Legislature(2001 - 2002)

04/18/2001 01:44 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 18, 2001                                                                                           
                          1:44 PM                                                                                               
                                                                                                                                
TAPE HFC 01 - 85, Side A                                                                                                        
TAPE HFC 01 - 85, Side B                                                                                                        
TAPE HFC 01 - 86, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:44 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative John Harris                                                                                                      
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Randy  Phillips; Dan Sullivan, Development  Director,                                                                   
Arctic  Winter   Games,  Anchorage;   Mike  Tibbles,   Staff,                                                                   
Representative Williams;  Randy Ruaro, Staff,  Representative                                                                   
Williams; Paul Rusanowski, Senior  Vice President Operations,                                                                   
Alaska  Intrastate  Gas  Company,  Anchorage;  Dean  Guaneli,                                                                   
Chief   Assistant   Attorney  General,   Criminal   Division,                                                                   
Department of Law.                                                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Katelyn  Markley, Alaska  Industrial  Development and  Export                                                                   
Authority (AIDEA);  Jim Maley, Executive Director,  Jesse Lee                                                                   
Home,   Seward;  Tim   Sczawinski,   Seward;  Jim   Stratton,                                                                   
Director,  Parks   and  Outdoor  Recreation,   Department  of                                                                   
Natural Resources                                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 40     "An Act providing for the revocation of driving                                                                       
          privileges by  a court for a driver  convicted of a                                                                   
          violation  of  traffic laws  in  connection with  a                                                                   
          fatal  motor vehicle  or  commercial motor  vehicle                                                                   
          accident; amending Rules  43 and 43.1, Alaska Rules                                                                   
          of Administration;  and providing for  an effective                                                                   
          date."                                                                                                                
                                                                                                                                
          HB 40  was heard and HELD in Committee  for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
HB 96     "An Act relating to acquisition and development of                                                                    
          the Jesse Lee Home;  and providing for an effective                                                                   
          date."                                                                                                                
                                                                                                                                
          CSHB 96 (FIN) was REPORTED out of Committee with a                                                                    
          "do  pass"   recommendation  and   with  previously                                                                   
          published  fiscal  impact  note  (1) by  the  House                                                                   
          Education and Social Services.                                                                                        
                                                                                                                                
HB 101    "An Act relating to charter schools; and providing                                                                    
          for an effective date."                                                                                               
                                                                                                                                
          CSHB 101  (FIN) was REPORTED out of  Committee with                                                                   
          a "do pass" recommendation  and with two previously                                                                   
          published fiscal  impact note by the  Department of                                                                   
          Education and Early Development (#1 and #2).                                                                          
                                                                                                                                
HB 236    "An Act relating to the contracting and financing                                                                     
          authority of the Alaska  Industrial Development and                                                                   
          Export  Authority;  authorizing  the  authority  to                                                                   
          issue  bonds in  a principal  amount not to  exceed                                                                   
          $76,000,000  to  finance the  acquisition,  design,                                                                   
          construction,  inventory, and operation  of natural                                                                   
          gas,  propane  air,   or  manufactured  gas  public                                                                   
          utility facilities;  and providing for an effective                                                                   
          date."                                                                                                                
                                                                                                                                
          HB 236 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
SB 93     "An Act relating to the Arctic Winter Games Team                                                                      
          Alaska  trust;  and   providing  for  an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
          SB 93 was REPORTED out of Committee with a "do                                                                        
          pass" recommendation  and with previously published                                                                   
          fiscal  impact  note  (#1)  by  the  Department  of                                                                   
          Revenue.                                                                                                              
                                                                                                                                
          CSSB 93 (FIN) was REPORTED  out of Committee with a                                                                   
          "do  pass"  recommendation  and with  a  previously                                                                   
          published  zero fiscal  note by  the Department  of                                                                   
          Revenue (#1).                                                                                                         
SENATE BILL NO. 93                                                                                                            
                                                                                                                                
     "An Act relating to the Arctic Winter Games Team Alaska                                                                    
     trust; and providing for an effective date."                                                                               
                                                                                                                                
SENATOR RANDY  PHILLIPS, SPONSOR  testified in support  of SB
93. He  observed that the  legislation relates to  the Arctic                                                                   
Winter Games  Team Alaska  Trust Fund  and was modeled  after                                                                   
the  Alaska Children's  Fund.  The legislation  would  permit                                                                   
state, federal and private money  to be deposited in the Fund                                                                   
and invested.  The interest  from the fund  would be  used to                                                                   
support Team Alaska  and the Arctic Winter Games.  The Arctic                                                                   
Winter Games  occur every two  years. The next games  will be                                                                   
held  in Greenland.  It  is the  second  level winter  games.                                                                   
Approximately 2,000 athletics  participate. Approximately 330                                                                   
athletics  participate from Alaska.  State participation  for                                                                   
the games has been around $250,000  to $300,000 dollars every                                                                   
two years.  The trust fund  would provide funding  stability.                                                                   
The games have been in existence  for 30 years. The state has                                                                   
provided financial support since 1970.                                                                                          
                                                                                                                                
