Legislature(2011 - 2012)HOUSE FINANCE 519
03/20/2012 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB261 | |
| HB196 | |
| HB9 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 196 | TELECONFERENCED | |
| + | HB 261 | TELECONFERENCED | |
| += | HB 9 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 20, 2012
9:20 a.m.
9:20:58 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 9:20 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mike Doogan
ALSO PRESENT
Joe Michel, Staff, Co-Chair Stoltze; Wanetta Ayers,
Division Director, Division of Economic Development,
Department of Commerce, Community and Economic Development;
Bruce Twomley, Chairmen, Commercial Fisherman Limited
Entry; Jerry McCune, United Fishermen of Alaska;
Representative Mike Hawker; Tom Wright, Staff,
Representative Mike Chenault; Rena Delbridge, Staff,
Representative Mike Hawker.
PRESENT VIA TELECONFERENCE
Scott Ruby, Director, Division of Community and Regional
Affairs, Department of Commerce, Community and Economic
Development; Del Conrad, CEO, Rural Alaska Fuel Services;
Meera Kohler, President and CEO, Alaska Village Electric
Co-op.
SUMMARY
HB 9 IN-STATE GASLINE DEVELOPMENT CORP
HB 9 was HEARD and HELD in committee for
further consideration.
HB 196 BULK FUEL LOANS/POWER PROJECT FUND
HB 196 was HEARD and HELD in committee for
further consideration.
HB 261 COMMERCIAL FISHING ENTRY PERMIT LOANS
HB 261 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 261
"An Act relating to loans for the purchase of
commercial fishing entry permits; and providing for an
effective date."
9:21:04 AM
Co-Chair Thomas MOVED to ADOPT proposed committee
substitute for HB 261, Work Draft 27-LS0968\B, (Bullard,
3/19/12) as a working document.
Co-Chair Stoltze OBJECTED for purpose of discussion.
JOE MICHEL, STAFF, CO-CHAIR STOLTZE, reported the changes
to the work draft. He noted that three sections (Section 1,
Section 4, and Section 5, Paragraph B), were removed from
the previous version [CSHB 261(FSH)], of the legislation
and nothing was added. The omitted sections removed the
provision that reduced the interest on the loan two percent
below the prime rate to avoid competition with commercial
banks and maintain the focus of the bill. The primary
purpose remained increasing the loan limit. The sponsor
concurred with the changes.
Co-Chair Stoltze WITHDREW the objection. HB 261, Work Draft
27-LS0968\B (Bullard, 3/19/12) was adopted as a working
document.
9:25:45 AM
Representative Edgmon explained that HB 261 dealt with the
Commercial Fishing Revolving Loan Fund Act. The program was
implemented in the 1980's and was designed to assist
commercial fishers. Over the years, the legislature enacted
modifications to the program. The statute contained six
sections and HB 261 pertained to Section B, of the act.
Section B increased the loan limit from $100,000 to
$200,000. The provision allowed economically disadvantaged
fishermen to purchase limited entry permits that were
rising in value. He expounded that the original bill
attempted to do more. The earlier version offered the loan
at two percent below the prime rate, which was currently
5.25 percent. After discussions with the Department of
Commerce, Community and Economic Development (DCCED),
Division of Economic Development, it was decided that
interest rates were likely to rise in the future. The
interest rate provision was considered too "ambitious." The
bill was scaled back to contain only one provision; raising
the loan limit. He outlined the eligibility requirements. A
commercial fisher must be turned down by conventional
lending institutions or CFAB (Commercial Fisheries and
Agriculture Bank), proven economically disadvantaged, and
participated in commercial fishing for two years.
Co-Chair Stoltze wondered how CFAB was performing. He
repeatedly heard of fishers and farmers being turned down
by CFAB for loans. Representative Edgmon answered that he
was uncertain.
Representative Edgmon voiced that the projected demand for
the loan program was relatively modest; 25 to 50 loans. He
expected that the applicants would be younger fishers
without other means to purchase a limited entry permit. The
opportunity for young fishers to obtain a permit provided
multiple benefits. The economic multiplier effect for the
small coastal communities where many of the young fishers
resided was potent.
Co-Chair Stoltze remarked that his district contained a
number of commercial fishers.
Representative Edgmon spoke to the new zero fiscal note by
DCCED. He pointed to an error in the narrative on the
second page. The second sentence referenced the interest
reduction provision that was not included in the work
draft.
