Legislature(2009 - 2010)BUTROVICH 205

03/22/2010 03:30 PM RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 287(RES) Out of Committee
Scheduled But Not Heard
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSSB 228(RES) Out of Committee
                  SB 287-IN-STATE GAS PIPELINE                                                                              
4:16:28 PM                                                                                                                    
CO-CHAIR MCGUIRE announced SB 287 to be up for consideration.                                                                   
MIKE PAWLOWSKI, aide to Senator  McGuire, sponsor of SB 287, said                                                               
that the committee substitute (CS) 26-LS1467\E was before them.                                                                 
He  explained there  were some  minor  changes to  bill and  some                                                               
fairly  substantive ones,  as  well.   The  first  change was  to                                                               
section 1 -  the purpose and findings section.  Changes were made                                                               
to the language  in some cases to dial back  some of the findings                                                               
to more reasonable levels and some  were taken out to address how                                                               
the bill  and process envisioned  in the bill would  move forward                                                               
with the  changed effective date.  In particular, he said  he was                                                               
referring  to the  transfer language  from the  administration to                                                               
the ARRC.  The original  bill had a  transfer of  authority. With                                                               
the movement  to an  effective date  of July 1,  the bill  is now                                                               
more of an authorization rather  than a transfer. It acknowledges                                                               
that the work under the  administration is continuing and will be                                                               
transferred to the  ARRC as it becomes authorized  to conduct and                                                               
move an instate gas pipeline forward.                                                                                           
4:18:35 PM                                                                                                                    
The  changes in  section 2  (page3,  lines 19-20)  were added  to                                                               
recognize that  there may  be other  sources of  gas. On  page 4,                                                               
line  1, the  compatible  but not  competitive projects  language                                                               
added the  AGIA project  in AS  43.90. In  section 4  the primary                                                               
change  was on  page 4,  lines  4-5, where  (b)(1) establishes  a                                                               
subsidiary corporation for the ARRC.  Also in section 4, lines 6-                                                               
7, the word "acquisition" was used  twice and this was a clerical                                                               
cleanup that  "authorization" seemed  to be the  more appropriate                                                               
The  final substantive  change was  to page  4, lines  20-31, and                                                               
page  5,  lines  1-13  in the  previous  version  where  language                                                               
covered the  right-of-way issue. They worked  with the Department                                                               
of Law (DOL) on  new language that is on page 4,  lines 21 - page                                                               
5, line  6, that changes  the way the right-of-way  gets granted.                                                               
Originally the  land, itself,  was transferred  to the  ARRC; the                                                               
concept is the  actual land transfer was  unnecessary and created                                                               
some  cumbersome  management  issues  in the  event  the  project                                                               
wasn't  built.  Sticking  with a  more  traditional  right-of-way                                                               
transfer made more sense for the project.                                                                                       
MR. PAWLOWSKI said  section 5 had relatively minor  changes up to                                                               
the  final ones  on  page  6, lines  16-17.  SB  287 envisions  a                                                               
process  for cancelling  the project  and  it seemed  appropriate                                                               
given that there are other  efforts going on that language needed                                                               
to  be  included  that  other  circumstances  could  warrant  the                                                               
termination of this project.                                                                                                    
4:21:42 PM                                                                                                                    
Finally, on page 6, lines 18-19,  he said the manner in which the                                                               
legislature would  express terminating  the project  was designed                                                               
as  a   concurrent  resolution.  In  the   original  version  the                                                               
requirement was for  the legislature to express  that the project                                                               
should  be terminated.  The  question was  how  it would  express                                                               
that. He  also mentioned  a drafting  error on  page 6,  line 20,                                                               
where the words "immediately under"  were supposed to be deleted.                                                               
Legislative Legal  apologized for  the error.  It would  say this                                                               
act takes effect July 1, 2010.                                                                                                  
CO-CHAIR  WIELECHOWSKI moved  conceptual Amendment  1 on  page 6,                                                               
line 20, to delete "immediately  under". There were no objections                                                               
and it was so ordered.                                                                                                          
4:23:16 PM                                                                                                                    
SENATOR FRENCH asked for an explanation of the new fiscal note.                                                                 
MR. PAWLOWSKI said the ARRC could address that.                                                                                 