Representative Croft  noted that there is a  zero fiscal note                                                                   
and questioned  how funding  would be  established without  a                                                                   
fiscal  note. Senator  Phillips  noted  that the  legislation                                                                   
would only establish the shell.                                                                                                 
                                                                                                                                
Representative  Hudson spoke in  support. He questioned  if a                                                                   
permanent  fund  dividend  check  off  had  been  considered.                                                                   
Senator   Phillips  stated   that  he   had  considered   the                                                                   
possibility  of using a  check off. He  stated that  he would                                                                   
consider it for  the next year. He emphasized  the uniqueness                                                                   
of  the Arctic  Winter  Games. He  provided  examples of  his                                                                   
experience with the Arctic Winter Games.                                                                                        
                                                                                                                                
DAN  SULLIVAN,  DEVELOPMENT DIRECTOR,  ARCTIC  WINTER  GAMES,                                                                   
ANCHORAGE testified  via teleconference in support  of SB 93.                                                                   
He  observed that  one part-time  employee working  out of  a                                                                   
donated office  manages the event.  More than  100 volunteers                                                                   
assist.  He  observed  that  Alaska   is  lagging  behind  in                                                                   
equipment and uniforms  and the ability to manage  the event.                                                                   
Athletes pay a third of their  participations cost; currently                                                                   
each athletic  pays about $450  dollars to participate.  This                                                                   
cost is estimated  to double due to transportation  costs. He                                                                   
suggested the  use of Tobacco  Settlement Funds  to establish                                                                   
the trust. He  noted that sports help keep  young people from                                                                   
tobacco.                                                                                                                        
                                                                                                                                
Representative Lancaster  MOVED to report CSSSB  93 (FIN) out                                                                   
of   Committee    with   the   accompanying    fiscal   note.                                                                   
Representative   John  Davies   spoke  in   support  of   the                                                                   
legislation.  He  noted that  he  participated  in the  first                                                                   
Arctic  Winter games.  He  emphasized the  cultural  exchange                                                                   
that occurs at the event.                                                                                                       
                                                                                                                                
There  being NO  OBJECTION,  CSSSB 93  (FIN)  was moved  from                                                                   
Committee.                                                                                                                      
HOUSE BILL NO. 101                                                                                                            
                                                                                                                                
     "An Act relating  to charter schools; and  providing for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
MIKE   TIBBLES,  STAFF,   REPRESENTATIVE  WILLIAMS   provided                                                                   
members with  Amendment 1 (copy  on file). He  explained that                                                                   
the amendment would  modify the section that  provides a $500                                                                   
dollar grant  per student  and adds a  pro rata provision  in                                                                   
the event of a shortfall.                                                                                                       
                                                                                                                                
Co-Chair Williams MOVED to ADOPT  Amendment 1. Representative                                                                   
Croft OBJECTED  for the  purpose of  discussion. Mr.  Tibbles                                                                   
reiterated  that the amendment  would  add subsection  (c) to                                                                   
pro rata the appropriation if  there are insufficent funds to                                                                   
apply  $500 dollars  per  student  for every  charter  school                                                                   
student. Each  student's share would be reduced  equally. The                                                                   
cost is approximately $1.6 million dollars.                                                                                     
                                                                                                                                
Representative  Croft   maintained  that  the   appropriation                                                                   
should be  fully funded. He stated  that he did not  want the                                                                   
fiscal note to  drive the text. He felt that  the fiscal note                                                                   
should be funded at the level of the legislation.                                                                               
                                                                                                                                
Co-Chair Mulder  spoke in  support and  stated his  desire to                                                                   
fund  the entire  fiscal note.  He noted  that the  amendment                                                                   
would provide future flexibility.  Mr. Tibbles added that the                                                                   
fiscal note would  be funded in the conference  committee. He                                                                   
observed  that the  same pro  rata language  is contained  in                                                                   
other education  funding such  as the foundation  formula. He                                                                   
noted that  the student count  could change between  the time                                                                   
the fiscal note is funded and the student count occurs.                                                                         
                                                                                                                                
Co-Chair  Mulder clarified  that the same  pro rata  language                                                                   
exists in regulation for pupil transportation.                                                                                  
                                                                                                                                
Representative Croft expressed  hope that the intent would be                                                                   
to fully fund the appropriation  and withdrew his objections.                                                                   
                                                                                                                                
Co-Chair  Mulder  MOVED  to  report CSHB  101  (FIN)  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB  101 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   two  previously  published                                                                   
fiscal impact note  by the Department of Education  and Early                                                                   
Development (#1 and #2).                                                                                                        
HOUSE BILL NO. 236                                                                                                            
                                                                                                                                
     "An  Act  relating  to  the  contracting  and  financing                                                                   
     authority  of  the  Alaska  Industrial  Development  and                                                                   
     Export  Authority; authorizing  the  authority to  issue                                                                   
     bonds in  a principal amount  not to exceed  $76,000,000                                                                   
     to  finance   the  acquisition,  design,   construction,                                                                   
     inventory,  and operation of  natural gas, propane  air,                                                                   
     or manufactured gas public utility facilities; and                                                                         
     providing for an effective date."                                                                                          
                                                                                                                                