9:34:05 AM
Representative Guttenberg questioned whether raising the
loan limit for young people new to a fishery was burdening
them with excessive debt. Representative Edgmon replied
that entering the fishing business was more expensive than
ever. Limited entry permits and associated fishing costs
had skyrocketed. The higher loan availability afforded the
opportunity for new young fishers to make a living.
Representative Wilson asked how many loans ended in
default. Representative Edgmon answered that historically
the default rate was very low. The loan portfolio performed
"admirably." The principle in the loan fund was
approximately $80 million. The program actually returned
funds to the Department of Fish and Game (DFG).
Co-Chair Stoltze asked whether the loan program was a true
revolving fund. Representative Edgmon responded that the
program was a true revolving fund.
Representative Costello asked what the costs of permits
were over the time period of the loan program.
Representative Edgmon elaborated that permit prices varied
widely over time. Speaking exclusively of salmon permits,
prices correlated to the ex-vessel price of salmon. He
related that in Bristol Bay in the early 2000's the price
of limited entry permits plummeted to $18,000 when salmon
prices tumbled. Bristol Bay gillnet permits were now worth
$150,000. Permit prices raise and lower dramatically.
Representative Costello asked what the average age of a
commercial fisher in Alaska was. Representative Edgmon
relayed that the age of the average limited entry permit
holder was creeping upwards. The average was 50 years of
age.
9:39:51 AM
Representative Gara asked whether a residency requirement
applied to loan applicants. Representative Edgmon replied
that the applicant must clearly establish residency for a
period of two years preceding the date of the application
and participated in commercial fishing for two of the last
five years.
Representative Gara asked if a lower interest rate could be
offered to young applicants that would not cost the state
to lose money. Representative Edgmon explained that the
current statute authorized an interest rate of two points
above prime. There was another provision in statute that
allowed a one percent deduction if the loan payments were
paid on time for the first year.
Co-Chair Stoltze added that the loan was a securitized loan
and not a signature loan.
Representative Neuman asked if different interest rates
were specified in statute. Representative Edgmon responded
that the loan rate was specifically tied to the prime rate.
Representative Neuman asked whether a board had any
authority to determine the interest rate in the revolving
loan fund or if the rate was set statutorily.
Representative Edgmon restated that the intent of the
original bill was to allow the division to deduct 2 percent
off of the prime interest rate, which was removed in the
current version. The rules were defined in statute and set
at two percent above prime.
Representative Neuman inquired if different loan rates
applied for different fisheries under the program.
Representative Edgmon exemplified the passage of HB 20 two
years ago. The legislation authorized energy efficiency
loans to commercial fishers at 2 percent below the prime
interest rate for energy efficient engines, generator sets,
etc.
9:45:39 AM
WANETTA AYERS, DIVISION DIRECTOR, DIVISION OF ECONOMIC
DEVELOPMENT, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, indicated that different interest rates for
different purposes existed in statute for the Commercial
Fishing Revolving Loan Fund. The senior loan committee
within the division cannot consider different interest
rates other than the interest rates outlined in statute.
Representative Neuman believed that a board was better
suited to set the most applicable interest rate that
reflected the current conditions of the fishery.
Co-Chair Stoltze asked if the loans could be refinanced.
Ms. Ayers replied that the interest was fixed for the term
of the loan. A re-financing option was available.
Co-Chair Thomas referenced the student loan forgiveness
program. He wondered why one profession was chosen over
another for state loan forgiveness, especially since the
commercial fishing fleet was "graying." He asked why
$200,000 was chosen as the loan limit when some permits
cost $400,000. Representative Edgmon felt that the number
addressed the majority of salmon fisheries permit costs in
the state. The amount was set to accommodate the most
number of fishers.
Co-Chair Stoltze reiterated that the loan limit was
doubling from $100,000 to $200,000.
9:49:25 AM
BRUCE TWOMLEY, CHAIRMEN, COMMERCIAL FISHERMAN LIMITED ENTRY
COMMISSION, addressed Representative Guttenberg's concern
that the increased loan limit might burden new young
fishers with too much debt. He explained that the
commission monitored the price of permits from 1980 through
2011. The price of permits reflected the amount that
fishers were willing to invest in the fishery and their
expected returns. He felt that the best measure was the
individual fishermen's willingness to put their own money
at risk based on expectations. He reported that Bristol Bay
was the largest salmon fishery. Out of the 32 years that
the commission tracked permit prices, the average and
median price for a Bristol Bay gillnet permit was $100,000
for 16 years. Currently, the price exceeded $100,000. He
felt that the $200,000 loan limit was a good estimate. The
loan program provided rural fisher's access to credit that
otherwise was unobtainable. He was pleased that the
legislation was introduced to increase the loan limit for
Section B loans since the price of Bristol Bay permits
exceeded the limit. He believed that the legislation was a
"concrete response" to facilitating the entry of young
Alaskans into commercial fishing that was addressed in HCR
18 (Commercial Fisheries Programs.)
