Legislature(2015 - 2016)HOUSE FINANCE 519
11/01/2015 01:00 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB3001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB3001 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
THIRD SPECIAL SESSION
November 1, 2015
1:03 p.m.
1:03:39 PM
CALL TO ORDER
Co-Chair Neuman called the House Finance Committee meeting
to order at 1:03 p.m.
MEMBERS PRESENT
Representative Mark Neuman, Co-Chair
Representative Steve Thompson, Co-Chair
Representative Dan Saddler, Vice-Chair
Representative Les Gara
Representative Lynn Gattis
Representative David Guttenberg
Representative Scott Kawasaki
Representative Cathy Munoz
Representative Lance Pruitt
Representative Tammie Wilson
MEMBERS ABSENT
Representative Bryce Edgmon
ALSO PRESENT
Pete Ecklund, Staff, Representative Mark Neuman; David
Teal, Director, Legislative Finance Division;
Representative Lora Reinbold, Representative Paul Seaton;
Representative Sam Kito III; Representative Andy Josephson;
Representative Dave Talerico; Representative Louise Stutes;
Representative Gabrielle Ledoux; Representative Shelly
Hughes; Representative Dan Ortiz; Representative Mike
Chenault.
PRESENT VIA TELECONFERENCE
Daniel Fauske, President, Alaska Gasline Development
Corporation; Ken Vassar, General Counsel, Alaska Gasline
Development Corporation (AGDC); Joe Dubler, Vice President
and Chief Financial Officer, Alaska Gasline Development
Corporation.
SUMMARY
HB 3001 APPROP: LNG PROJECT & FUND/AGDC/SUPP.
HB 3001 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 3001
"An Act making supplemental appropriations; making
appropriations to capitalize funds; making
appropriations to the general fund from the budget
reserve fund (art. IX, sec. 17, Constitution of the
State of Alaska) in accordance with sec. 12(c), ch. 1,
SSSLA 2015; and providing for an effective date."
1:03:39 PM
Co-Chair Thompson MOVED to ADOPT the proposed committee
substitute for HB 3001, Work Draft 29-GH3812\E
(Wallace/Martin, 11/1/15). There being NO OBJECTION, it was
so ordered.
Co-Chair Neuman noted that the committee would not move the
bill from committee during the meeting.
PETE ECKLUND, STAFF, REPRESENTATIVE MARK NEUMAN, relayed
that the Senate Finance Committee would have an identical
bill.
1:06:04 PM
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
addressed the Committee Substitute (CS). He explained the
changes in the bill. He pointed to Section 2, which
appropriated the $69 million buyout to acquire the
TransCanada interest in the natural gasline project. He
noted the to be done by three agencies including the
Department of Law (DOL), Department of Natural Resources
(DNR), and Department of Revenue (DOR) He noted that the
appropriations were tightly worded and there were specific
uses the money would go to. The money appropriated to the
agencies could not be used for other purposes. He drew
attention to fiscal year ending June 30, 2016. The CS made
sure that the departments could not enter long-term
contract. The committee substitute appropriated money for
work to be completed during 2016. There was some "wiggle
room" to allow agencies to use money across different
lines.
Co-Chair Neuman asked members to hold questions.
Mr. Ecklund noted that there were updated numbers in
Sections 3 and 4 for DNR and DOR.
Co-Chair Neuman asked for the numbers.
Mr. Ecklund detailed that DNR's request was $1.849 million,
and the former number was $2.126 million. He furthered that
DOR's request was $1.45 million and the former number was
$1.381 million.
Representative Gara asked for a repeat of the numbers.
Mr. Ecklund repeated the numbers.
1:11:01 PM
Mr. Teal continued with Section 5(a), appropriated to
acquire the interest in TransCanada. Sections (c) and (d)
were reimbursements by the partners for the funds that
Alaska Gasline Development Corporation (AGDC) had not
utilized from AGDC itself. He explained that not all of the
reimbursement would go to the AKLNG fund, but an additional
funds would be available once the money was reimbursed to
the funds. He noted that the title was shorter than the
governor's initial bill. He explained that HB 2001 had
authorized the Constitutional Budget Reserve (CBR) to cover
all of the expenditures that had been passed to date. It
did not allow any room for supplemental of any kind.
Allowing an additional $500 million, done with the gas line
buyout in mind along with some high supplemental funds
needed for fire suppression.
1:16:43 PM
Mr. Ecklund reiterated the supplemental appropriations for
DNR, DOR, and LAW, which were all contingent on all parties
voting in the affirmative.
Co-Chair Neuman noted the bill was officially described as
a work program and budget, so the money would be delegated
appropriately. He remarked that the goal of the committee
substitute was to provide a "tight" appropriation bill. He
wondered if the committee substitute represented the
"tightest" control possible. He also wanted to ensure that
the legislature provided enough economy to AGDC in using
the funds.