RANDY  RUARO,  STAFF, REPRESENTATIVE  WILLIAMS  testified  in                                                                   
support   of  the   legislation.   He  explained   that   the                                                                   
legislation would provide the  legislative approval necessary                                                                   
for the  Alaska Industrial  Development and Export  Authority                                                                   
(AIDEA)  to  review the  Southeast  and  Gulf of  Alaska  gas                                                                   
project for bond funding, required  under AS 44.88.095(g) for                                                                   
projects  over $10 million  dollars. Approval  does not  mean                                                                   
that  the  project  would  be   funded  as  there  are  other                                                                   
statutory requirements. There is a zero fiscal note.                                                                            
                                                                                                                                
Co-Chair  Williams noted  that it  was not  his intention  to                                                                   
move the bill from committee at that time.                                                                                      
                                                                                                                                
PAUL  RUSANOWSKI, SENIOR  VICE  PRESIDENT OPERATIONS,  ALASKA                                                                   
INTRASTATE  GAS COMPANY,  ANCHORAGE  spoke in  support of  HB
236.  He noted  that  the  project  would bring  utility  gas                                                                   
utility service to Southeast and  Gulf of Alaska communities.                                                                   
The project  is based on  the production, transportation  and                                                                   
storage  of liquid  natural  gas,  liquid petroleum  gas  and                                                                   
manufactured  gases. The  company is  approved by the  Alaska                                                                   
Public  Utilities   Commission  in  17  communities   and  is                                                                   
involved  in long-term  operations and  maintenance of  local                                                                   
gas distribution  systems. They contract with  communities to                                                                   
provide   gas  supplies   and   marine  transportation.   The                                                                   
communities involved include:  4 in the Gulf of Alaska and 13                                                                   
in  Southeast Alaska.  The legislation  would  allow them  to                                                                   
expand to include five more communities  in Southeast Alaska.                                                                   
Juneau,  Ketchikan, Sitka  and  Kodiak would  be the  largest                                                                   
communities  served. He  projected  a residential  load of  5                                                                   
billion  cubic  feet  annually   (for  all  four  communities                                                                   
combined)  within 5 years  of startup.  He estimated  that an                                                                   
additional  3.7   billion  cubic   feet  of  commercial   and                                                                   
industrial  loads would  be available.  He stated that  there                                                                   
would  be 10  to 12  billion cubic  feet  annually, about  10                                                                   
years out in the project.                                                                                                       
                                                                                                                                
Mr.  Rusanowski provided  members  with a  handout of  slides                                                                   
that were  projected during  his presentation(copy  on file).                                                                   
He  reviewed the  slides. He  noted that  gases move  through                                                                   
pipes   to  a  processing   facility   and  are  stored   and                                                                   
transported.  They are then  re-injected into storage  fields                                                                   
and  stored  as  liquids. Supplies  would  come  from  Prince                                                                   
Rupert, which is the closest point.                                                                                             
                                                                                                                                
Mr. reviewed major components  of the project: acquisition of                                                                   
gas supplies,  transportation, storage and  distribution. Gas                                                                   
would come from Northern British  Columbia and Southern Yukon                                                                   
Alberta  and Prince  Rupert Canada  have  active gas  fields.                                                                   
Marine  transportation  involves  three  different  modes:  a                                                                   
barge  (1  million  gallon  capacity),   railcar  aqua  train                                                                   
(180,000 and  500,000 existing  capacity) and existing  small                                                                   
bulk gas carriers (500,000 to 2 million capacity).                                                                              
                                                                                                                                
Representative  Croft  questioned what  would  happen in  the                                                                   
event  of a  collision or  spill  of a  liquefied gases.  Mr.                                                                   
Rusanowski explained  that they would float out  on the water                                                                   
and  vaporize. Some  would  dissolve in  the  water but  most                                                                   
would  be vaporized.  There would  not be  an expulsion.  The                                                                   
double haul  is designed  to prevent  damage to the  internal                                                                   
tanks. It  is easier to  repair the hull  than to  repair the                                                                   
tanks. The purpose is not containment.                                                                                          
                                                                                                                                
Mr. Rusanowski showed slides of  existing facilities (copy on                                                                   
file.) He  stressed that the  residential and  small business                                                                   
service is  their focus. Residential  service is  expected at                                                                   
$7.25  dollars  per  cubic feet  and  $7.95  dollars  monthly                                                                   
service  charge. He  compared  the proposed  rate with  other                                                                   
states. The rate would be about  .40 cents above the national                                                                   
average, but competitive to Northeastern states.                                                                                
                                                                                                                                
Once gas comes  to the communities operations  and management                                                                   
costs  would  be  under  the control  of  the  company.  Debt                                                                   
service  is 30  percent. Fuel  represents 62  percent of  the                                                                   
cost structure  and transportation represents 32  percent. He                                                                   
emphasized  that  efficiency would  impact  costs.  Wholesale                                                                   
liquid petroleum  prices from Canada during the  last 4 years                                                                   
have ranged  from .20 to .40  cents. He estimated  their cost                                                                   
at .25 to .30 cents a gallon.                                                                                                   
                                                                                                                                