Co-Chair Stoltze questioned what happened when a limited
entry permit dropped in value and the borrower defaulted.
Mr. Twomley responded that the loan program had a
"tremendous" success rate. In case of a foreclosure the
division was required to sell the permit. Procedural
protections existed for the fishermen under statute. Very
few loans went into foreclosure. The program was very
successful.
Co-Chair Stoltze questioned whether the fisher had enhanced
protection under statute than other debtors had. Mr.
Twomley stated that was correct.
Co-Chair Thomas recalled bidding online for a repossessed
Bristol Bay gillnet permit that was foreclosed on.
Vice-chair Fairclough referred to a letter of opposition
from CFAB dated January 25, 2012 (copy on file). She asked
whether CFAB was still in opposition or if its concerns
were addressed. Representative Edgmon replied that the
letter addressed an earlier version of the bill opposing
the interest rate reduction. He had not heard from CFAB
regarding the new version.
9:56:22 AM
Representative Gara related that when the state granted a
limited entry license the recipient was able to sell it
when they stopped fishing. He felt that created an unfair
opportunity to make money on a public resource. He asked
whether the state changed the rules. Mr. Twomley responded
that free transferability still existed. He felt that the
transferability was useful to help Alaskans get limited
entry permits. If the limited entry permits were reissued
to the state the process would be accessible outside of the
state. Transferability gave Alaskans a fair chance. Over
the years transfers to Alaskan residents grew over non-
Alaskans.
Representative Gara inquired how the current system keeps
more permits in Alaskan communities. Mr. Twomley replied
that transferability created the opportunity for Alaskan
ownership. The provisions in Article 8 of the Alaska
Constitution prohibited the state from directing the
distribution of permits. He explained that transferability
"created the opportunity" to direct permits to Alaskan
communities. He highlighted that the Bristol Bay Economic
Development Corporation operated a regional permit
brokerage and loan guarantee program. The loan guarantee
program influenced where the permits went.
Co-Chair Stoltze spoke to the constitutional aspect. The
Constitution contained non-exclusive rights to fisheries.
A constitutional amendment adopted in 1972 allowed
exclusive rights for conservation and economic distress. He
thought that although not a mandate, the constitutional
amendment allowed amending the limited entry permit statute
to include exclusive fishery rights. He asked for
clarification. Mr. Twomley reported that when the state
tried to direct benefits the efforts were always reversed
in the Alaska Supreme Court under the equal protection
clause. He exemplified reversals of rural preference for
subsistence in times of scarcity or local hire provisions.
He concluded that it was highly unlikely that the state
Supreme Court would concur with a program that granted
resource entitlements to particular communities or
individuals.
Co-Chair Stoltze countered that the exclusive rights
amendment was not a constitutional right but an allowance
within the statutory framework. He interpreted the
constitutional amendment as, allowing for a deviation from
the non-exclusive right but was not a guaranteed exclusive
right. Mr. Twomley agreed that an amendment to modify the
limited entry statute could be recommended and added that
the permit was not a right but a privilege.
Co-Chair Thomas concurred that a limited entry permit was a
privilege from the state to harvest the resource. He felt
that it did not give commercial fishers an inherent right
to block other industries from developing resources. The
state granted the fishers the privilege to work by making
limited entry permits available to purchase. He did not
want commercial fishers to limit other Alaskans opportunity
to jobs in other industries through protest claiming they
have exclusive rights. He added that Alaskan fishers pay 7
percent of gross income in raw fish tax, enhancement tax
and a marketing fee. Alaskan fishers generated the revenue
to operate the Commercial Fisheries Entry Commission via
limited entry permit purchases and vessel licenses fees and
even generated surplus funding.
Co-Chair Stoltze OPENED public testimony.
