statement  by  an  independent  outside                                                                   
     auditor  for the corporation  and the subsidiaries  must                                                                   
     accompany  the final report,  indicating that  no bonds,                                                                   
     notes, or other obligations are outstanding.                                                                               
                                                                                                                                
     Under Section  11: Covenants Required  to be in  a Lease                                                                   
     to a Natural Gas Pipeline that is a Contract Carrier                                                                       
     Page 32, lines 25-28                                                                                                       
     Clarifies that  a lease for  state land for  a right-of-                                                                   
     way for  which an  applicant has  applied as a  contract                                                                   
     carrier  for  a  natural   gas  pipeline  valued  at  $1                                                                   
     million or greater  may be granted to a  lessee, as long                                                                   
     as the  lessee does  not construct  or expand  a natural                                                                   
     gas  pipeline   that  would   compete  with   a  project                                                                   
     licensed under AGIA.                                                                                                       
                                                                                                                                
9:33:07 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:34:18 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Ms. Armstrong continued to discuss the proposed changes in                                                                      
the new CS.                                                                                                                     
                                                                                                                                
     General  Powers &  Duties of  the Regulatory  Commission                                                                   
     of Alaska                                                                                                                  
     Beginning at Page 40, lines 29-31                                                                                          
     Provides  that the  RCA may  not  investigate a  dispute                                                                   
     under  (b) (3) -  found at  Page 39, lines  5-26 -  if a                                                                   
     complete formal  complaint has  not been filed  with the                                                                   
     commission within  60 days after the event  occurs which                                                                   
     gives rise to the complaint.                                                                                               
                                                                                                                                
     Contract  Review;  Contract Carriage  Certificate;  Open                                                                   
     Seasons                                                                                                                    
     Beginning at Page 42, line 6 - 8                                                                                           
     Clarifies  that  a  carrier   shall  publish  notice  in                                                                   
     advance  of an  open season  and that  the notice  shall                                                                   
     state the methods  for awarding capacity set  out in the                                                                   
     carrier's recourse  tariff and whether  pre-subscription                                                                   
     agreements have been executed.                                                                                             
                                                                                                                                
     Page 42, line 11-12                                                                                                        
     Clarifies  that presubscription  agreements are  subject                                                                   
     to  the methods  for awarding  capacity,  which are  set                                                                   
     out in the open season notice.                                                                                             
                                                                                                                                
     Page 42, lines 18-24                                                                                                       
     Clarifies  that an  open season  for an  expansion of  a                                                                   
     pipeline  system  when  it  has  received  one  or  more                                                                   
     requests   for   firm   transportation    service   from                                                                   
     potential  shippers and that  expansion of the  pipeline                                                                   
     system will not  cause it to be a competing  natural gas                                                                   
     pipeline project under AGIA.                                                                                               
                                                                                                                                
     At Page 42, line 31- Page 43, line 1-8                                                                                     
     Provides  that  if precedent  agreements  are  received,                                                                   
     the  carrier shall  within 10 days  after accepting  and                                                                   
     executing the  agreements, inform the public  of results                                                                   
     and include  the name of  each prospective  shipper, the                                                                   
     amount  of   capacity  allocated,  and  the   period  of                                                                   
     commitment. Also  provides that if the carrier  does not                                                                   
     receive  sufficient commitments  during the open  season                                                                   
     to continue  the development  or construction of  an in-                                                                   
     state  natural   gas  pipeline,  the   corporation  will                                                                   
     notify the RCA within 30 days.                                                                                             
                                                                                                                                