Representative Croft noted that  prices have increased in the                                                                   
last years.  Mr. Rusanowski agreed  that prices had  gone up,                                                                   
but  explained that  the higher  prices are  not holding.  He                                                                   
explained  that  natural  gas  is  a  single  carbon  methane                                                                   
molecular. Liquid  petroleum gases  are gases at  near normal                                                                   
temperature  such   as  ethane,  propane,  and   butanes.  He                                                                   
explained that liquid petroleum  gases are now being put into                                                                   
the  natural   gas  stream  in  pipelines   throughout  North                                                                   
America. The natural gas stream  had been previously returned                                                                   
to  oilfields   to  maintain  pressure  or  used   to  create                                                                   
specialty products  such as  bottled propane. Propane  stores                                                                   
well  and  indefinitely.  All  the gases  that  go  into  the                                                                   
pipeline are  indistinguishable at  the burner tip.  Each one                                                                   
provides a different amount of  energy. Gases are balanced to                                                                   
provide a stable energy content.                                                                                                
                                                                                                                                
Mr.  Rusanowski compared  petroleum  gases to  crude oil.  He                                                                   
noted that their  prices are linked. When there  are peaks in                                                                   
crude oil prices, petroleum gases do not follow as sharply.                                                                     
                                                                                                                                
Mr.  Rusanowski  referred  to community  energy  surveys.  He                                                                   
noted that the annual energy consumption  in Southeast Alaska                                                                   
is 165 million BTU per year. The  average cost of fuel oil in                                                                   
rural Southeast Alaska was $1.74  dollars per gallon in 1999.                                                                   
The average annual  cost of fuel is $2,700 dollars  a year in                                                                   
small communities.                                                                                                              
                                                                                                                                
TAPE HFC 01 - 85, Side B                                                                                                      
                                                                                                                                
Mr.  Rusanowski discussed  savings for  rural homeowners.  He                                                                   
estimated that  there would  be a 15  to 40 percent  savings.                                                                   
Those with the highest electric  rates have the best savings.                                                                   
                                                                                                                                
Representative John  Davies questioned what  assumptions were                                                                   
made  regarding  amortization  of infrastructure  costs.  Mr.                                                                   
Rusanowski  noted  that  those  cost were  not  included.  An                                                                   
incentive  program was  built in  to allow  cost recovery  of                                                                   
those modifications in 5 years or less.                                                                                         
                                                                                                                                
Mr. Rusanowski  reviewed a  slide that  compared the  gas and                                                                   
electric cost  to operate  a clothes  dryer in Anchorage  and                                                                   
their service  area (page  7 of  handout). He concluded  that                                                                   
the  stable  pricing  structure   makes  it  advantageous  to                                                                   
convert to gas.                                                                                                                 
                                                                                                                                
Mr. Rusanowski  explained that  their estimates use  a 9-year                                                                   
build  out scenario.  He added  that they  expect the  actual                                                                   
build out to be  only 6 to 7 years. He anticipated  a bump in                                                                   
the fourth year  as the first three communities  come on line                                                                   
and then steady growth from that point.                                                                                         
                                                                                                                                
Mr. Rusanowski  discussed marketing  incentives, which  would                                                                   
make it  in the interest  of the  public to convert.  Juneau,                                                                   
Ketchikan  and  Sitka  would  be  the  first  communities  to                                                                   
receive services. Klawock and  Craig would most likely be the                                                                   
next two served.                                                                                                                
                                                                                                                                
Representative  Croft noted  that  Angoon and  Kake have  the                                                                   
lowest  percent  benefit and  questioned  why  they would  be                                                                   
among  the  first  served.  Mr.  Rusanowski  noted  that  the                                                                   
scenario  is  based on  transportation  logistics.  The  plan                                                                   
takes advantage of the fact that  the route would go by these                                                                   
communities,  because of  the size they  could be  engineered                                                                   
quickly. Savings  would be less in these  smaller communities                                                                   
due  to  the  cost  for  waterfront   storage  and  send  out                                                                   
facilities.   The  infrastructure  is   the  same   in  every                                                                   
community. There is a small population  to serve, but a large                                                                   
volume of  gas still needs to  be available. There  are fewer                                                                   
people to amortize against.                                                                                                     
                                                                                                                                
Mr. Rusanowski  noted that  there would be  200 or  more jobs                                                                   
created  during construction.  There  would  be 15  permanent                                                                   
full time jobs created in Juneau,  another 35 jobs throughout                                                                   
other  areas  of Southeast  Alaska  and  50 or  more  related                                                                   
secondary industry jobs.                                                                                                        
                                                                                                                                
Mr.  Rusanowski  observed  that  there  would  be  an  equity                                                                   
investment of $11.5 million dollars  and loans of $45 million                                                                   
dollars. There would be internally  generated revenues of $13                                                                   
million  dollars.  Infrastructure  costs in  the  communities                                                                   
would be $45 million dollars.                                                                                                   
                                                                                                                                
