Legislature(2009 - 2010)HOUSE FINANCE 519

03/23/2010 01:30 PM House FINANCE

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+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 50(FIN) Out of Committee
Moved CSHB 369(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 23, 2010                                                                                            
                         1:41 p.m.                                                                                              
1:41:07 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:41 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Woodie Salmon                                                                                                    
ALSO PRESENT                                                                                                                  
Bob   Swenson,  Director,   Division   of  Geophysical   and                                                                    
Geological  Surveys,  Department  of Natural  Resources  and                                                                    
Alaska In-State  Natural Gas  Pipeline Manager;  Tom Wright,                                                                    
Staff,   Representative   Mike  Chenault,   Sponsor;   Frank                                                                    
Richards,   Deputy    Commissioner,   Highways    &   Public                                                                    
Facilities,   Department   of  Transportation   and   Public                                                                    
Facilities;    Representative   Mike    Chenault,   Sponsor;                                                                    
Representative  Peggy   Wilson,  Sponsor;   Rebecca  Rooney,                                                                    
Staff,   Representative   Peggy   Wilson;   Grey   Mitchell,                                                                    
Director,   Division   of   Labor  Standards   and   Safety,                                                                    
Department  of   Labor  and  Workforce   Development;  Wilda                                                                    
Laughlin,  Legislative  Liaison,  Department of  Health  and                                                                    
Social Services.                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Ron Adler, Director/CEO, Alaska Psychiatric Institute.                                                                          
HB 50     LIMIT OVERTIME FOR REGISTERED NURSES                                                                                  
          CSHB 50(FIN) was REPORTED out  of Committee with a                                                                    
          "do pass"  recommendation and with three  new zero                                                                    
          notes  by  the  Department of  Health  and  Social                                                                    
          Services  and   one  indeterminate  note   by  the                                                                    
          Department of Labor and Workforce Development.                                                                        
HB 369    IN-STATE PIPELINE MANAGER/TEAM/COMMITTEE                                                                              
          CSHB 369(FIN)  was REPORTED out of  Committee with                                                                    
          a "do  pass" recommendation and  with accompanying                                                                    
          new  fiscal  impact  note by  the  Office  of  the                                                                    
HOUSE BILL NO. 369                                                                                                            
     "An Act relating to an in-state natural gas pipeline,                                                                      
     the office of in-state gasline project manager, the                                                                        
     Joint In-State Gasline Development Team, and the In-                                                                       
     State Gasline Steering Committee; and providing for an                                                                     
     effective date."                                                                                                           
1:42:04 PM                                                                                                                    
Co-Chair  Hawker   provided  history   of  the   measure  in                                                                    
committee. He referred  to a CS that had been  adopted and a                                                                    
new  combined fiscal  note that  would replace  all previous                                                                    
fiscal notes.                                                                                                                   
BOB SWENSON, DIRECTOR,  DIVISION, GEOPHYSICAL AND GEOLOGICAL                                                                    
SURVEY, DEPARTMENT OF NATURAL  RESOURCES and ALASKA IN-STATE                                                                    
NATURAL GAS  PIPELINE MANAGER, confirmed that  the format of                                                                    
the fiscal  note had  been changed  to combine  all previous                                                                    
fiscal  notes.  He  pointed  out that  the  money  would  go                                                                    
through  the governor's  office and  be distributed  through                                                                    
reimbursable service agreements (RSAs) to various agencies.                                                                     
Co-Chair  Hawker  queried the  fiscal  plan  for the  coming                                                                    
year.  Mr. Swenson  responded  that the  request  for FY  11                                                                    
comes  first  in the  fiscal  note  narrative; each  of  the                                                                    
agency's requests  for the  FY 11 budget  is broken  out. In                                                                    
addition, the RSA requests (which  are indeterminate at this                                                                    
time) are listed.                                                                                                               
Co-Chair  Hawker  requested  fiscal analysis  for  the  bill                                                                    
beginning with  the coming year. Mr.  Swenson continued that                                                                    
the  fiscal   request  from  the  governor's   office  would                                                                    
specifically fund positions  (through personal services) for                                                                    
the team of seven members (reduced later to six):                                                                               
   · Project manager: Mr. Swenson                                                                                               
   · Engineering manager: would  manage engineering work on-                                                                    
     going  and work  on the  project plan  outlined in  the                                                                    
   · Commercial  manager: management  of  both upstream  and                                                                    
     downstream activities                                                                                                      
   · Legislative liaison and public outreach                                                                                    
   · Finance and budget analyst                                                                                                 
   · Schedule coordinator                                                                                                       
   · Technical writer:  one-year position to develop  of the                                                                    
     plan outlined in the bill                                                                                                  
Mr. Swenson  informed the committee  that the FY  11 request                                                                    
also included the original $6.5  million put forth in the FY                                                                    
