Legislature(2005 - 2006)BUTROVICH 205

04/27/2006 08:30 AM JUDICIARY

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Scheduled But Not Heard
Scheduled But Not Heard
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
          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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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.                                                                                       

Document Name Date/Time Subjects