Mr.  Rusanowski  pointed  out   that  HB  239  would  provide                                                                   
legislative  approval  for  a  utility project  of  over  $10                                                                   
million dollars  and authorizes a  bond limit of  $76 million                                                                   
dollars. There  would be  a sunset date  of July 1,  2006 for                                                                   
issuance of bonds. This would  allow focus on the development                                                                   
and   finance   program   in  AIDEA,   which   would   target                                                                   
development,  ownership  and  operation  of  facilities  like                                                                   
road, ports  and utilities. These  projects would need  to be                                                                   
essential   to  the  economic   well   being  of  the   area,                                                                   
financially feasible and supported  by local communities. The                                                                   
project  would  move  into the  due  diligence  and  economic                                                                   
feasibility  review  with  AIDEA   when  the  legislation  is                                                                   
passed.                                                                                                                         
                                                                                                                                
Representative Whitaker  asked if there is a  downside to the                                                                   
project.  Mr.  Rusanowski did  not  think  there would  be  a                                                                   
downside  to introducing  gas utilities  to the  communities.                                                                   
The  service   would  enhance   infrastructure  and   provide                                                                   
different  opportunities. Some  employees could be  displaced                                                                   
as the  use of fuel  oil is decreased  but there would  be an                                                                   
increase in gas related jobs.  He maintained that communities                                                                   
would  be more  attractive for  development and  acknowledged                                                                   
that some  could view this  negatively. Gas provides  a clean                                                                   
fuel  source with  environmental benefits.  He discussed  the                                                                   
benefits, such as a reduction in pollution.                                                                                     
                                                                                                                                
Representative  Whitaker  concluded  that the  project  would                                                                   
bring economic growth and opportunity.  He questioned the gas                                                                   
source.                                                                                                                         
                                                                                                                                
Mr. Rusanowski  noted  that they have  agreements with  Amoco                                                                   
Canada (the  largest holder  of gas  reserves in Canada).  He                                                                   
stressed that  Alaskan gas would  be used when  available and                                                                   
Cook  Inlet gas  would  be used  if additional  reserves  are                                                                   
discovered.                                                                                                                     
                                                                                                                                
Mr. Rusanowski  noted that  average household consumption  is                                                                   
165  million  BTU  per year.  The  American  Gas  Association                                                                   
estimates 170 million BTU per year.                                                                                             
                                                                                                                                
Representative Whitaker  questioned if the high  price of gas                                                                   
in the  market was  an anomaly and  what factors  could lower                                                                   
the price. Mr.  Rusanowski pointed out that gas  and oil have                                                                   
generally been  coupled. They were decoupled  during the last                                                                   
excursion in  prices. This has  only happened one  other time                                                                   
in the  past 30 -  40 years. Wholesale  gas prices  rose from                                                                   
$2.50 - $3.50  per million BTU's to $13 dollars.  The federal                                                                   
government  cost projection  is $4.00  dollars by next  year.                                                                   
The current cost is $5.00 dollars  per BTU. There has been an                                                                   
increase in gas exploration.                                                                                                    
                                                                                                                                
Representative  Whitaker  disagreed  that  there would  be  a                                                                   
significant reduction  of the value  of gas. Supply  is still                                                                   
out stripping  demand. The futures market indicates  that the                                                                   
prices  will  remain  high.  He  expressed  support  for  the                                                                   
project.                                                                                                                        
                                                                                                                                
Mr. Rusanowski  noted that the  competition is with  fuel oil                                                                   
prices.  As long as  fuel oil  prices remain  high (they  are                                                                   
currently at $28 dollars) it doesn't matter what gas is.                                                                        
                                                                                                                                
Representative   Lancaster  noted   that   the  project   was                                                                   
originally  to   bring  gas   from  Alaska.  Mr.   Rusanowski                                                                   
explained that  the Cook Inlet  reserves were in  question. A                                                                   
10-year reliable  gas source is  needed. They were  unable to                                                                   
secure a  long-term commitment  for gas  from Cook  Inlet. He                                                                   
noted  the  intent  to  return  to Alaskan  gas  when  it  is                                                                   
available.                                                                                                                      
                                                                                                                                
Representative  Lancaster  clarified  that  it is  not  their                                                                   
intent  to generate  power. Mr.  Rusanowski  noted that  they                                                                   
would need  certificates from  the Regulatory Commission  [in                                                                   
order to generate  power]. They could not sell  gas for power                                                                   
generation without approval.                                                                                                    
                                                                                                                                
Representative   Lancaster  questioned   the   cost  of   the                                                                   
feasibility study. Co-Chair Williams  explained that it would                                                                   
go before  AIDEA and that  AIDEA would incorporate  the cost.                                                                   
The  legislation  only  puts the  project  before  AIDEA  for                                                                   
consideration. Mr.  Rusanowski added that it would  be a year                                                                   
or two out before bonding would take place.                                                                                     
                                                                                                                                
Representative John Davies asked  if the AIDEA proposal would                                                                   
come before the legislature.                                                                                                    
                                                                                                                                