4:24:09 PM                                                                                                                    
SENATOR STEDMAN suggested  focusing more on page  3, lines 29-31,                                                               
that  deals  with compatible  but  not  competitive projects.  He                                                               
thought that  ANGDA was already set  up to do that  sort of thing                                                               
and that  the legislature should  have a policy  discussion about                                                               
alleviating  ANGDA  of  its  duties   and  heading  down  another                                                               
direction. Otherwise the state would  continue having a fractured                                                               
approach to the solution of getting gas.                                                                                        
CO-CHAIR MCGUIRE  said that was a  great point and she  said that                                                               
his committee could  look at it more broadly.  She explained that                                                               
this weekend  they broke  out all  the pieces  that needed  to be                                                               
considered; one of the pieces  was an evaluation of the financing                                                               
and which  entities are in place  to bond and which  entities may                                                               
or may not wish to bond.                                                                                                        
4:26:21 PM                                                                                                                    
MR.  PAWLOWSKI  said  one  of  the concepts  in  talking  to  the                                                               
administration and  working through  the issue internally  is the                                                               
separation between  a pipeline and  a shipper. In that  ANGDA was                                                               
working on aggregating demand through  the Natural Gas Co-op, the                                                               
idea  was separating  them out  as part  of a  commercial working                                                               
group that  might purchase gas or  might be a shipper  of gas and                                                               
the  effort around  the pipe.  If they  are co-mingled  too much,                                                               
that might raise issues with  RCA about preferential treatment of                                                               
CO-CHAIR MCGUIRE  said it is their  goal and it is  a position of                                                               
distinction  between  Speaker  Chenault  and her  that  the  ARRC                                                               
should be  the one looking  at the building part.  This shouldn't                                                               
be competitive, but  rather be compatible, with  the efforts that                                                               
ANGDA  is  currently  undertaking  and  would  undertake  in  the                                                               
expansion of  the HB 44 to  look at gas supply  and other things.                                                               
She said she was amenable to clearer language.                                                                                  
4:27:54 PM                                                                                                                    
SENATOR HUGGINS  said ANGDA had done  a lot of work  on propanes,                                                               
infrastructure   and   distribution   items,  which   is   hugely                                                               
important. In a  larger sense, he anticipated that  this bill and                                                               
HB 44 would go through a metamorphosis and amalgamation.                                                                        
SENATOR  STEDMAN said  not really;  the issue  is that  he agreed                                                               
with the direction, but they  should close some doors behind them                                                               
instead  of  coming  up  with more  options.  Ignoring  ANGDA  is                                                               
politically  easier  to  do,  but  that doesn't  get  them  to  a                                                               
solution any easier.                                                                                                            
CO-CHAIR MCGUIRE  said that is the  point of making the  ARRC the                                                               
exclusive agency for  housing the work that has been  done so far                                                               
as well as  continuing acquisition of rights-of-way  and data. Do                                                               
they want to eliminate any reference  to ANGDA, page 3, lines 29-                                                               
31? She said this was her  early attempt to send a friendly olive                                                               
branch  to other  body, to  let  them know  they thought  perhaps                                                               
there was  a role  for ANGDA but  in a different  place -  not as                                                               
builder  or assessor  of planning,  permits  and coordination  of                                                               
building, but perhaps on the supply side.                                                                                       
SENATOR  HUGGINS said  he  assumed the  ARRC  would organize  the                                                               
CO-CHAIR MCGUIRE said she thought Senator Stedman was right.                                                                    
4:33:16 PM                                                                                                                    
RALPH SAMUELS,  Fairbanks resident,  said he thought  the instate                                                               
line would  get gas  to Alaskans first  and provide  the economic                                                               
growth  for  jobs. The  Parks  Highway,  the  last big  piece  of                                                               
infrastructure  to be  built  in Alaska,  would  have never  been                                                               
built if they had charged a  toll. If it gets built everybody can                                                               
tap off of it; things can develop  from there. This is a piece of                                                               
infrastructure that is appropriate for the state to build.                                                                      
He  stated that  shale gas  has changed  the world  fundamentally                                                               
now.  More  than  anything  else   Alaskans  need  to  invest  in                                                               
themselves and  move forward with  the bullet line. It's  the one                                                               
