Legislature(2005 - 2006)BUTROVICH 205
04/27/2006 08:30 AM JUDICIARY
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SB 316-COURT REVIEW OF STRANDED GAS DECISION 9:39:30 AM CHAIR SEEKINS announced SB 316 to be up for consideration. Senator Charlie Huggins joined the meeting. CHAIR SEEKINS reminded the committee that the previous day he had asked the drafter to conform the language between Section .310 of the SGDA and Section .435 of the bill. He asked Mr. Ostrovsky whether he had a chance to look at the committee substitute (CS) entitled 24-LS1842\I. LARRY OSTROVSKY said he thought that .435(2) ought to look like .410(2) and clarify the information that needs to stay confidential. 9:41:49 AM [The committee studied the existing law together CHAIR SEEKINS said his intent was to get the same language in .410(2) transferred over to .435(b)(1) so they would conform to each other. SENATOR FRENCH explained then (b)(1) would read, "submit to the Legislature the commissioner's final findings and determination and, to the extent the information is not required to be kept confidential under AS 43.82.310, the supporting financial, technical, and market data, including work papers, analyses, and recommendation s of any independent contractors used, etcetera." 9:44:23 AM CHAIR SEEKINS said the CS did not reflect what he wanted to relay and that the committee would continue to work off version Y. SENATOR GUESS explained her proposed amendment that she referred to as Y.2. The amendment would allow for the preliminary and final findings to have the same language. Also "fiscal interest" is implied but inconsistent throughout the statute. CHAIR SEEKINS said he didn't think the contract could be provided to the Legislature with any proposed amendments. There is an impasse unless the contract absolutely meets the requirements of the Chapter. SENATOR GUESS said she didn't see the difference. For example, one of the purposes of the Stranded Gas [Development] Act is a new investment without altering the taxes and royalties in the current gas infrastructure and production. 9:50:06 AM SENATOR FRENCH noted the committee was discussing the mismatch between current law and the contract that is being developed right now. He reminded the committee that the governor has the authority inherent in his position to release the contract no matter what. CHAIR SEEKINS said he would like to see everything spelled out and in the open. He would like to see the contract and its agreements as well as what exactly needs to be changed in current law to get the contract moving. SENATOR FRENCH said he thought the committee was in agreement on that point. It would have been a better process to amend the Stranded Gas Development Act before negotiating a contract. CHAIR SEEKINS stated the public should know why the contract doesn't meet the requirements. 9:52:58 AM at ease 9:53:25 AM CHAIR SEEKINS reiterated his earlier comment that he wants the entire contract process to be "out in the light of day." SENATOR FRENCH said it was up to the committee to decide what language the governor would have to overcome in order to finalize a contract. SENATOR GUESS said the question might be on the preliminary findings and whether the contract meets the requirements of the Chapter and that language probably shouldn't be in the final findings. It seems like there may be a role in the preliminary findings given the current timing. SENATOR FRENCH agreed and said the preliminary findings are as to "whether" the contract meets the requirements and the final probably shouldn't even though the Legislature would be considering the contract after the SGDA was amended. 9:56:57 AM CHAIR SEEKINS opined there have always been two findings contained in the final findings. One is an absolute finding in 430(b) that the contract is in the long-term financial interest of the state. The other finding is in .410(a)(3), which is as to whether the proposed contract and any proposed amendments meet the requirements and purposes of the Chapter. In the past that was executed by the administration. Now there is a further approval on the part of the Legislature and they must be careful to specify that the Legislature can't consider a proposed contract until it meets those two provisions. SENATOR GUESS argued that .430(b) was not a "final finding or determination." That's a commissioner determination, not an agency decision, she noted. 10:01:45 AM MR. OSTROVSKY responded the change in .400 reflects the process in terms of the amendments. In terms of changes in .430(a)(3), the "as to whether" is preferable language partly due to the issues of effective date. He speculated that the amendments to the SGDA might not be effective until another 90 days. SENATOR GUESS said the final findings should not be wishy-washy. They should meet the requirements of the Chapter and comply with the Act. She asked specifically what it would be that people would take to court in a challenge. CHAIR SEEKINS said the constitutional issue that remains is whether or not the contract meets the requirements of the Chapter. 