Mr. Teal believed the language was as tight as possible.
The language was not "bullet proof", but the intent was
clear.
Co-Chair Neuman suspected that members speaking with the
administration would make the intent clear.
Mr. Teal added that the bill was a draft. He believed the
language should be reviewed carefully by AGDC and
administration to ensure all parties were named
appropriately.
Representative Gattis asked about the four voting parties.
She asked not forcing four parties to vote yes to buyout
TransCanada.
Mr. Ecklund agreed that there was no contingency plan for
the buyout of TransCanada.
Representative Gattis surmised there was no reason to
provide funding if the AGDC did not support the
legislature's decision.
Mr. Ecklund replied in the affirmative.
1:21:30 PM
Co-Chair Neuman believed the concept had been
inappropriately termed a "buyout." He shared that
approximately $7 million was intended for services
rendered. He stressed that TransCanada had participated to
cover Alaska's assets during the gather information to the
current time. He wondered if that was an accurate
summation.
Mr. Teal replied in the affirmative. He agreed that a
payment owed to TransCanada. By taking the action the state
was effectively buying TransCanada out of their voting
rights.
Co-Chair Neuman clarified that as the money was expended
did the Legislative Finance Division (LFD) add codes to
track how money was spent.
Mr. Teal replied in the affirmative. He explained that
codes were added to the three appropriations to the
departments. The other money was intended for the AKLNG
fund, which was tracked as it was delivered. He stressed
that LFD would track all the money spent. He explained that
regular GF could be deposited into the AKLNG. He furthered
that there were tracking codes that would follow the AKLNG
fund with AGDC.
Co-Chair Neuman asked if the legislature requested for
monthly reports from AGDC.
1:25:16 PM
Mr. Teal replied in the affirmative.
Vice-Chair Saddler looked at the original version of the
bill, which described the organization that owned the
state's interest as "the TransCanada Alaska Development
Incorporation." He further noted that the committee
substitute defined it as the "TransCanada Alaska Midstream
and Limited Partnership." He wondered when the partnership
was created, and whether that was the correct target.
Mr. Teal replied that it was a subsidiary of TransCanada to
work on the project. He stressed the need to ensure that
the administration and AGDC agree that all of the names
were correct.
Representative Guttenberg asked if there was a conflict
between the organizations and fiscal years.
Mr. Teal did not believe there was a conflict. He noted
that the state's fiscal year ran from July 1 to June 30. He
did not believe there was any problem with the calendar
year and fiscal year.
Mr. Ecklund looked at page 3, line 5 of the bill. He
explained that the appropriations for the work program had
a budget should there be a positive vote in December, the
appropriations would capitalize the AKLNG fund without
lapse.
Co-Chair Neuman believed that under the prior bill the
money could be swept. There was concern that agencies could
enter into long-term contracts without the legislature's
oversight.
Mr. Ecklund referred to testimony in another committee
where LAW announced that the full $10 million would lapse
to GF, should the full funding not be utilized. The bill's
construction was the result of the allowance for the lapse
into GF. He explained that there had been situations when
contracts were formulated during the fiscal year that would
obligate money, but the work would occur in FY 17. He
stressed that the bill was constructed to prevent that
possible situation.
Representative Guttenberg noted that there was a reference
to the cost accounting edit sourcing from 1241. He wondered
if that reference was included in the committee substitute.
He felt that there may need to be a subset of cost
accounting codes in order to properly track the funds.
1:30:35 PM
Mr. Teal responded that a numbers portions would include
the fund "rollup", which addressed the precise fund code.
He shared that the current bill was drafted with language
only, so there was no reference to fund code. He stated
that the bill shoed that there was an appropriation from
GF. He looked at Section 1(a), "it was the intent of the
legislature that the appropriations made in Sections 2
through 4, shall be accounted for separately from UGF." He
stated that the section gave LFD the authority to create
the tracking code. He explained that the 1241 code would be
used in the transactions.
Representative Gara thought people were getting close to
the same page. He pointed to page 2, line 21. He wondered
about the legality of the language. He he understood that
the legislature only wanted to pay TransCanada, but felt
that it could be a different number. He stated that if it
was $69.3 million, could they give the executive branch
that power to change the number.
Mr. Teal replied that it was done frequently with
appropriation bills. He stated that appropriation bills
sometimes specified, "the amount required to pay according
to the formula is appropriated." The reasoning behind
appropriating the maximum number was to ensure that the
project had the necessary funds.
Representative Gara understood why it had been included. He
stressed that adding $100 million more, and wondered could
they really give the executive branch the power. The
alternative would be to designate a number not to be
exceeded.