     Review  of Certain  Contracts by  the RCA  - Rate  Payer                                                                   
     Protection Measure                                                                                                         
     Page 45, lines 2 - 4                                                                                                       
     Provides  that  a  precedent   agreement  or  a  related                                                                   
     contract public  utility is not considered  arm's length                                                                   
     if  the rate  paid  for  transportation on  an  in-state                                                                   
     natural  gas  pipeline  is  greater  than  the  recourse                                                                   
     rate.   The  issue/circumstance   was  discussed   in  a                                                                   
     previous  committee of  referral that  a public  utility                                                                   
     might  try   and  negotiate  a  higher  rate   than  the                                                                   
     recourse  tariff  rate,  which would  result  in  higher                                                                   
     prices  for utility  customers. This  change would  make                                                                   
     public  utility contracts  that are  for a greater  rate                                                                   
     than  the recourse  rate to  automatically fail  meeting                                                                   
     the  RCA's arm's length  standard.  If this does  occur,                                                                   
     the  contracts  would  be  evaluated  by the  RCA  on  a                                                                   
     heightened  review  standard  (the  same  standard  used                                                                   
     between affiliated parties.)                                                                                               
                                                                                                                                
     Initial or Revised Rates                                                                                                   
     Beginning on Page 48, line 3                                                                                               
     Provides  that  the review  and  notice period  for  the                                                                   
     review  of  initial  recourse  rates  runs  concurrently                                                                   
     with  the timeline  for the  RCA to make  a decision  on                                                                   
     the  recourse rate.  The  timeline on  decision for  the                                                                   
     tariff  was established at  90 days,  the change  in the                                                                   
     Senate Finance  CS under the Initial Review  and Revised                                                                   
     Rates  provides  that  the   review  and  notice  period                                                                   
     occurs during the same timeframe.                                                                                          
                                                                                                                                
     Page 48, line 28                                                                                                           
     Provides that  the RCA may initiate a  suspension period                                                                   
     of  no longer  than 30  days  from the  day the  initial                                                                   
     recourse   tariff  would   otherwise  go  into   effect.                                                                   
     Provides  that  the  RCA  must hold  a  hearing  on  the                                                                   
     suspended  recourse tariff  filing and  issue its  order                                                                   
     before the end of the suspension period.                                                                                   
                                                                                                                                
     Expansion; Dispute Resolution                                                                                              
     Page 50, line 19-22                                                                                                        
     Provides that  an in-state natural gas  pipeline carrier                                                                   
     may  enter into  a contract  for expansion,  as long  as                                                                   
     the  expansion would  not cause  it to  be considered  a                                                                   
     competing natural gas pipeline project under AGIA.                                                                         
                                                                                                                                
     Investigations                                                                                                             
     Page 53, lines 14-19                                                                                                       
     Provides  that in  conducting  an investigation  related                                                                   
     to a timely  filed dispute, the RCA shall  issue a final                                                                   
     order  within  150  days  after a  formal  complaint  is                                                                   
     filed  with  the RCA,  except  for disputes  related  to                                                                   
     open  seasons. In  the case  of open  season, the  final                                                                   
     order must be issued within 60 days.                                                                                       
                                                                                                                                
     Definitions  that Pertain to the  Title 42, Chapter  8 -                                                                   
     In-State Pipeline  Contract Carrier Page 55,  lines 29 -                                                                   
     31, Page 56, lines 1 - 5                                                                                                   
     Provides  a definition  of  "affiliated" or  "affiliated                                                                   
     interest"  Previous   versions  of  the  bill   did  not                                                                   
     include  a  definition of  "affiliated"  or  "affiliated                                                                   
     interest".  While  there   is  a  definition  under  RCA                                                                   
     statutes,   it   was  thought   wise   to  include   one                                                                   
     specifically in the Title and Chapter pertaining to                                                                        
     In-State Pipeline Contract Carrier and will provide                                                                        
     more explicit direction to the RCA.                                                                                        
                                                                                                                                
Senator  Olson asked for  clarification  about the length  of                                                                   
time  the   Regulatory  Commission   of  Alaska   (Regulatory                                                                   
Commission  of Alaska)  had to investigate  a complaint  from                                                                   
the time  of the  event. Ms.  Armstrong replied  that the  CS                                                                   
stipulated  that the date  began when  the dispute  was filed                                                                   
with the RCA and had 150 days to issue a final order.                                                                           
                                                                                                                                
Senator Olson  asked for further  clarification about  the 60                                                                   
day  investigative  period for  the  RCA on  page  40 of  the                                                                   
legislation.  He inquired  whether the  60 day  period was  a                                                                   
similar length of time in other jurisdictions nationwide.                                                                       
                                                                                                                                