10:05:09 AM SENATOR GUESS said she would question again the reason for the Stranded Gas Development Act and said that question was the "Elephant in the Room." The other issue is a law review of 393 that asks whether the Legislature could approve the Act or not. If someone takes that to court and the court finds that because of "separation of powers" then the Legislature does not have the authority to approve or disapprove an Act. That is why final findings and determination should be kept whole in the bill. 10:07:12 AM SENATOR THERRIAULT asked Chair Seekins whether it was his opinion that the bill still leaves a snag in the system. CHAIR SEEKINS said it leaves it open to one possibility and that is that unless the contract absolutely complies with the Act it would be improper to forward it to the Legislature for consideration. SENATOR THERRIAULT reminded the committee that the Act was pending a handful of amendments. 10:10:38 AM SENATOR GUESS responded that the debate brings the committee back to her question of why even have the Stranded Gas [Development] Act. If the Act is going to see more than 20 offered amendments and the Legislature only approves 10 of them, the contract reflects the 20 amendments and so she questioned the reason for wasting the public's time if there is not going to be a requirement that the contract meet the Act. CHAIR SEEKINS asked if the committee was in agreement of the conceptual proposed language to the amendment Y.2. 10:13:03 AM SENATOR FRENCH reread the language. CHAIR SEEKINS asked Mr. Ostrovsky to comment. MR. OSTROVSKY said that language reflects the fact that the commissioner would say if the proposed contract doesn't line up. CHAIR SEEKINS said he would have the conceptual amendment drafted up. He indicated he would also have the drafter work on his proposed amendment of the previous day, which did not come out right. He advised Senator Guess that the committee would no longer need to consider her amendment in regards to .430(b). SENATOR GUESS said .430 (b) addresses when the commissioner gives the contract to the governor. It does not address the long-term fiscal interest because that is not in the final determination. 10:16:42 AM MR. OSTROVSKY responded the language might be somewhat ambiguous but the final findings support the conclusion that the contract is in the long-term fiscal interest of the state. Even though the statute separates them, for all practical purposes they are linked. CHAIR SEEKINS asked Mr. Ostrovsky whether there was any reason not to add "and findings and determination that the proposed contract is in the long-term fiscal interest of the state" to page 4 paragraph 3. MR. OSTROVSKY said that could be done. 10:19:21 AM CHAIR SEEKINS referred to the content on determination and findings regarding requirements and purposes of the Chapter. He asked the committee whether they wanted to amend that part. SENATOR GUESS said she was leaning towards clarity. She questioned the reason a contract would be forwarded if it didn't align with the statute. MR. OSTROVSKY interjected that would raise a potential timing issue. SENATOR GUESS questioned why. The issue is whether or not the contract is in alignment with the statute. 10:21:27 AM MR. OSTROVSKY replied the timing issue is an effective date issue. With that change it would say the contract meets the requirements and purposes of the Chapter. If the legislature changed the requirements of the chapter but it wasn't effective at the time the commissioner submitted the final findings it still wouldn't necessarily line up. CHAIR SEEKINS said the bill could pass with an immediate effective date. MR. OSTROVSKY agreed that if that were to occur it would negate the timing issue. SENATOR FRENCH referred to his proposed amendment titled Y.1 and spoke to it. He said it would maintain all the substantive rights for the public to bring forth a challenge. Senator Therriault brought up a good point in respect to the constitutionality of the Legislature's authorization of the contract. He speculated that there could be a real issue with that in regards to a violation of the separation of powers and whether or not the Legislature's review of the contract would be intruding on an executive function. If such legal argument were successfully made then the final finding of the commissioner of revenue would be the end of the contract negotiation process and would be the default place that a person would bring about a challenge. 10:26:33 AM CHAIR SEEKINS stated that was a good point. Most importantly the committee has preserved the challenge on a constitutional issue and limited the time that it can be brought forth. 10:27:59 AM SENATOR GUESS explained the reason she was confused is because she believed that the committee was trying to deal with protecting a person's right to challenge a contract but without affecting or creating a timing issue. CHAIR SEEKINS advised the committee that he was going to draw up a CS for members to consider at the next bill hearing. SENATOR THERRIAULT informed members of an amendment that he was prepared to introduce that would extend the public comment period to 90 days. 10:32:27 AM CHAIR SEEKINS held the bill in committee.