10:04:25 AM
JERRY MCCUNE, UNITED FISHERMEN OF ALASKA spoke in support
of the legislation. He felt the bill provided a good
opportunity to support new younger entrants into the
fisheries. He identified the three ways to obtain a limited
entry permit; CFAB, Division of Economic Development, or a
private lending institution. A private lender required
collateral. He related that groups like Sea Grant and
Bristol Bay Economic Development Corporation educated young
fishers on how to repay the loans and helped them with
financial planning. New entrants into the fisheries needed
to implement a business plan. Commercial fishing was a
business and a professional approach was required for
success. He furthered that permit prices were dictated by
permit availability, previous season's conditions, and fish
prices. Permit prices dropped after a bad season as quickly
as they rose with good seasons.
Representative Joule asked what ages encompassed the
"young" demographic. Representative Edgmon thought that the
demographic was fisher's in their 20's.
Mr. McCune related from his experience in the Copper River
fishery that approximately 50 "young" fisher's, 20 to 30
years of age participated in the fishery. Many permits get
passed on to family members. The legislation aided new
entrants into the fishery who had to purchase the permit.
10:09:39 AM
Co-Chair Stoltze CLOSED public testimony.
HB 261 was HEARD and HELD in committee for further
consideration.
HOUSE BILL 196
"An Act relating to the power project fund and to the
bulk fuel revolving loan fund; establishing a bulk
fuel loan account and making the bulk fuel loan
account and the bulk fuel bridge loan account separate
accounts in the bulk fuel revolving loan fund;
providing for technical assistance to rural borrowers
under the bulk fuel bridge loan program; relating to
the administration and investment of the bulk fuel
revolving loan fund by the division in the Department
of Commerce, Community, and Economic Development
responsible for community and regional affairs; and
providing for an effective date."
Representative Edgmon introduced the legislation. He
explained that the bill took two bulk fuel loan programs,
housed in the Department of Commerce, Community and
Economic Development (DCCED) and administered them from one
location. The Bulk Fuel Revolving Loan Fund was
administered by the Alaska Energy Authority (AEA) and the
Bulk Fuel Bridge Loan Program resided in the Division of
Community and Regional Affairs. He noted that consolidating
the programs administration was a recommendation in the
"Governor's Report on Energy" and from AEA. The
consolidation made both programs more accessible for the
public. Applicants that were turned down for the revolving
loan would not have to re-apply for the bridge loan. He
questioned the fiscal note by the division.
Ms. Ayers reported that the Division of Community and
Regional Affairs (DCRA) would perform all of the
underwriting, and work directly with the borrowers for the
consolidated loan fund. The Division of Economic
Development (DED) would provide loan servicing.
SCOTT RUBY, DIRECTOR, DIVISION OF COMMUNITY AND REGIONAL
AFFAIRS, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT (via teleconference), spoke to the new fiscal
note (FN CED 3/19/12). He determined that the cost to
administer the consolidated programs would increase to
$216.6 thousand for FY 2013 and $209.8 thousand in FY 2014.
The AEA currently administered the loans at a cost of $53.6
thousand dollars. Presently, within the division an
existing employee was servicing the small number of bridge
loans without charging the personnel costs to the program.
The consolidated loan program increased the workload from
administering 12 to approximately 70 loans. The division
was not able to perform the additional work without an
additional position. The division had an RSA (reimbursable
services agreement) with the Division of Economic
Development for invoicing and loan accounting. The DED
required and extra position to provide more of the services
to DCRA with the increase in loans. He noted that the new
fiscal note (FN CED 3/20/2012) for DED was funded through
inter agency receipts.
Vice-chair Fairclough questioned why additional funding was
needed considering the work was being consolidated.
Representative Edgmon had the same question. He indicated
that AEA had a staff position dedicated half-time to
service the loans that would transfer to DCRA. He mentioned
confusion with the fiscal notes. He was aware of a fiscal
note that appropriated a local government specialist at a
range 17 to DCRA and an appropriation to DED for an
Accounting Tech II. The DCRA contracted out technical
services, credit checks, and loan counseling with a third
party. The loans primarily helped small communities with
populations less than 2000.
Vice-chair Fairclough asked if the state was using existing
technology such as online grant applications to assist the
process. Mr. Ruby answered, "no." He stated that people can
download the application online and most return it by fax
for review. The bulk fuel bridge loan typically responded
to emergency type situations. Recently, two villages
applied because less than seven days' worth of fuel was
available. The third party contractor was instrumental in
helping the communities with a high credit risk apply for
and manage the loan.
10:21:03 AM
Vice-chair Fairclough remarked that DCRA planned to manage
the loans much differently than AEA and still questioned
the fiscal notes.