RENA DELBRIDGE,  STAFF, REPRESENTATIVE MIKE  HAWKER, answered                                                                   
that  she  did  not  know  about   other  jurisdictions.  She                                                                   
explained  that the provisions  regarding dispute  resolution                                                                   
on page  39 of the  bill pertained to  the types  of disputes                                                                   
the RCA  could hear.  Most disputes  would be governed  under                                                                   
contractual  dispute resolution  mechanisms. In  the case  of                                                                   
an  open  season,  if a  complaint  was  lodged  against  the                                                                   
carrier by  a non-contractual  party there was  the potential                                                                   
to hold up further  progress. If the RCA discovered  that the                                                                   
open  season process  was  unfair the  open  season might  be                                                                   
repeated.                                                                                                                       
                                                                                                                                
Senator Bishop queried  whether there needed to  be a written                                                                   
complaint  in   order  for  the   RCA  to  investigate.   Ms.                                                                   
Delbridge  replied  in  the affirmative  and  that  a  formal                                                                   
complaint must be lodged within 60 days of the action.                                                                          
                                                                                                                                
9:43:01 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer WITHDREW his OBJECTION.                                                                                          
                                                                                                                                
There  being   NO  OBJECTION,  Work  Draft   28-LS0021\T  was                                                                   
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Meyer MOVED to ADOPT Amendment 1.                                                                                      
                                                                                                                                
Amendment 1                                                                                                                     
OFFERED TO SENATE FINANCE                                                                                                       
TO: SCS CSSSHB 4 (Fin)/T                                                                                                        
                                                                                                                                
Page 8 line 1 after pipeline Delete "or" Add "and"                                                                              
Page 8 line 7 after pipeline Delete "or" Add "and"                                                                              
Page 8 line 18 after system Delete "or" Add "and"                                                                               
                                                                                                                                
Vice-Chair   Fairclough   OBJECTED   for   the   purpose   of                                                                   
discussion.                                                                                                                     
                                                                                                                                
Ms. Armstrong related  that Amendment 1 corrected  a drafting                                                                   
error  in  the  CS.  The  error  was  discovered  by  Senator                                                                   
Hoffman's staff.                                                                                                                
                                                                                                                                
Vice-Chair Fairclough WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There being NO further OBJECTION, AMENDMENT 1 was ADOPTED                                                                       
                                                                                                                                
9:44:38 AM                                                                                                                    
                                                                                                                                
Ms. Armstrong  explained  the six new  fiscal notes  attached                                                                   
to  the bill.  She relayed  that  the first  fiscal note  for                                                                   
Department  of Commerce, Community  and Economic  Development                                                                   
(DCCED)  appropriated  to  the   Alaska  Gasline  Development                                                                   
Corporation  in  the amount  of  $4,058.3  for FY  2015.  The                                                                   
fiscal  note  reflected   a  fund  source  change   from  CIP                                                                   
(capital improvement  projects) receipts  to the  new Instate                                                                   
Natural  Gas Pipeline  Fund  created  in the  legislation  on                                                                   
page 14, lines  16 through 25. She pointed to  the new fiscal                                                                   
note from  the Department  of Law  (DOL) appropriated  to the                                                                   
Civil Division  in the amount  of $102.3  in FY 2014  for one                                                                   
permanent full-time  position. She turned to the  fiscal note                                                                   
for the  Department of  Transportation and Public  Facilities                                                                   
(DOT) appropriated  to Design,  Engineering and  Construction                                                                   
in the amount of $711.8 in FY  2014 for three permanent full-                                                                   
time  positions.  She  moved  to  the  fiscal  note  for  the                                                                   
Department of  Environmental Conservation (DEC)  appropriated                                                                   
to Environmental Health  in the amount of $54.6  for FY 2014.                                                                   
She  cited  the  fiscal  note for  DEC  appropriated  to  the                                                                   
Division of  Water in the  amount of  $236.2 for FY  2014 for                                                                   
two permanent  full-time positions. The last  fiscal note was                                                                   
for  a  Fund Capitalization  into  the  Instate  Natural  Gas                                                                   
Pipeline fund for the amount of $330,000.0.                                                                                     
                                                                                                                                