KATELYN  MARKLEY, ALASKA  INDUSTRIAL  DEVELOPMENT AND  EXPORT                                                                   
AUTHORITY   (AIDEA)   testified   via   teleconference.   She                                                                   
clarified  that the once  the legislature  provides  the bond                                                                   
authorization a due diligence  process by AIDEA would have to                                                                   
be completed. This includes a  feasibility study to determine                                                                   
that  the project  is advantageous  to the  state of  Alaska.                                                                   
Sources and uses of funds would  then be reviewed. Sufficient                                                                   
revenues   for  debt   and  operation   would   have  to   be                                                                   
demonstrated.  The Alaska Industrial  Development and  Export                                                                   
Authority would  do a risk  analysis and market  review. They                                                                   
would  also  review  the  credit  strength  of  participants,                                                                   
demand  on   public  facilities,   and  adverse   affects  on                                                                   
communities.  They   would  also  assess  job   creation  and                                                                   
determine  if it  is consistent  with bonding  authorization.                                                                   
The  projects  would   also  have  to  be  approved   by  the                                                                   
communities.   The  project   would  not   come  before   the                                                                   
legislature again.  Once the  feasibility study  is completed                                                                   
the AIDEA board would approve or disapprove the project.                                                                        
                                                                                                                                
Representative  Harris noted that  the project would  provide                                                                   
possibilities  to reduce  rural utility  costs. He asked  the                                                                   
process involved to gain approval  from the Alaska Regulatory                                                                   
Commission to sell gas to a utility system.                                                                                     
                                                                                                                                
Mr.  Rusanowski stated  that  it would  make  sense for  some                                                                   
communities to consider  [the use of gas to  generate power].                                                                   
There would  have to be  a fully operational  and functioning                                                                   
gas utility in the community with  an alternative fuel source                                                                   
readily  available for  the  electric utility.  The  electric                                                                   
utility  could approached  the gas company.  The gas  utility                                                                   
would  have to  assess their  reserves  to see  if there  are                                                                   
sufficient reserves and how it  would affect their customers.                                                                   
The analysis  would then be  used to approach  the Regulatory                                                                   
Commission with the  electric utility to apply  for the right                                                                   
to sell gas for the purpose of  generating electricity. If it                                                                   
is  determined to  be  in the  public's  interest they  would                                                                   
determine  the rate  and  conditions for  sale.  It would  be                                                                   
initiated by the electric utility.  The Regulatory Commission                                                                   
could  determine that  the  rate should  be  higher or  lower                                                                   
depending on cost  and the service being provided  by the gas                                                                   
utility.   The   regulatory  prices   would   determine   the                                                                   
legitimate charges for the service.                                                                                             
                                                                                                                                
HB  236  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 96                                                                                                             
                                                                                                                                
     "An Act relating to acquisition and development of the                                                                     
     Jesse Lee Home; and providing for an effective date."                                                                      
                                                                                                                                
Representative  Ken Lancaster,  Sponsor testified in  support                                                                   
of HB 96. He  explained that the legislation  would allow the                                                                   
Department  of Natural  Resources to look  at acquisition  of                                                                   
the Jesse Lee Home.  The home was built in Seward  in 1925 to                                                                   
house  children.  It  hasn't been  occupied  since  the  1964                                                                   
earthquake  when it was  severely damaged.  The Alaska  state                                                                   
flag  was designed  on the  site and  American soldiers  were                                                                   
housed  there during  World War  II. It is  currently in  the                                                                   
hands of  the Kenai Peninsula  Borough and is in  the process                                                                   
of  being  given to  the  city  of  Seward.  There is  a  $65                                                                   
thousand dollar  fiscal note for  an architectural  study and                                                                   
site  assessment.  The Jesse  Lee  Home  was later  moved  to                                                                   
Anchorage and is still in operation.                                                                                            
                                                                                                                                
Representative John Davies clarified  that the funds would go                                                                   
toward the study.  He questioned if the city  of Seward would                                                                   
donate the building. Representative  Lancaster explained that                                                                   
the  Department of  Natural Resources  would  be expected  to                                                                   
"make  those  assumptions".  The  city  of  Seward  would  be                                                                   
willing to  donate the  property or it  could be  retained by                                                                   
the city  if the  Department of  Natural Resources  wanted to                                                                   
manage the property or help fix the building.                                                                                   
                                                                                                                                
In   response  to   a  question   by  Representative   Croft,                                                                   
Representative  Lancaster  explained  that the  facility  was                                                                   
moved to Anchorage in the early  1960's after the earthquake.                                                                   
                                                                                                                                
Representative  Harris  referred   to  the  fiscal  note  and                                                                   
pointed  out that  an  existing historic  preservation  grant                                                                   
program would cover half of the cost.                                                                                           
                                                                                                                                
JIM  STRATTON,   DIRECTOR,  PARKS  AND  OUTDOOR   RECREATION,                                                                   
DEPARTMENT    OF    NATURAL     RESOURCES    testified    via                                                                   
teleconference.  He explained  that the  grant requires  a 50                                                                   
percent match. This  is half of the consultant's  costs. This                                                                   
would be matched with $35 thousand  dollars in federal funds.                                                                   
                                                                                                                                
Representative  Moses clarified that  Unalaska was  the first                                                                   
site of the home.                                                                                                               
                                                                                                                                
Representative  John Davies noted  that $70 thousand  dollars                                                                   
would be spent on the architectural  consultant. Mr. Stratton                                                                   
observed  that  the  federal  funds  are  authorized  in  the                                                                   
current operating budget through  a historical grant program.                                                                   
                                                                                                                                