thing we  can have complete  control over. You don't  need export                                                               
licenses, AGIA, Denali,  or the Canadians. A small  leap of faith                                                               
is needed that  private sector investors would jump  in with some                                                               
of the  mining and  the LNG plant  - but he  was willing  to take                                                               
that leap of faith.                                                                                                             
4:36:12 PM                                                                                                                    
JOHN BINKLEY,  Chairman, Alaska Railroad  Board (ARRC),  said the                                                               
success of the  Railroad has not been dependent on  one person or                                                               
one boards of  the years. They all help in  making it successful.                                                               
But  the  real  success  has   been  in  the  brilliance  of  the                                                               
legislative  body when  they enacted  the statutes  that set  the                                                               
framework for the  ARRC 25 years ago. It took  an entity that has                                                               
a  very  public  purpose  in  serving  the  economic  development                                                               
aspects of Alaska, but doing it in  a manner that is based on the                                                               
principals  of  the  private  sector.  When  the  ARRC  looks  at                                                               
projects, it looks at the benefit  to the public, but in a manner                                                               
that  is dependent  on serving  their customers  and producing  a                                                               
profit to their bottom line.                                                                                                    
The Railroad  has a very  unique bonding authority under  the IRS                                                               
code  that allows  a  public  entity to  partner  with a  private                                                               
entity to sell tax free bonds  for a project. It was specifically                                                               
written into federal law that  the ARRC retain that ability while                                                               
it  was taken  away  from other  entities. It  gives  an edge  to                                                               
projects by reducing the capital costs.                                                                                         
He explained  that the  third aspect  of the  Railroad is  in the                                                               
structure  of its  board of  directors. It  is made  up of  seven                                                               
members:  two  are  commissioners  of the  Alaska  Department  of                                                               
Transportation  and  Public  Facilities (DOTPF)  and  the  Alaska                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED).   The  other   members   are  one   from  labor,   three                                                               
representing each  of the judiciary  districts the  Railroad runs                                                               
through from  Seward to North Pole  and Eielson, the fourth  is a                                                               
private sector  person at large. This  is an entity that  is well                                                               
suited for the  task outlined for the Alaska  Railroad. The board                                                               
has  not discussed  this  as  a policy  matter,  but  he has  had                                                               
discussions  with individual  board  members. They  will meet  on                                                               
Thursday to  discuss this specifically  along with bringing  on a                                                               
new president and CEO.                                                                                                          
4:45:02 PM                                                                                                                    
SENATOR FRENCH  asked his  view of  the ARRC's  relationship with                                                               
MR.  BINKLEY  said  his  opinion  is that  ANGDA  has  played  an                                                               
important role  on this project to  this point. They have  done a                                                               
tremendous job alone on moving  propane ahead that will share the                                                               
benefits  of this  resource beyond  just the  gas line  grid from                                                               
Prudhoe Bay to  Homer to other areas of the  state. It's critical                                                               
that that  happen; ANGDA has a  critical role to play  in that as                                                               
well as other areas.                                                                                                            
SENATOR STEDMAN  said some people  are concerned that we  are not                                                               
moving  forward and  there  are  too many  captains  on too  many                                                               
ships.  He asked  him to  explain the  Railroad's unique  bonding                                                               
MR. BINKLEY  said it  is similar  to the  building of  the Valdez                                                               
tank  farm during  the construction  of the  TransAlaska Pipeline                                                               
(TAPS)  when  the  City  of Valdez  did  wrap-around  bonds.  The                                                               
recourse of the bond went back  to the owners of the TAPS project                                                               
and the  terminal facility  in Valdez. It  allowed Valdez  to use                                                               
the tax  free bonds to provide  a lower rate of  interest for the                                                               
project funding.                                                                                                                
CO-CHAIR WIELECHOWSKI  asked how  confident he  was that  the IRS                                                               
would allow issuance of these bonds.                                                                                            
MR. BINKLEY  answered that you could  not be 100 percent  sure of                                                               
that, but  it is clear in  statute. Their analysis shows  that it                                                               
is viable and it is codified in IRS law.                                                                                        
CO-CHAIR WIELECHOWSKI said the voters  voted to enact ANGDA years                                                               
ago to  design and  construct a pipeline  that would  bring North                                                               