9:48:19 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:50:31 AM                                                                                                                    
RECONVENED                                                                                                                      
Ms. Armstrong  directed attention to  the analysis on  page 2                                                                   
of the  DCCED fiscal note. She  explained that the  total for                                                                   
all  departments  in  FY 2014  was  $5.163.2  with  increases                                                                   
projected in  the out years.  She alerted the  committee that                                                                   
the increases will appear in future budgets.                                                                                    
                                                                                                                                
Senator Hoffman  wondered why the capitalization  of the fund                                                                   
was  not  included in  the  total  on  the fiscal  note.  Ms.                                                                   
Armstrong  replied  that  the  fund  capitalization  was  not                                                                   
considered an operating budget expense.                                                                                         
                                                                                                                                
Senator Hoffman  understood that  fund capitalization  was an                                                                   
expenditure.                                                                                                                    
                                                                                                                                
DAVID   TEAL,   DIRECTOR,   LEGISLATIVE   FINANCE   DIVISION,                                                                   
confirmed that  the fund  capitalization was an  expenditure.                                                                   
He added  that the  fiscal note  reflected the  appropriation                                                                   
that capitalized the fund.                                                                                                      
                                                                                                                                
9:54:11 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:55:02 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Meyer announced  that DCCED wanted  to add  another                                                                   
fiscal note.                                                                                                                    
                                                                                                                                
JO  ELLEN  HANRAHAN,  DIRECTOR,  DIVISION  OF  ADMINISTRATIVE                                                                   
SERVICES,  DEPARTMENT  OF COMMERCE,  COMMUNITY  AND  ECONOMIC                                                                   
DEVELOPMENT, explained  that AGDC  was not exempted  from the                                                                   
Executive Budget  Act in  the current version  of the  CS. As                                                                   
part of DCCED and included in  the Executive Budget Act, AGDC                                                                   
must participate  in the cost  allocation plan  stipulated in                                                                   
the  law. The  corporation needed  the authority  to pay  the                                                                   
costs to  the department. The  new fiscal note  would include                                                                   
the increased costs for AGDC.                                                                                                   
                                                                                                                                
Co-Chair  Meyer inquired  how much the  fiscal note  increase                                                                   
was.   Ms.   Hanrahan   replied   that   the   increase   was                                                                   
approximately $120 thousand.                                                                                                    
                                                                                                                                
Co-Chair  Meyer   inquired  whether  the  amount   should  be                                                                   
included.  Mr. Teal  responded  that  the issue  was  whether                                                                   
DCCED  needed to  add new  staff.  He offered  that if  DCCED                                                                   
could  handle the  transfer of  AGDC to  the department  with                                                                   
existing  staff the  fiscal note  would  be a  net zero.  The                                                                   
department  would charge  AGDC $120 thousand  and reduce  the                                                                   
collections  from other divisions  and agencies.  Technically                                                                   
a fiscal  note was  not necessary to  collect the  funds from                                                                   
AGDC.                                                                                                                           
                                                                                                                                
Ms.  Hanrahan agreed  that a  fiscal note  was not  necessary                                                                   
but AGDC needed the authority to pay the funds to DCCED.                                                                        
                                                                                                                                
Mr.  Teal commented  that  any  charges AGDC  had  to pay  in                                                                   
interagency   receipts  would  come   out  of  its   existing                                                                   
appropriation.  He advised that  AGDC report, for  the record                                                                   
the  amount  AGDC had  to  pay  to DCCED  for  administrative                                                                   
services and clarify what services they would receive.                                                                          
                                                                                                                                