Co-Chair Thomas asked if the same clients applied for the
loan each year. He felt that the personal services request
in the fiscal note was problematic.
Vice-chair Fairclough believed that the use of technology
via online applications, where information was recalled for
future applications could streamline the process.
Representative Gara thought that DCRA proposed "the worst
example of streamlining." He suggested that the
consolidation should transfer to AEA. He recommended that
AEA transfer the half time position to DED for a "net zero
cost." He argued that streamlining created efficiencies
that required fewer personnel. He questioned the need for
more personnel. Ms. Ayers responded that the challenge was
turning one operating unit into two. The division did not
inherit 100 percent cost savings from AEA because only a
half time position was dedicated to service its portion of
the loans. The division's workload increased from servicing
12 accounts to 70 accounts. She stressed the need for
additional staff to simultaneously respond to both loan
populations. Time sensitivity was a factor in processing
the bridge loans. Often a fuel barge was waiting to deliver
fuel.
10:25:41 AM
Representative Edgmon responded to Representative Gara's
suggestion to transfer the consolidated loan servicing to
AEA instead of DCRA. He elaborated that AEA was strongly
favored when the idea first came forward. The switch to
DCRA was made to utilize DCRA's seven local government
specialist offices spread throughout the state. The
specialists would work with the third party contractor;
Rural Alaska Fuels. The consolidation was intended to
streamline the process and improve the services for the
community. The process was supposed to be simplified for a
community to apply for the bulk fuel revolving loan and if
turned down the application would quickly be processed as a
bridge loan. He remained perplexed why extra personnel were
necessary. He emphasized that he did not receive a "clear
response" from the department and that it was not his
intent to introduce the bill with extra personnel costs.
Representative Costello asked why the choice was made to
shift the loan services to DCRA. She mentioned that the
budget process was focused on departmental missions. She
relayed that DCRA was the only division with a
constitutional mandate; Article 10, Section 14, which
mandated a report on the status of communities. The mission
of AEA was to reduce energy costs in the state. She thought
that AEA was the more appropriate division for the loan
consolidation. Representative Edgmon commented that one of
the reasons that DCRA was chosen over AEA was that AEA was
taking on more responsibilities including the Susitna
project. The premise was that with the DCRA offices located
in rural parts of the state, its capabilities were better
suited to assist smaller communities.
Representative Costello was informed that communities were
filling out an application for the first loan process and
had to re-apply for the bridge loan from scratch if turned
down. She noted that the board for Alaska Industrial
Development and Export Authority, (AIDEA) was the same for
AEA, which the commissioner of DCCED was a member. She
queried if the problem was ever brought to the board for
resolution. Ms. Ayers believed that discussions were held.
She reiterated that the loans were time sensitive and
required focus and responsiveness to keep the process
moving forward.
10:31:43 AM
Representative Wilson asked for clarification on the number
of loans. She deduced that the increase from 12 to 70 loans
was an actual increase of 58, which serviced the same
communities every year. Ms. Ayers stated that was correct
and added that some communities applied several times a
year.
Representative Wilson felt that the division could educate
the communities to be more proactive and apply for the
loans before it was an emergency situation and deal with
the communities on a more regular basis. She concurred with
the other committee members' call for more efficiency,
elimination of repetitive paperwork for the communities,
and questioned the need for additional staff. Ms. Ayers
hoped that the department would achieve efficiencies
through consolidation of the loan program by DCRA working
with the borrower on a more regular basis.
Mr. Ruby revealed that the department was proactive in
getting the communities to apply for loans. The department
implemented a plan called "fuel watch." The department
contacted every bulk fuel purchaser in rural Alaska to
determine the status of payments. He mentioned that 8 to 10
communities each year apply late for various reasons.
Currently, there were 49 loans to process and some of the
communities had to fly in fuel. Each time a community
needed more fuel another loan was necessary. Only one
approval process was required, but arrangements for
delivery were made, invoices were processed, and repayment
schedules developed for each refill. A lot of the staff
time was spent working with the communities on cash flow
issues. Most of the work within DED was not application
oriented but appraising cash flow and developing procedures
to repay the loan. Representative Edgmon discussed the
larger issues embedded in the situation. Frequent turnover
of city administrators and personnel in smaller communities
was a problem. The application process was complex and
detailed financial statements were necessary. The high cost
of fuel created challenging circumstances and cash flow
problems.
10:38:27 AM
Co-Chair Thomas OPENED public testimony.