Mr. Teal replied that the committee substitute's was
drafted in the traditional formal. He stressed that the
appropriation was the necessary amount. He shared that the
project would only us the amount necessary.
Representative Gara believed it was correct and would look
further into the issue.
Mr. Ecklund replied that Legislative Legal Services had not
objected to the language.
Representative Gara wanted to make sure the administration
did not spend more than necessary the amount had to be
expended by June 30, 2016. He was concerned about spending
being limited by dates in the bill.
1:37:01 PM
Mr. Teal did not have a great deal of concern about the
issue. He did not believe agencies were asking for more
than they needed. The point of the structure was to specify
that agencies received in FY 17 request. The administration
did not want money in the bill that carried forward to.
Mr. Ecklund read the language in the bill differently. He
explained that the agencies did not have to spend all of
the money by the deadline.
Representative Gara suggested removing the language,
because there may be fear in the administration that the
money would not be available.
1:39:20 PM
Representative Wilson addressed DNR. She wondered if the
agency would be able to go for the marketing lead and
analyst positions if they were only funded to June 2016.
Mr. Teal answered that the appropriation currently could
fund for FY 16, but was expected to wait to FY 17 to fund
the remainder. He stressed that it was up to the
legislature to fund FY 17. He announced that no state
employees were guaranteed funding for each fiscal year.
Representative Wilson stated that the project was different
than standard state projects. She remarked that the three
large companies did not run business the same way as the
state. She felt that there needed to be a guarantee for the
high level positions. She requested that DNR share the
funding forecast for the outlying years. She stressed that
the AKLNG project was an extremely large project, and she
wondered if the project should be dealt in a similar matter
to the state agencies.
Mr. Teal replied that it was the position that every state
agency was in that they may not be funded in the following
year. He believed it was a good question for the agencies.
1:43:27 PM
Mr. Ecklund added that the legislature had received
additional information on the $840,000 position.
Representative Wilson wondered if the $500 million would be
from the GF or CBR.
Mr. Teal explained that the appropriation in HB 2001
allowed up to $500 million be removed from the CBR to pay
the GF bills after July 1. He explained that the money was
still in the CBR, and would remain in the CBR until the GF
funds were completely depleted. He stressed that the CBR
was never directly used, rather was an over-expenditure of
GF backfilled with the CBR.
Representative Kawasaki expressed concern regarding the
existing contracts' dates. He announced that Black and
Veatch was contracted in September 2014 until June 2016. He
felt that contracts were outlined with list of deliverables
and a specific date, resulting in recruiting difficulties.
He wondered if the language in the bill had been in other
appropriation bills in the past.
Mr. Teal replied that the language had not appeared in
prior appropriation bills. He announced essentially the
entire amount was for contract work. He stated that DOL had
testified that expenditures could be up to $1 million per
month, which was the cause of the language inclusion. Once
contracts were signed, the money was obligated, and would
not lapse at the end of FY 16. He stressed that the purpose
of the language was to ensure a pure FY 16 supplemental, so
no money would be carried over into the following fiscal
year.
Representative Kawasaki had the concern that contracts
typically spanned over years and that the bill was
departing from the usual procedure.
Co-Chair Neuman turned the question around and asked what
would happen without the language.
Mr. Teal replied that DOL could have a long-term contact,
so the appropriation funded possible FY 17 and FY 18
activities. He explained that money had been carried
forward from one year to the next on the current project,
because of obligations.
Mr. Ecklund noted that the original request did not ask for
any lapse extensions for FY 17. He stressed that the
request was for FY 16 alone.
Mr. Teal continued that the department could request a
lapse date extension to the legislature. He stressed that
that language in the bill only prevented a current lapse.
1:49:39 PM
Vice-Chair Saddler asked for confirmation that the money
was designed to get through the pre-FEED (front end
engineering and design).
Mr. Ecklund replied that the money was for calendar 2016,
and may not get all the way through pre-FEED.
Mr. Teal added that the calendar year 2016 plan was half of
2016 and 2017. The plan showed $157 million in FY 16 plus
$100 million to AGDC over the next three years and $100
million to various agencies over the next three years. He
stressed that it was a question of how much money the
legislature wanted to put in the AKLNG fund.
1:53:16 PM
AT EASE
2:01:21 PM
RECONVENED
Co-Chair Neuman discussed the plan for the presentation. He
listed AGDC staff available to testify via teleconference.
DANIEL FAUSKE, PRESIDENT, ALASKA GASLINE DEVELOPMENT
CORPORATION (via teleconference), asked corporate counsel
to provide the presentation.
KEN VASSAR, GENERAL COUNSEL, ALASKA GASLINE DEVELOPMENT
CORPORATION (AGDC) (via teleconference), provided a
PowerPoint presentation titled "Confidentiality" dated
November 1, 2015. He explained that AGDC was subject to the
public records act.