JIM  MALEY,  EXECUTIVE  DIRECTOR,   JESSE  LEE  HOME,  SEWARD                                                                   
testified via  teleconference in support of  the legislation.                                                                   
The  program   is  currently   known  as  Alaska   Children's                                                                   
Services,  which   is  the   oldest  and  largest   childcare                                                                   
institution  in Alaska.  The original  home was  built as  an                                                                   
orphanage  in Unalaska  in 1890.  It was moved  to Seward  in                                                                   
1925. He noted  its historic value. He emphasized  the home's                                                                   
service to Alaskan children.                                                                                                    
                                                                                                                                
TIM  SCZAWINSKI,  SEWARD, testified  via  teleconference.  He                                                                   
suggested  that the  move of  the Jesse  Lee Home  was not  a                                                                   
result  of the  earthquake damage  as much  as Alaska's  move                                                                   
toward  foster homes.  He stressed  the community's  interest                                                                   
and  involvement in  maintaining  this historical  site.  The                                                                   
City Council appropriated  $50 thousand dollars  to clear the                                                                   
adjacent land to  make the site more presentable  and protect                                                                   
against further damage.                                                                                                         
                                                                                                                                
Representative  John Davies  MOVED  to report  HB  96 out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB 96 (FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and with previously  published fiscal  impact                                                                   
note (1) by the House Education and Social Services.                                                                            
                                                                                                                                
CSHB 96 (FIN) was REPORTED out  of Committee with a "do pass"                                                                   
recommendation  and with previously  published fiscal  impact                                                                   
note (1) by the House Education and Social Services.                                                                            
                                                                                                                                
TAPE HFC 01 - 86, Side A                                                                                                      
HOUSE BILL NO. 40                                                                                                             
                                                                                                                                
     "An  Act   providing  for  the  revocation   of  driving                                                                   
     privileges  by  a court  for  a  driver convicted  of  a                                                                   
     violation  of traffic  laws in connection  with  a fatal                                                                   
     motor  vehicle  or commercial  motor  vehicle  accident;                                                                   
     amending   Rules   43   and  43.1,   Alaska   Rules   of                                                                   
     Administration; and providing for an effective date."                                                                      
                                                                                                                                
DEAN GUANELI,  CHIEF ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT                                                                   
OF LAW, explained that the legislation  would revoke licenses                                                                   
of those  that violate  a traffic  law or  regulation of  the                                                                   
state, which  results in a  death. Licenses would  be revoked                                                                   
for  a year.  He  noted  that there  are  a number  of  fatal                                                                   
accidents on Alaskan highways.  He observed that the criminal                                                                   
penalty  does not  cover  accidents where  a  traffic law  or                                                                   
regulation  was  violated  such  as  running  a  stop  light,                                                                   
falling asleep  at the  wheel, crossing  the center  line, or                                                                   
going off  the road.  Currently, the only  penalty is  a $300                                                                   
dollar  fine  in  the form  of  a  traffic  ticket.  Victims'                                                                   
families  question how  someone  who caused  a  death can  be                                                                   
allowed to continue  driving. He noted that, on page  2: if a                                                                   
person is convicted  of a violation of a traffic  law and the                                                                   
court finds  that the  person was  operating a motor  vehicle                                                                   
and the  driver's violation of  a traffic law  contributed to                                                                   
an  accident that  caused the  death of  another person  then                                                                   
their license  would be  revoked for  one year. He  recounted                                                                   
testimony and observed the affect on families.                                                                                  
                                                                                                                                
Mr. Guaneli stressed that the  question is, "should the state                                                                   
of  Alaska   recognize  that   the  poor  judgment   that  is                                                                   
exercised, whether  you run a  red light or whether  you fall                                                                   
asleep  at the  wheel, whether  that  justifies revoking  the                                                                   
license".  He  maintained that the answer to  the question is                                                                   
"yes". The  legislation provides  license revocation  for one                                                                   
year and  also provides for  a limited driver's  license. The                                                                   
court can  grant a  limited license to  drive for  purpose of                                                                   
work or drive for purposes of  providing care for someone who                                                                   
is  in  need of  the  [driver's]  physical  care.   There  is                                                                   
adequate  protection  to  prevent   loss  of  employment.  He                                                                   
asserted that it  is time to recognize that there  are a wide                                                                   
variety  of circumstances  that reflect  poor judgment,  poor                                                                   
driving and as a result, license action should be taken.                                                                        
                                                                                                                                
Vice-Chair Bunde asked if it would  be a presumptive sentence                                                                   
or mandatory  minimum sentence.   Mr. Guaneli stated  that it                                                                   
would be and noted that the Court  would need to make certain                                                                   
findings that the conduct contributed  to the death. If there                                                                   
were  another  license revocation  (if  the  conduct put  the                                                                   
driver's  points over  the limit), the  revocation would  run                                                                   
concurrently.  It would guarantee  that the sentence would be                                                                   
at least one year.                                                                                                              
                                                                                                                                