Slope  gas to  market. Which  one is  the best  agency, ANGDA  or                                                               
4:50:37 PM                                                                                                                    
MR. BINKLEY replied  that it is ultimately a policy  call for the                                                               
legislature, but the  ARRC is well-suited for  large projects. He                                                               
wasn't so sure about ANGDA, although  it has had a very important                                                               
role in bringing  projects to the point that they  are. He didn't                                                               
know  their  competencies  in   terms  of  actually  constructing                                                               
facilities or engaging in large scale projects.                                                                                 
SENATOR WAGONER said 63 percent of  the people voted for ANGDA to                                                               
do what  they are talking about;  the problem is every  time they                                                               
turn  around,  the  legislature   picks  another  approach  to  a                                                               
pipeline. Two years  ago Enstar came to his office  and said they                                                               
wanted to  build the pipeline,  and all  they wanted was  for the                                                               
state to help them in the  permitting process. Now this thing has                                                               
morphed back into the state  building the pipeline. He understood                                                               
the bonding capacity of the  Railroad, but maybe everybody should                                                               
make up  their mind  once and  for all that  AGIA is  the state's                                                               
chosen entity.  Every time they  get a  head of steam  going, the                                                               
legislature jerks  the money out  from under them and  they don't                                                               
have enough  money to do their  job and they give  it to somebody                                                               
else. They should back ANGDA and  maybe bring the ARRC in for its                                                               
bonding capacity and get the  people who know about gas pipelines                                                               
in charge of the project.                                                                                                       
Another point Senator Wagoner made  is that everybody talks about                                                               
fast-tracking this pipeline,  but if one molecule  is destined to                                                               
go out  of state,  this pipeline  has to  go through  exactly the                                                               
same  process as  the  big line.  He wanted  a  timeline on  this                                                               
project, open season, FERC, the whole works.                                                                                    
4:55:16 PM                                                                                                                    
CO-CHAIR MCGUIRE  responded that  the Railroad isn't  being asked                                                               
to build  the gas pipeline.  They are trying  to find a  place to                                                               
house the good  work that Harry Noah started and  Mr. Swenson has                                                               
continued towards an instate pipeline  should AGIA fail. She said                                                               
the  intensity started  for her  when AGIA  passed. Many  thought                                                               
giving the  governor tools to get  a gasline was the  right thing                                                               
to do. Many were shocked when  it came back with a single bidder.                                                               
Some people felt that it was a sole source contract.                                                                            
The real concern  started from a group in the  Instate Gas Caucus                                                               
about the 500  mcf/d limit and realizing that was  a "sweet spot"                                                               
that people didn't want to give  up. That is when the $10 million                                                               
amendment was  put in to instate  efforts as well -  because that                                                               
is important.  Harry Noah  was appointed and  his team  did great                                                               
work.  The  Railroad is  the  only  quasi-public entity  that  is                                                               
building things  in the  state. She  liked the  fact that  it's a                                                               
private corporation bringing buyers and sellers together.                                                                       
SENATOR HUGGINS said the governor  had signed on with her concept                                                               
of  the Railroad.  He also  pointed out  that not  only does  the                                                               
Railroad  have good  people  it  will have  a  lot  to gain  from                                                               
transporting construction materials and fuel.                                                                                   
5:01:08 PM                                                                                                                    
SENATOR WAGONER  said there  was more than  one applicant  in the                                                               
AGIA process.  As a matter  of fact, many were  disappointed that                                                               
one other did not show up and make an application.                                                                              
CO-CHAIR  WIELECHOWSKI said  he  thought the  legislature had  to                                                               
come to  a conclusion in  this issue  this session. He  had heard                                                               
that  another  organization  that  was  looking  at  building  an                                                               
instate pipeline has  said they are no  longer interested because                                                               
of uncertainty  about whether  or not  the state  is going  to be                                                               
MR. BINKLEY concurred with his comments.                                                                                        
5:03:34 PM                                                                                                                    
PAUL  METZ,  Director,   Mineral  Industry  Research  Laboratory,                                                               
University  of  Alaska,  Fairbanks,  Alaska,  said  his  previous                                                               