Mr. Vassar looked at slide 2, "Public Record Disclosures":
AGDC was granted broad confidentiality authority in
the corporation's enabling statutes through HB 4
(2013)
AGDC may enter into Confidentiality Agreements (CA) as
necessary to carry out its functions [AS 31.25.090]
Confidential information is not subject to the state's
public records disclosure laws
Confidential information shared by AGDC with another
public agency, are not public records
Mr. Vassar highlighted slide 3, "Public Record
Disclosures":
CAs are valid and binding against all parties
Information and trade secrets of the corporation are
confidential if disclosure would cause commercial or
competitive harm
Information that discloses the particulars of a
business or the affairs of a private enterprise is
confidential and not subject to public disclosure
SB 138 added provision to ensure that the DNR & DOR
Commissioners have access to confidential information
related to North Slope natural gas pipeline contracts
2:05:58 PM
Co-Chair Neuman noted the reason for going into further
depth on the issue. He stated that if there was proprietary
information, and stressed the availability for legislators
to be a part of
Mr. Vassar moved to slide 4, "Confidentiality Agreements":
All AGDC employees sign a standard confidentiality
agreement upon employment
Originally all AGDC board members also signed a
confidentiality agreement upon appointment
Governor Walker has expressed a desire for more
transparency in the corporation's business
New AGDC board members have not signed CAs
Governor Walker notified Alaska LNG partners that
Commissioners, the Attorney General and other cabinet
officials would not sign CAs
Mr. Vassar addressed slide 5, "Draft Confidentiality
Regulations":
AGDC is authorized to adopt regulations to carry out
corporate duties and functions
Attorney General has worked with AGDC to draft a set
of proposed confidentiality regulations:
Public Hearing held on Oct 15th
30-day public comment period closed Oct 21st
Public comments will be reviewed by AGDC's board
Supplemental public comment period being
considered
Board may adopt the regulations as drafted,
modify them or decide to take no action
2:11:51 PM
Mr. Vassar continued that the corporation could not change
the terms for a valid contract it had already entered into.
Co-Chair Neuman communicated that proposed regulations and
comments were in members' backup documents.
Mr. Vassar moved to slide 6, "Draft Confidentiality
Regulations":
After December 1st, AGDC may only enter into a CA to
protect specific categories of information:
-Tax and financial
-Credit related
-Proprietary business information
-Trade secrets
-Sales, marketing and pricing strategies
-Information required to be confidential under
state or federal law
Confidentiality Agreements themselves shall not be
treated as confidential
Mr. Vassar discussed slide 7, "Draft Confidentiality
Regulations":
AGDC shall make its records available to the public
pursuant to the Alaska Public Records Act
Board members may meet in executive session to
consider confidential matters
Directors, officers, employees and agents of the
corporation must preserve the confidentiality of
information
Board shall endeavor to limit the amount of
information it withholds from the public
2:22:51 PM
Mr. Vassar turned to slide 8, "Draft Confidentiality
Regulations":
Information is assumed to be public, absent clear
indication to the contrary
AGDC President shall appoint a committee to
periodically conduct a confidentiality review
Upon review, if a need for confidentiality does not
still exist, information shall be made public
Board shall make available to the public the entirety
of any contract submitted for its approval 10 days
prior to meeting to consider the contract
Mr. Vassar stated that information was assumed to be
public, absent clear indication to the contrary. He
explained that the board shall make available to the public
the entirety of any contract submitted for its approval 10
days prior to meeting to consider the contract.
Co-Chair Neuman wondered if there was something wrong with
the current confidentiality agreements pertaining to the
AKLNG project. He queried any changes.
Mr. Vassar replied that there was nothing wrong with the
existing regulations with the exception of public policy.
The private industry approach ran into the open and
transparent policy of the current administration.
In response to a question from Co-Chair Neuman, Mr. Fauske
answered that it had been the governor's desire that board
members should not sign confidentiality agreements.
2:28:06 PM
Mr. Vassar elaborated agreed with his Mr. Fauske. He
stressed that AGDC needed to explore a way of addressing
confidentiality, and how to address in light of having
board members who had not signed confidentiality
agreements. There was an existing statute that all board
members of corporations were subject to put limitations on
how board members put to use the knowledge of
confidentiality, like telling board members that what they
heard in executive sessions was to remain confidential.
Co-Chair Neuman asked about impacts of regulations.
Mr. Fauske answered that based on public comments it would
probably impact the corporation, it current form. He
believed the process would be workable, but much more
difficult.
Co-Chair Neuman surmised it was common.
Mr. Fauske stated that it was not up to AGDC to determine
what was confidential.
Co-Chair Neuman asked if Mr. Fauske or staff had been
required to leave the room because they had not signed
confidentiality agreements.