FRANK  RICHARDS,  ALASKA  GASLINE   DEVELOPMENT  CORPORATION,                                                                   
stated  that the  expectation was  that AGDC  would not  have                                                                   
any  administrative  expenses   under  DCCED;  therefore  the                                                                   
corporation  was exempted  from the Executive  Budget  Act in                                                                   
previous versions  of the bill.  Without the exemption,  AGDC                                                                   
incurred  the   $120  thousand  administrative   expense  for                                                                   
annual  budget  preparation  that  was not  included  in  the                                                                   
original calculation.                                                                                                           
                                                                                                                                
Co-Chair Meyer did  not believe that another  fiscal note was                                                                   
needed.  Mr.  Richards  answered  that the  amount  would  be                                                                   
deducted from the fund capitalization money.                                                                                    
                                                                                                                                
Ms. Hanrahan concurred with the comments from Mr. Richards.                                                                     
                                                                                                                                
Senator Hoffman  cited the $330,000  as an expenditure  in FY                                                                   
2014  to point  out  the expenditure's  inclusion  in the  FY                                                                   
2014 spending  plan. He felt  that the $5.163.2  amount cited                                                                   
earlier, which did  not include the $330,000  was misleading.                                                                   
He  supported   the  bill  but   wanted  clarity   about  the                                                                   
expenditure.                                                                                                                    
                                                                                                                                
Co-Chair Meyer  appreciated the  comments of Senator  Hoffman                                                                   
and  remarked that  the funds  were  being appropriated  from                                                                   
the  Alaska  Housing  [Alaska  Housing  Capital  Corporation]                                                                   
fund established in  2008. The purpose of the fund  was for a                                                                   
gas pipeline  or other  capital items.  He believed  the fund                                                                   
source was an "excellent" choice.                                                                                               
                                                                                                                                
Senator  Hoffman  wanted  assurance that  any  further  "and"                                                                   
"or"  errors would  be  corrected  while drafting  the  final                                                                   
version  of  the CS.  Ms.  Armstrong  replied that  she  sent                                                                   
instructions   to  the   legal   drafters   to  correct   any                                                                   
additional errors.                                                                                                              
                                                                                                                                
Senator   Olson  requested   an  explanation   of  what   the                                                                   
amendment actually  accomplished. Ms. Armstrong  related that                                                                   
the  references  deleted  "or"  and added  "and"  on  page  8                                                                   
before  the   words,  "other  transportation   mechanisms  to                                                                   
deliver natural gas to communities in the state."                                                                               
                                                                                                                                
Vice-Chair Fairclough  MOVED to  REPORT SCSCSSSHB  4(FIN) out                                                                   
of  committee   with  individual   recommendations   and  the                                                                   
accompanying fiscal  notes. There being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SCSCSSSHB  4(FIN) was REPORTED  out of  committee with  a "do                                                                   
pass" recommendation  and with a new fiscal  impact note from                                                                   
the   Senate  Finance   Committee  for   the  Department   of                                                                   
Commerce, Community  and Economic  Development, a  new fiscal                                                                   
impact  note from  the Senate  Finance Committee  for a  Fund                                                                   
Capitalization,  a new  fiscal  impact note  from the  Senate                                                                   
Finance  Committee   for  the  Department   of  Environmental                                                                   
Conservation,  a  new  fiscal  impact note  from  the  Senate                                                                   
Finance  Committee   for  the  Department   of  Environmental                                                                   
Conservation,  a  new  fiscal  impact note  from  the  Senate                                                                   
Finance Committee  for the  Department of Transportation  and                                                                   
Public  Facilities, and  a new  fiscal impact  note from  the                                                                   
Senate Finance Committee for the Department of Law.                                                                             
                                                                                                                                
10:05:01 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:16:27 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
10:17:16 AM                                                                                                                   
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:17 a.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
HB 4 SCS for CS for SS HB 4 work draft version T.pdf SFIN 4/11/2013 9:00:00 AM
HB 4
HB 4 summary of changes senate finance.pdf SFIN 4/11/2013 9:00:00 AM
HB 4
HB 4 Amendment 1 Meyer.pdf SFIN 4/11/2013 9:00:00 AM
HB 4
HB 4 Opposition Letter - Roberts.pdf SFIN 4/11/2013 9:00:00 AM
HB 4