presentation on SB 228 incorporated  his comments with respect to                                                               
the  instate gas  line.  He  said he  would  be  happy to  answer                                                               
SENATOR FRENCH moved Amendment 2, labeled E.1.                                                                                  
                          AMENDMENT 2                                                                                       
     OFFERED IN THE SENATE                                                                                                      
     TO:  CSSB 287(RES), Draft Version "E"                                                                                      
     Page 4, line 13, following "work;":                                                                                        
          Delete "and"                                                                                                          
     Page 4, line 17, following "gas":                                                                                          
          Insert "; and                                                                                                         
               (6)       commit    to   negotiate,    before                                                                    
     construction  of  the   natural  gas  pipeline  project                                                                    
     begins,  a  project  labor  agreement  to  the  maximum                                                                    
     extent permitted by law;  if the corporation determines                                                                    
     that  the  natural  gas  pipeline   project  is  to  be                                                                    
     constructed by a  private pipeline construction company                                                                    
     or  companies, the  corporation  shall incorporate  the                                                                    
     requirements  of this  paragraph into  its construction                                                                    
     contract agreement  as a binding  commitment applicable                                                                    
     to  the corporation's  contractors; in  this paragraph,                                                                    
     "project   labor  agreement"   means  a   comprehensive                                                                    
     collective    bargaining    agreement    between    the                                                                    
     corporation or, if construction  is to be undertaken by                                                                    
     one  or more  private pipeline  construction companies,                                                                    
     the  corporation's contractor  or  contractors and  the                                                                    
     appropriate labor  representatives to  ensure expedited                                                                    
     construction with  labor stability for the  natural gas                                                                    
     pipeline project by qualified residents of the state"                                                                      
CO-CHAIR MCGUIRE  objected for discussion purposes.  She said the                                                               
issue of project  labor agreements (PLA) is  very important. They                                                               
have meetings today  with people who have strong  views about it,                                                               
and she hoped this debate  could continue upstairs in the Finance                                                               
5:05:47 PM                                                                                                                    
TIM  SHARP,   Business  Manager,   Alaska  District   Council  of                                                               
Laborers,  supported Amendment  2 that  requires a  project labor                                                               
agreement.  It would  make  sure  Alaskans get  the  jobs on  the                                                               
proposed bullet line.  Most projects of this size  in Alaska have                                                               
had project  labor agreements;  it's not  new ground.  Most state                                                               
leadership has  recognized the need for  project labor agreements                                                               
on  projects. These  agreements will  make certain  that Alaskans                                                               
are trained and hired for the jobs first and laid off last.                                                                     
He said that  Commissioner Click Bishop, Department  of Labor and                                                               
Workforce Development  (DOLWD), prepared a report  on Alaska hire                                                               
that  indicated  without  project  labor  agreements  things  are                                                               
continually getting  worse in the  oil fields and not  better. It                                                               
also means  that real apprenticeship programs  with track records                                                               
of creating  jobs and careers  for Alaskans will be  put strongly                                                               
into  play.   PLAs  also  contractually  insure   Alaskan  Native                                                               
participation in the project.                                                                                                   
MR. SHARP said  they strongly support energy  and gas development                                                               
in the  state, but at  the end of the  day, while the  project is                                                               
being built  a PLA means  the money  will stay in  Alaska because                                                               
Alaskan participation is enforceable.                                                                                           
5:08:35 PM                                                                                                                    
MIKE  LITTLEFIELD, Teamsters  Local  959,  supported Mr.  Sharp's                                                               
comments about project labor agreements.  He said "We want to see                                                               
Alaskans working on an Alaskan project."                                                                                        
5:09:06 PM                                                                                                                    
VINCE  BALTRAMI, President,  Alaska AFL-CIO,  supported Amendment                                                               
2. He agreed  with Mr. Sharp's comments saying there  are tons of                                                               
documentation that  show PLAs are  good business  decisions, they                                                               
determine predictability  and planning  construction, scheduling,                                                               