Mr. Fauske replied in the affirmative. He elaborated that
it was not uncommon.
Co-Chair Neuman asked if it had interfered with
negotiations. Mr. Fauske replied that it had not made
things any easier, but it did not make things impossible.
He found people were overly cautious.
2:34:52 PM
Co-Chair Neuman queried the process that the partners would
be required to undergo to discuss items deemed confidential
members of AGDC who had not signed the confidentiality
agreements.
JOE DUBLER, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
ALASKA GASLINE DEVELOPMENT CORPORATION (via
teleconference), replied that there was a current related
issue. He shared that there was a proposed technology for
the LNG terminal, and AGDC had not yet executed an
acceptable non-disclosure agreement to the third-party that
owned the proprietary technology. He shared that Fritz
Cruzen was currently unable to participate in those
discussions.
Co-Chair Neuman stressed that adding more cost to the
project enhanced the possibility for project failure. He
wondered if the confidentiality issues would cost time and
money, because of the proposed regulations.
Mr. Dubler replied that it did not currently cost any time,
but did not allow the AGDC representative full access to
the data.
Co-Chair Neuman wondered how the AGDC board could make an
informed decision on December 4 as to whether to proceed on
the AKLNG project without access to the required
information.
Mr. Fauske replied that the decision should be positive. He
shared that the AGDC had confidence in the information.
2:38:00 PM
Co-Chair Neuman asked if Mr. Fauske understood Mr. Rigdon
Boykin's role and responsibility as a member of the AKLNG
gas team.
Mr. Fauske answered in the affirmative. He felt that Mr.
Boykin had kept AGDC informed and believed he was an astute
chief negotiator and liaison.
Co-Chair Neuman asked if Mr. Boykin was under contract and
who paid him.
Mr. Fauske replied that he was under contract and was paid
through the AKLNG fund.
Co-Chair Neuman asked if AGDC or the board directed Mr.
Boykin's activities.
Mr. Fauske replied that he was Mr. Boykin's boss. He stated
the board was apprised of his behavior on a regular basis
on his activities.
Co-Chair Neuman asked for verification that that Mr. Boykin
was primarily negotiating the commercial agreements.
Mr. Fauske replied in the affirmative.
Co-Chair Neuman observed that there were two issues:
commercial negotiations and AKLNG pipeline construction. He
wondered why Mr. Boykin was not under contract with DNR.
Mr. Fauske deferred the question to his colleague.
Mr. Dubler replied that there were many commercial
agreements relating the AKLNG project, and only some
related directly to the upstream components under the
responsibility of DNR. He explained that Mr. Boykin had
been responsible for negotiating all agreements including
governance, withdrawal, expansion and other aspects
affecting AGDC and the overall project.
Co-Chair Neuman queried the types of internal legal
services with AGDC.
Mr. Vassar responded that the legal services on the
drafting and negotiating AKLNG documents, by statute, was
in the province of the attorney general. He explained that
the attorney general had appointed an assistant attorney
general for that purpose. He furthered that the attorney
general had entered into a contract with the law firm,
Greenburg and Traurig, to provide assistance in the AKLNG
project. He announced that he was the primary legal counsel
for AGDC on the side of AGDC not relating to AKLNG.
2:45:42 PM
Co-Chair Neuman asked how previous legislation, HB 4
establish the necessary legal services, and how had those
legal services changed over time.
Mr. Vassar replied that HB 4 authorized AGDC to retain
outside legal counsel. He explained that he was under
contract with AGDC. He stated that other outside counsel
could be utilized based on appropriations available, and
the need for counsel. He stated that former legislation, SB
138 put the attorney general in charge of the AKLNG
matters.
Co-Chair Neuman asked if there was an attorney/client
privilege between AGDC and DOL concerning the proposed
confidentiality regulations, would AGDC be able waive the
privilege in order to conduct discussions with DOL.
Mr. Vassar answered that the department had already
discussed with its board in public on the record the
drafting of its regulations. He did not think there was any
attorney-client privilege to be waived. There were ethical
attorney-client privileges. He stated that the attorney
general had not taken the position of general corporate
regulations because it had to do with legal representation.
2:49:51 PM
Co-Chair Thompson wondered why AGDC was proposing to limit
its rights under existing law.
Mr. Fauske replied that the proposal was intended to
deliver the information to the members.
Mr. Vassar elaborated and referred back to slide 6. He
noted that AGDC would still be able to protect the
information. He stressed that the list still included
protecting trade secrets and proprietary business
information. He shared that there was a certain level of
battling semantics in the confidentiality agreements.
Co-Chair Thompson asked if AGDC had to enter into a
confidentiality agreement every time it came up under the
bullets listed on slide 6. Mr. Vassar replied in the
negative.