In  response  to  Vice-Chair  Bunde,  Mr.  Guaneli  discussed                                                                   
presumptive   sentencing.    He   pointed   out    that   the                                                                   
Administration  is  advocating  for an  appropriate  sanction                                                                   
were none exists.                                                                                                               
                                                                                                                                
                                                            st                                                                  
Representative  Lancaster asked why  there is a  September 1                                                                    
effective date.  Mr. Guaneli did  not know the  rationale for                                                                   
the effective date.                                                                                                             
                                                                                                                                
Representative   Harris  felt   that   the  legislation   was                                                                   
"unsettling".     He  observed  that  the  penalty   for  the                                                                   
identical conduct  is changed depending on the  outcome.  Mr.                                                                   
Guaneli pointed out  that the law looks at  the circumstances                                                                   
and what results from the conduct in addressing sanctions.                                                                      
                                                                                                                                
Representative  Croft noted that  the legislation  represents                                                                   
"almost a  strict liability consequence  of a  violation that                                                                   
is proven". He questioned the lack of a mental state.                                                                           
                                                                                                                                
Mr.  Guaneli noted  that the  state  does not  have to  prove                                                                   
intent  for most violations  of traffic  laws. Mental  states                                                                   
that  are  generally  associated  with criminal  law  do  not                                                                   
applied  to traffic  violations.  If  the state  could  prove                                                                   
criminal negligence then the current  criminal negligence law                                                                   
would pertain. The legislation  would apply to a small set of                                                                   
cases, perhaps a  half a dozen cases a year that  do not fall                                                                   
under  other   criminal  law.  If  the  driver   simply  acts                                                                   
carelessly,  the only action  would be  a civil lawsuit.  The                                                                   
state could do nothing more than issue a traffic ticket.                                                                        
                                                                                                                                
In response to a question by Representative  John Davies, Mr.                                                                   
Guaneli  clarified   that  the   preponderance  of   evidence                                                                   
standard is the  usual legal standard applied  in civil cases                                                                   
involving  negligence  involving   torts  or  contracts.  The                                                                   
penalty  is in  essence  a  civil penalty  or  administrative                                                                   
action imposed  by the court.  The preponderance  of evidence                                                                   
standard would be the appropriate standard.                                                                                     
                                                                                                                                
Representative John  Davies observed that it  is a relatively                                                                   
low standard. He  concluded that the action  is between civil                                                                   
and criminal. He questioned if  it is appropriate to maintain                                                                   
a civil standard when the case would be in between.                                                                             
                                                                                                                                
Mr.  Guaneli explained  that in  most cases  the court  would                                                                   
have found  clear and convincing  evidence and would  be able                                                                   
to make the [clear and convincing  evidence] standard. He did                                                                   
not think  it [the change  to clear and convincing  evidence]                                                                   
would make a practical difference.                                                                                              
                                                                                                                                
Representative Davies expressed  further concern with the use                                                                   
of "contributed" on line 7, page  2: the violation of traffic                                                                   
laws by the  person contributed to the accident.  He observed                                                                   
that  the  person  who  was  killed   could  also  have  done                                                                   
something  that "contributed"  to the  accident. Mr.  Guaneli                                                                   
noted  that  the [conduct  of  the  person killed]  does  not                                                                   
directly  enter  into  the  case.  The  court  would  discern                                                                   
whether the violation  of the traffic law contributed  to the                                                                   
accident and  other negligence  by another  party is  not the                                                                   
court's  concern.  He  argued  in  support  of  the  language                                                                   
contained in  the legislation. Representative  Davies pointed                                                                   
out that  the accident must  "cause" the death.  He expressed                                                                   
further concern  with the  fact that  there may be  different                                                                   
levels  of contribution  to the  accident  and questioned  if                                                                   
"contributed"  should  be changed  to "caused".  Mr.  Guaneli                                                                   
stated that he did not object  to "substantially contributed"                                                                   
to the  accident.  The legal system  has a  variety of  terms                                                                   
that it  uses to weigh  levels of  culpability. All  of these                                                                   
concepts are taken into consideration.  He explained that the                                                                   
intent is not  to turn these cases into large  involved civil                                                                   
lawsuits.  The  legislation  is   designed  to  be  a  simple                                                                   
decision by  a magistrate that  the violation  contributed to                                                                   
the accident.  It is not designed  to be used in  later civil                                                                   
litigation.  The legislation  provides that  the decision  by                                                                   
the judge is not to be used in other litigation.                                                                                
                                                                                                                                
Representative  Davies  gave an  example  of  an accident:  a                                                                   
person at a stop  sign has their car stall when  they go into                                                                   
the intersection.  Another  person comes  over a hill,  where                                                                   
there is reduced sight and hits  the stalled car. The stalled                                                                   
car would be  guilty of a traffic violation.  The person that                                                                   
came over the hill was speeding.  He questioned if the driver                                                                   
of the stalled car would lose  their license if the driver of                                                                   
the speeding  car were killed.  Mr. Guaneli was not  sure. He                                                                   
stated that if the violation were  not a moving violation the                                                                   
law would not apply.                                                                                                            
                                                                                                                                
HB  40   was  heard  and   HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:40 p.m.                                                                                          

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