labor needs  and safety  programs. Both AGIA  and ANGDA  have PLA                                                               
requirements.   The  Building Trades  Council has  negotiated and                                                               
worked under  dozens of PLAs  over the  years; one of  the recent                                                               
big ones  was a  ground-based missile  defense project  in Shemya                                                               
and Delta  Junction. The management  of those  prime contractors,                                                               
LaFleur and  Bechtel, raved about  how well  the PLA worked  on a                                                               
real large  project. It  put over  1000 people  to work,  over 90                                                               
percent  Alaska  hire, 12  percent  Alaska  Native hire,  and  17                                                               
percent  minority  hire -  all  the  while training  hundreds  of                                                               
apprentices who  are now  working as  journeymen in  their chosen                                                               
fields, and  without a hitch that  job has been done  on time and                                                               
under budget.                                                                                                                   
MR. BALTRAMI said  one thing they do know us  that the workers on                                                               
this  project  will  be  heavy   and  highway  type  construction                                                               
workers, and 85  percent of those workers in the  state of Alaska                                                               
are  represented   by  unions;   85  percent  of   the  federally                                                               
registered  apprentices  are  actually  in  union  apprenticeship                                                               
programs. He said  while there are tons of arguments  in favor of                                                               
PLAs there  are usually only a  couple against and a  lot of them                                                               
go  back 30  years  to a  time when  complaints  were made  about                                                               
people coming up  from outside of the state.  But this generation                                                               
of  labor leaders  has made  a  significant effort  to make  sure                                                               
Alaskans will  go to  work first on  these projects  whether they                                                               
currently belong to  a union or not. Barriers  to membership have                                                               
been  knocked down  and it's  real easy  to get  non-union people                                                               
that  are interested  in going  to work  on a  project like  this                                                               
signed up, tested and ready to go,  so they are ready to have all                                                               
the rights that a resident  union would have before anybody would                                                               
be able to go out on a job  from the Lower 48. This is one of the                                                               
common myths that is  used quite a bit to bad  mouth what is seen                                                               
across  the  country  these  days   as  good  public  policy.  He                                                               
encouraged them  to look  at a  website called  Plaswork.org that                                                               
has  recent  studies  from  Michigan  State  University  and  the                                                               
University of Tennessee where experts  in the field have debunked                                                               
a lot of the myths surrounding PLAs.                                                                                            
SENATOR  WAGONER  said one  of  his  worries with  project  labor                                                               
agreements is out of state call  ups versus instate hires, and he                                                               
asked what  they can  do to  assure the workers  in the  State of                                                               
Alaska if they have a PLA that they would be called up first.                                                                   
5:14:21 PM                                                                                                                    
MR. BALTRAMI  answered that  is one of  the things  labor leaders                                                               
have  worked on  over  the  years. All  the  unions have  certain                                                               
referral  procedures for  when  people  go to  work  and in  what                                                               
order. He  remembered that out-of-state  workers used to  be able                                                               
to  come up  here  and go  to  work  if they  met  all the  other                                                               
requirements. But  now referral  procedures have changed  to make                                                               
sure that  qualified Alaskan residents  go to work  before others                                                               
from outside the state. A PLA  is the only way to legally enforce                                                               
any kind of a local hire.                                                                                                       
Another thing  Mr. Sharp mentioned  was that the trend  they have                                                               
seen  in the  commissioner's report  on resident  hire definitely                                                               
left  something to  be  desired.  It shows  that  this year  more                                                               
people are  working in the oil  fields than a year  ago, but less                                                               
Alaskans are  working there. The  logical conclusion is  that too                                                               
many people are  coming and taking jobs. A PLA  is the only legal                                                               
means they have of assuring Alaskans get hired.                                                                                 
SENATOR WAGONER said he didn't  answer his question. How can they                                                               
assure that hiring Alaskans does actually take place?                                                                           
MR. BALTRAMI answered that the  project labor agreements language                                                               
typically  contains referral  language that  is in  place in  the                                                               
local unions. He hadn't seen  the amendment, but he would support                                                               
language  stating that  the union  referral procedures  must take                                                               