Co-Chair Thompson wondered how the governor had the right
to dictate to the ADGC board that it should not sign
confidentiality agreements. He believed AGDC was
autonomous.
Mr. Vassar replied that the corporation was not autonomous
from the governor's office. The corporation was owned by
the state.
2:57:03 PM
Co-Chair Neuman referred to the intent of passed
legislation that AGDC should be fully autonomous.
Mr. Fauske replied in the negative. He shared that he had
been present during negotiations on HB 4 and stressed that
the state had ownership of AGDC. He shared that most board
members were appointed by the governor
3:00:32 PM
Co-Chair Neuman stated that the issue around
confidentiality was that AGDC should have the ability to do
its work without pressure from legislators, agencies, or
other. He stated that the board was supposed to be fully
autonomous. He pointed to much concern related to AGDC.
Mr. Fauske understood the concern. He believed that the
goal should be to remove the concerns. He was very
committed to the project and wanted to make sure that
communication and a level of trust was enhanced. He was not
aware of any pressure put on board members from the
governor.
Co-Chair Neuman hoped to have a successful pipeline.
Co-Chair Thompson spoke to public hearings from October 15.
He referred to testimony from multiple people. He read from
a typed paper.
3:07:12 PM
Mr. Fauske answered that the regulations were only proposed
and had not yet been adopted. The agency did not want to
adopt regulations that would be to its detriment. He stated
that the action would go to the board at some point.
Mr. Vassar elaborated that AGDC was currently in the
process of reviewing the proposed regulations. The agency
did not want to do anything that would result in the state
not participating in AKLNG. The board would make the
decision, he believed it should be taken seriously. One of
the reasons the comment period had been extended due to the
great deal of respect for its private industry partners in
AKLNG.
Co-Chair Thompson pointed to slide 8 and read the final
bullet point. He believed it would be disadvantageous to
sign confidentiality agreements for multiple contracts. He
thought it was contrary to business. He looked at other
questions that had already been addressed.
3:11:38 PM
Co-Chair Neuman asked if there was enough information on
the regulations to know if he supported them.
Mr. Fauske answered that the agency would review the
proposed regulations.
Representative Gattis believed the conversation about
confidentiality was a good example of why government should
not be in business. She wondered if the state was going to
act like a business to make money or if it would act as a
governing entity.
Mr. Fauske agreed. He came from the background of Alaska
Housing Finance Corporation (AHFC), which had run like a
business and did mortgages. He shared that AGDC had to
perform in the same way, but also act as a business
partner.
Representative Gattis hoped the state would act like its
partners and would remain in the room with its partners
during discussions.
3:16:23 PM
Representative Wilson wondered how the legislature could
stand in TransCanada's place without a confidentiality
agreement.
Mr. Fauske restated the question. He surmised that the
question was related to AGDC's ability to have strong
confidentiality agreements, and whether TransCanada may
have a stronger position than the state.
Representative Wilson agreed with that summation.
Mr. Fauske answered that there was a motivation going
forward. He stressed that the product should be focused on
an effective system.
Representative Wilson announced that this legislation was
an intense decision, and entrusted AGDC to make the best
decisions. She wondered if it would be difficult for the
state to take TransCanada's seat, should there be a problem
with the confidentiality agreements. She queried the
approximate date of the signed confidentiality agreements,
and the date of the meeting that AGDC was asked to leave
the meeting.
Mr. Fauske replied that all employees of the corporation
had signed confidentiality agreements. He could not give an
exact date of the meeting, but recalled that it was a time
that AGDC was heavily involved in ASAP.
Representative Wilson surmised that the state was out of
compliance for over a year, and wondered why the
regulations were only just being drafted.
Mr. Fauske responded that, as ASAP was not a strong
project, there must be a careful system as to how
information was utilized. He shared that AGDC developed a
plan to benefit both projects.
3:22:46 PM
Mr. Dubler explained that the ASAP and AKLNG issue was a
competition issue that the producers noticed. He stressed
that the issue was to keep information confidential between
the two projects.
Representative Wilson was concerned that nothing had been
done the first time AGDC had been asked to leave a room
during discussions due to confidentiality. She thought
confidentiality agreements should be signed.
Representative Munoz wondered whether Mr. Boykin had signed
a confidentiality agreement. Mr. Fauske replied in the
affirmative.
Representative Munoz spoke to the subjective nature of what
was deemed to be confidential. Mr. Vassar asked for
clarification on the question. Representative Munoz asked
how the issue would be resolved.
Mr. Vassar replied that the model that currently was in
place. He stated that it was relatively easy, and basically
everything was confidential under one umbrella, but one had
to think about each item of information. He stressed that
it was really up to each individual party whether
information was restricted by the confidentiality
agreement.
3:28:31 PM
Representative Munoz wondered if the regulations would add
delay and cost to the project. She wondered if the draft
regulations were in the best interest of AGDC.