DEL CONRAD, CEO, RURAL ALASKA FUEL SERVICES (via
teleconference) testified strongly in favor of the bill. He
reported that during the first six years of the bridge loan
program his company managed the program. The program was
initially set up as a grant. The funds were given to the
contractor under the provision that any unused funds were
returned to the state. The company reviewed the application
and forwarded a recommendation to the department. After
approval from the department the company issued a check to
the fuel vendor, issued monthly invoices, and processed
collections. The company also interfaced with the
communities and would work with them on pricing and
collection. He explained that the program was changed to a
loan program approximately two years earlier and state
involvement increased. He believed from experience that
additional staff was unnecessary. He elucidated that much
of his work with financially distressed communities
involved establishing a budget and pricing. He felt that
combining the programs eliminated duplication for both the
state and the communities. The focus of DCRA was on
sustainable communities and thought that was the
appropriate place to administer the loans. The local
government specialists were familiar with the communities
and understood the issues to better serve economically
distressed communities in contrast to AEA that acted as a
bank.
10:41:58 AM
MEERA KOHLER, PRESIDENT AND CEO, ALASKA VILLAGE ELECTRIC
CO-OP (via teleconference), spoke in support of the
legislation. She discussed that several years earlier
acting as a member of the Alaska Village of Council
Presidents had chaired a subcommittee on rural fuel issues.
The subcommittee had determined that the communities'
credit risk was the largest deterrent for the community to
receive timely fuel delivery with better pricing. She
revealed that part of the problem was the formidable loan
application process. She was in favor of consolidation. She
reiterated that AEA was a banking institution. She believed
DCRA was a better agency to handle the program. The
division developed the inroads and relationships with
villages that could enable the villages to become more
financially sustainable. She opined that HB 196 represented
a move in the right direction.
Co-Chair Thomas CLOSED public testimony.
HB 196 was HEARD and HELD in committee for further
consideration.
10:45:25 AM
AT EASE
10:46:33 AM
RECONVENED
HOUSE BILL NO. 9
"An Act requiring the Joint In-State Gasline
Development Team to report to the legislature
recommended changes to state law that are required to
enable or facilitate the design, financing, and
construction of an in-state natural gas pipeline so
that the in- state natural gas pipeline is operational
before 2016; and providing for an effective date."
10:46:48 AM
REPRESENTATIVE MIKE HAWKER, DISTRICT 32, announced that the
sponsors submitted two amendments to HB 9. He reported that
one amendment dealt with confidentiality and the provisions
of state agencies. The other amendment was considerable and
concerned "regulatory authority under the Regulatory
Commission of Alaska (RCA) for contract carrier pipelines."
TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, briefly
synopsized that Amendment 2 was requested by the Department
of Law (DOL) to ensure that any information the state
obtained remained confidential. The amendment was a
collaboration between the DOL and Alaska Gasline
Development Corporation (AGDC). The amendment required the
consent of the third-party to allow AGDC access to the
information.
RENA DELBRIDGE, STAFF, REPRESENTATIVE MIKE HAWKER explained
that the other amendment replaced three sections in HB 9.
The amendment would exempt the gasline from regulatory
oversight. The amendment would insert a new chapter into
the Regulatory Commission of Alaska (RCA) statutes that
indicated how the gasline was regulated within the
Regulatory Commission of Alaska's statutory framework for
regulating an instate gas pipeline explicitly authorized to
operate as a contract carrier. Currently no statutes
existed to regulate a contact carrier pipeline. The
amendment created the framework for regulation and
"required regulation on the front end through approval of
contracts as just and reasonable provided they were entered
into at arm's length, and required a special limited scope
certificate of public convenience and necessity for the
special pipeline."
10:50:53 AM
Representative Gara spoke to amendment 3. He highlighted
that the amendment proposed that the gas pipeline advanced
only if it was the most efficient project that offered the
lowest prices to Alaskan consumers. The amendment mandated
the Alaska Natural Gas Development Authority (ANGDA) to
analyze alternative projects such as determining if Cook
Inlet contained enough natural gas reserves for further
development as a stop gap until a large pipeline project
was built. He opined that a large diameter pipeline
produced the lowest price gas and generated the most
revenue for the state. He added that another amendment
would maintain RCA's current statutory framework. The RCA's
process protected the consumer.
Co-Chair Stoltze announced that all of the amendments were
posted on BASIS for the public's interest and
participation.
HB 9 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 10:55 a.m.