local hire into consideration.                                                                                                  
5:17:53 PM                                                                                                                    
CO-CHAIR MCGUIRE  said one  of the common  push backs  on project                                                               
labor agreements  is that they  will put  more out of  staters to                                                               
work than Alaskans.                                                                                                             
5:19:07 PM                                                                                                                    
MEREK  PIERCE,  board  member,   Alaska  Gasline  Port  Authority                                                               
(AGPA), said the  one aspect of this bill that  he finds slightly                                                               
encouraging in the  66th year of pipeline  discussions (the first                                                               
gasline  study was  completed in  1954) is  the rendition  of the                                                               
basic facts  summarized in the legislative  findings and purposes                                                               
in section 1  of SB 287. Alaska does urgently  need a diversified                                                               
revenue stream  and Alaskans need affordable  energy. The problem                                                               
with  this  bill  is the  extraordinary  disconnect  between  the                                                               
findings and  the stated purpose. If  they are going to  make the                                                               
case  that we  have  a problem  -  an urgent  need  for both  new                                                               
revenue and  affordable natural  gas for  Alaskans, why  turn the                                                               
gas pipeline  over to a Railroad  that soon will not  have even a                                                               
CEO?  Why  wouldn't the  primary  responsibility  be invested  in                                                               
ANGDA,  an  organization  with  public  support,  with  both  the                                                               
institutional knowledge  and expertise, and the  strong desire to                                                               
see  the all-Alaska  gasline  and spur  line  to Southcentral  be                                                               
built? Additionally, ANGDA  is partnered with AGPA  that also has                                                               
a voter mandate  and partners who are very  interested in Alaskan                                                               
LNG both for the West Coast of  the United State as well as world                                                               
The second  problem with this  bill relates  to the first;  if we                                                               
urgently desire a gasline and expect  to move forward with a real                                                               
project after the  failed open season and the  scuttling of AGIA,                                                               
why  waste time  and effort  studying  a gasline  down the  Parks                                                               
Highway that doesn't  provide the lowest cost  gas for Alaskan's,                                                               
doesn't have  EIS, doesn't have  a right-of-way, it  doesn't even                                                               
deliver gas  to the military  bases, mines and  small communities                                                               
that need  gas? The all-Alaska gasline  as designed by YPC  has a                                                               
final  environmental impact  statement, an  established right-of-                                                               
way, economy of scale, delivers gas  to military bases and a host                                                               
of communities  along its route  that do not now  have affordable                                                               
CO-CHAIR  MCGUIRE  thanked  him  for  his  comments  and  focused                                                               
attention back to Amendment 2.                                                                                                  
5:21:27 PM                                                                                                                    
SENATOR FRENCH said  that they heard that the  last major project                                                               
in Alaska had 90 percent Alaskan hire.                                                                                          
CO-CHAIR  MCGUIRE said  she supported  project labor  agreements;                                                               
they work in general, but some folks are uncomfortable.                                                                         
A  roll call  vote was  taken: Senators  French and  Wielechowski                                                               
voted yea;  Senators Huggins, Wagoner  and McGuire voted  nay; so                                                               
the amendment failed.                                                                                                           
5:24:22 PM                                                                                                                    
SENATOR  WAGONER  moved  conceptual  Amendment 3  that  for  this                                                               
project, only, puts  the Railroad under the  Executive Budget Act                                                               
- just like ANGDA, AIDEA or  anybody else. It's important that if                                                               
the  Railroad is  going  to  be the  focal  point  on building  a                                                               
pipeline and coordinating all these  different agencies that they                                                               
should be under  the Act. That means they will  be responsible to                                                               
the legislature for the budgeting.                                                                                              
MR.  BINKLEY  responded  that  this  goes to  the  heart  of  the                                                               
brilliance of the legislation establishing  the Railroad. This is                                                               
what distinguishes the Railroad from  any other state agency, and                                                               
in his opinion, it  is what has been at the  heart of the success                                                               
of the  Alaska Railroad for the  last 25 years. Any  entity looks                                                               
to  its funding  source for  its direction;  the Alaska  Railroad                                                               
looks to its  customers and to profitability, not  to a political                                                               
body.  This is  the heart  of the  difference between  the Alaska                                                               