Mr. Vassar stated that the existing confidentiality
agreements made his life simple as the attorney for AGDC.
Everything was confidential. Had to keep track of what //
not a simple matter. He liked things that made his life as
simple as possible.
Vice-Chair Saddler provided a summation of testimony by
AGDC. He stressed that alignment and low costs were
critical to success. He wondered if the regulations would
speed or delay progress.
Mr. Fauske answered that the regulations would slow the
process.
Vice-Chair Saddler noted that the draft regulations had
strict limitations, and queried AGDC's understanding of how
the determination would be made.
Mr. Vassar replied that if there was a question it would
involve discussion, and stressed the corporation would make
the decision.
Vice-Chair Saddler asked what benefits the regulations
would bring to achieve gasline progress. Mr. Fauske stated
that the regulations would ensure that the process was open
and transparent.
3:33:57 PM
Vice-Chair Saddler asked how openness and transparency
would benefit the process. He noted that total transparency
would be detrimental.
Mr. Fauske replied that the implied benefit of transparency
was to ensure the comfort level between the legislature and
the public for greater access to information.
Vice-Chair Saddler asked if other public corporations
disclosed their commercial agreements on the basis of
transparency implied benefit.
Mr. Vassar answered that he could not address the legal
perspective from all public corporations. The
confidentiality power the other corporations had, was case
by case. He shared that they had the ability to keep things
confidential. For example AHFC was in the business of
buying mortgage loans.
Representative Kawasaki addressed slide 6. He wondered if
there were other categories that were not included in the
list.
Mr. Vassar replied that the list was fairly inclusive. He
explained that the administration desired to shift the
presumption from all things confidential to all things
public.
Representative Kawasaki queried the process that counsel at
AGDC would be able to filter through the categories.
Mr. Vassar replied that as a practical matter, the
discussions occurred in the proprietary business
information category. The term was not well-defined, so the
drafting of the agreements would address those issues.
Representative Kawasaki asked if AGDC be able to comply
should the draft regulations be passed.
Mr. Vassar replied that the regulations would dictate the
kinds of agreements the corporation entered into in the
future.
Representative Kawasaki asked if AGDC would be able to
comply with the proposed regulation.
Mr. Vassar emphasized that nothing in the regulations was
intended to be retroactive.
3:40:57 PM
Representative Kawasaki asked if the attorney general was
legal counsel to AKLNG.
Mr. Vassar replied in the affirmative.
Representative Kawasaki wondered who had the authority to
procure legal counsel for AKLNG.
Mr. Vassar replied that the attorney general had authority
procure the legal counsel for AKLNG, by statute.
Co-Chair Thompson stressed that the security of the state
and the partners was not granted under the proposed
regulations. He felt that the regulations did not line up
with the responsibilities of the CA.
Mr. Vassar answered that if the state entered into a
confidentiality agreement under the regulations, the
confidentiality agreement would be the security for the
counter party.
Co-Chair Thompson remarked that the partners had sensitive
information, and he wanted to ensure that the partners were
secure in discussions.
Mr. Vassar responded that the counter parties were not
satisfied with the draft regulations.
3:44:38 PM
Representative Gara asked if Mr. Fauske would make the
final decision on the regulations. Mr. Fauske replied in
the negative. The board would make the final decision.
Representative Gara outlined the approval process. Mr.
Fauske agreed.
Representative Gara wondered if regulations were outlined
and then were presented to the board. Mr. Fauske replied in
the affirmative.
Representative Gara noted that many statutes had
confidentiality rules, so the regulations could not violate
the already adopted statutes. Mr. Vassar agreed.
Representative Gara asked for verification that Mr.
Vassar's role was to write the regulations in a way that
was legal. Mr. Vassar answered yes, but did give assistance
in helping to understand ramifications.
Representative Gara remarked that there were times prior to
the current administration that limited the attendance of
the administration to certain meetings. Mr. Fauske replied
in the affirmative.
Representative Gara noted that the AGDC staff were always
able to attend meetings, because they had been subject to
the confidentiality agreements. He wondered if the proposed
regulations attempted to change the opportunity for AGDC to
attend meetings. Mr. Fauske responded that the limitations
depended on the final adoption of the regulation. He opined
that the partners may restrict attendance, should they find
the regulations to be too restrictive or not conducive to
their satisfaction. He stressed that AGDC could not always
determine what the other parties would deem "confidential."
Representative Gara spoke to the governor's goal of
transparency, and he looked at slide 6. There were many
strategies the state would want to remain confidential. He
asked for verification that would maintain confidentiality
in the specific outline. Mr. Fauske replied in the
affirmative.
3:50:34 PM
Co-Chair Neuman wondered if there were instances that
restricted AGDC because of confidentiality agreements. Mr.