Railroad  and   the  Department  of  Transportation   and  Public                                                               
Facilities (DOTPF).                                                                                                             
He said this  would take away one of the  most compelling reasons                                                               
for  why the  gas  pipeline  should be  housed  within the  ARRC.                                                               
Exempting  them from  the Executive  Budget Act  means that  they                                                               
respond to their  customers instead of a political  body. That is                                                               
why they  have been  less political than  other entity  over time                                                               
and have been successful in not  relying on any state subsidy for                                                               
moving the ARRC forward. It  would be damaging for the Railroad's                                                               
ability  to respond  to changes  in  the market  and to  business                                                               
decisions that have made it successful over the years.                                                                          
SENATOR WAGONER read the language  from ANGDA: The revenue earned                                                               
by operations of the Authority must  be identified as a source of                                                               
the operating  budget of the  Authority in the  state's operating                                                               
budget under  AS 37.07.  It's not as  complicated as  some think;                                                               
but it at  least gives some legislative control.  This bill takes                                                               
the  governor and  the legislature  out  of the  picture, and  he                                                               
didn't want to go there with this project.                                                                                      
CO-CHAIR  MCGUIRE pointed  out that  this bill  requires them  to                                                               
make regular  findings and milestone  achievement reports  to the                                                               
legislature and the governor.                                                                                                   
CO-CHAIR WIELECHOWSKI  said he appreciated the  amendment, but he                                                               
would oppose it,  because he thought part of the  problem was too                                                               
much legislative intervention.                                                                                                  
SENATOR WAGONER  agreed that it  had been micro managed  to death                                                               
already, but  his point is that  a report is not  oversight. They                                                               
are  talking about  turning a  big project  over to  the Railroad                                                               
that doesn't even have a CEO right now.                                                                                         
CO-CHAIR MCGUIRE  said she  would oppose it  also because  of the                                                               
reasons Mr. Binkley  articulated. But she didn't  expect any less                                                               
of a new CEO than the excellent ones they had had.                                                                              
SENATOR  HUGGINS added  that he  will oppose  the amendment,  but                                                               
would   remain  open   minded.  The   legislature  needs   to  be                                                               
consistent. In  his experience there  are two  organizations, the                                                               
Railroad  is one,  that  when they  present  they are  organized,                                                               
they're convincing, their numbers add  up, and you go away saying                                                               
"that is  one efficient organization."   He has  great confidence                                                               
in the Railroad and its structure.                                                                                              
SENATOR WAGONER  asked if the  Railroad thought  about purchasing                                                               
the Flint Hills refinery.                                                                                                       
MR. BINKLEY answered no.                                                                                                        
SENATOR  WAGONER asked  if it  had  been discussed  at the  board                                                               
MR. BINKELY answered that during  the previous administration the                                                               
governor  said something  about having  the Railroad  involved in                                                               
some solution  to making  certain that  the refinery  remained in                                                               
place and producing fuel for  both the Interior and Southcentral,                                                               
but there were never any negotiations.                                                                                          
SENATOR HUGGINS added  that he was involved in that  era and some                                                               
administration people were advocating  for it, buy General Gamble                                                               
had resisted it.                                                                                                                
CO-CHAIR MCGUIRE  asked for  a roll  call vote.  Senators Wagoner                                                               
voted  yea; Senators  Huggins, French,  Wielechowski and  McGuire                                                               
voted nay; so Amendment 2 failed.                                                                                               
5:36:38 PM                                                                                                                    
SENATOR HUGGINS moved  to report CSSB 287(RES)  from committee as                                                               
amended  with  individual  recommendations  and  attached  fiscal                                                               
SENATOR WAGONER  objected. A roll  call vote was  taken: Senators                                                               
Huggins,   French,   Wielechowski    and   McGuire   voted   yea;                                                               
Senator  Wagoner voted  nay; so  CSSB 284(RES)  as amended  moved                                                               
from committee.                                                                                                                 
5:39:52 PM                                                                                                                    
CO-CHAIR MCGUIRE adjourned the meeting at 5:39.                                                                                 

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