Fauske replied in the affirmative.
Representative Guttenberg looked at the list on slide 6. He
wondered if he could ask about specific confidential
categories.
Mr. Vassar replied that all of the things would be
confidential.
Representative Guttenberg asked if he could be told the
list of confidential categories, but not the detail of
confidentiality.
Mr. Vassar replied that it depended on the confidentiality
agreement.
Representative Guttenberg looked at slide 8, which stated,
"information is assumed to be public, absent clear
indication to the contrary." He remarked that there were
situations where information was public, even though it had
been published. He expressed frustration, because the
person inside the corporate structure could not directly
address that issue. He wondered if that situation would be
covered under "information assumed to be public."
3:54:30 PM
Mr. Vassar answered that the bullet on slide 8 was intended
to be a policy direction that AGDC would not agree that
something was confidential unless the party asking for
confidentiality had a reason.
Representative Guttenberg wondered what would occur if a
person had signed a confidentiality agreement, what that
person could discuss at a legislative meeting.
Mr. Dubler answered that the person could make up a
proposed set of slides to share with the legislature in
public and took them to the producers, and the producers
had agreed.
Representative Guttenberg asked for verification that it
was already prescreened by producers. Mr. Dubler replied
that it would depend on the question.
Representative Guttenberg asked what would occur during
confidential business decisions.
Mr. Dubler replied that AGDC would not provide the
information because it did not have it.
3:59:31 PM
Representative Guttenberg asked if the state was at the
point of FEED, but AGDC could not give the legislature
about where the pipe was built.
Mr. Dubler replied that AGDC had responded that there were
various places that could construct the pipelines.
Co-Chair Neuman had been informed that there was the
ability to manufacture 48 inch pipe in the U.S.
Representative Guttenberg stressed that there could be a
competitive edge on bidding, should those parties know that
they were being considered. He stressed that the
legislature could not that general request.
Representative Pruitt asked if AGDC currently had
confidentiality agreements signed with the various parties.
Mr. Vassar replied in the affirmative.
Representative Pruitt wondered if the proposed regulations
allowed for previously agreed upon confidential information
be released to the public sans consent of the parties. Mr.
Vassar replied in the negative.
Representative Pruitt queried the reasoning for choosing
the date December 1. Mr. Vassar replied that the date may
be changed.
Co-Chair Neuman asked who would decide on the date's
extension.
Mr. Vassar replied that in all likelihood it would be
shorter than the original comment period. He stated that
AGDC would decide the date.
4:04:05 PM
Representative Pruitt asked to confirm that the December 4
date had nothing to do with the determination on December
1.
Mr. Vassar replied in the affirmative.
Representative Pruitt wondered if the state was placing the
burden of proof be placed on the other parties, when
information was not released.
Mr. Vassar answered that the intention was that in
negotiating confidentiality agreements, AGDC would not
agree to keep something confidential, unless the other
party was able to demonstrate the need for confidentiality.
He stressed that the confidentiality agreement would
dictate exactly the withheld information.
Representative Pruitt asked if it happened in any other
situation. Mr. Vassar replied that he was not familiar
with other negotiations of confidentiality agreements on
that basis.
Representative Pruitt asked if there was something the
state felt should be confidential. Mr. Fauske replied in
the affirmative.
4:07:16 PM
Vice-Chair Saddler felt that the regulations would depress
the likelihood of success for the AKLNG project, against
the rhetorical benefit of transparency. He wondered why 85
percent of the funds for Mr. Boykin's pay came from ASAP.
Mr. Fauske replied that when the contract was originally
drafted for Mr. Boykin, it was understood that he would
liaison between the two projects. The current allocation
methodology was appropriate, because at the time both
projects were ongoing.
Vice-Chair Saddler inferred that it was a holdover from the
time of the drafting of the contract. He asked if there was
a reason it could not be adjusted.
Mr. Fauske agreed that the contract could and probably
would be adjusted.
Co-Chair Thompson discussed the agenda for the following
day.
HB 3001 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
4:12:10 PM
The meeting was adjourned at 4:12 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 3001 ExxonMobil Written Questions 10-09-2015.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| HB 3001 2015-10-21 CPAI Comments to AGDC Proposed Regs.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| HB 3001 AGDC.Proposed regs.BP.Qs.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| HB 3001 BP COMMENTS.PDF |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| CS WorkDraft HB 3001 FIN E version.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| HB 3001 FundSources LFD.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| 2015 10 15 AGDC Confidentiality Public Hearing Transcript.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| AGDC Proposed Confidentiality Regulations.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| 2015 11 01 AGDC H Finance Committee.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |
| HB 3001 OMB to House 3001 revision.pdf |
HFIN 11/1/2015 1:00:00 PM |
HB3001 |