11 appropriations  request addressed in a  previous meeting.                                                                    
He detailed that the amount was for:                                                                                            
   · Completion  of  environmental  permitting by  the  U.S.                                                                    
     Army Corps of Engineers;                                                                                                   
   · State and federal right-of-way approvals;                                                                                  
   · Project  management  development  and  coordination  of                                                                    
   · Working  with stakeholders  such  as local  communities                                                                    
     and Native Corporations, the  Bureau of Land Management                                                                    
     (BLM), and others;                                                                                                         
   · Beginning  studies   on  wetlands,   stream  crossings,                                                                    
     culture  impacts,  lake   studies,  wildlife  and  bird                                                                    
     surveys,  air and  noise  surveys  associated with  the                                                                    
     U.S. Army  Corps of  Engineers' Section  404/Section 10                                                                    
   · Project management on  the engineering data acquisition                                                                    
     and further refinement of the engineering design;                                                                          
   · Refinement  costs  of   service  estimates  and  tariff                                                                    
     modeling  associated with  using the  data provided  by                                                                    
     the cost  of transport (underway in  the current fiscal                                                                    
     year); and                                                                                                                 
   · Preparing and completing documentation for in-state                                                                        
     pipeline   assets   for   consideration   for   private                                                                    
     developer or entity.                                                                                                       
1:47:34 PM                                                                                                                    
Mr.  Swenson pointed  to an  additional  request for  $2.599                                                                    
million  for  contractual work  and  RSA  needs, making  the                                                                    
total  request  $10.653  million.  He  noted  that  the  RSA                                                                    
request would be distributed as  outlined in the fiscal note                                                                    
narrative to various agencies affected  by the bill, as well                                                                    
as the work towards developing the pipeline.                                                                                    
Co-Chair   Hawker   acknowledged  the   detailed   narrative                                                                    
provided with the fiscal note.                                                                                                  
Representative Gara  stated that  he did  not want  to spend                                                                    
$100 million  on a project that  might not go ahead,  but he                                                                    
was  comfortable   with  the   request  to   do  preliminary                                                                    
planning. He  noted that  the FY 11  amount was  $10 million                                                                    
and  queried   costs  after   that.  Mr.   Swenson  directed                                                                    
attention to page 2 of 10  of the fiscal note narrative that                                                                    
specifically  relates   to  the   indeterminate  contractual                                                                    
request; he  remarked that the fiscal  responsibility to the                                                                    
state  will be  determined  by the  outcome  of the  project                                                                    
plan. He  declared that a  very significant factor  would be                                                                    
the  ability to  get a  private entity  to partner  with the                                                                    
state or take the entire project  on; the costs to the state                                                                    
from FY 12  on could vary between zero (if  the entity takes                                                                    
over  the   entire  project)   up  to   the  full   cost  of                                                                    
construction. The  cost-of-production [projections]  are not                                                                    
currently  done;  on-going  engineering  work  is  currently                                                                    
Co-Chair  Hawker agreed  with  the analysis.  He added  that                                                                    
fiscal  notes  are  adopted  as   though  they  were  budget                                                                    
appropriations,  so  the  2011  Conference  Committee  would                                                                    
adopt  the   $10  million   fiscal  note;   considering  the                                                                    
contractual   level  for   FY  12,   FY  13,   and  FY   14,                                                                    
"indeterminate" means  that nothing  will be  anticipated in                                                                    
the draft budget  for those years unless  a determination is                                                                    
made  to   fund  something.  The  personnel   services  will                                                                    
continue  as   full-time  positions   are  hired   with  the                                                                    
presumption of  continuing on. However,  that does  not mean                                                                    
the  project  cannot  be  terminated   at  the  end  of  the                                                                    
preliminary development stage if so desired.                                                                                    
1:50:53 PM                                                                                                                    
Representative  Gara  wanted  assurance  that  the  sponsors                                                                    
would have  to come  to the  legislature first  in FY  12 or                                                                    
after if  there is  a new contract  obligating the  state to                                                                    
spend a large amount of  money. Mr. Swenson responded in the                                                                    
affirmative. He stated  that the plan would  be presented to                                                                    
the legislature, and the legislature  and the governor would                                                                    
make the decision based on the cost estimates and plans.                                                                        
Representative Doogan  recalled that  28 positions  had been                                                                    
included in  the previous set  of fiscal notes; he  asked if                                                                    
the number  was still  the same.  Mr. Swenson  answered that                                                                    
the original  fiscal note  was from  the original  CS, which                                                                    
had a construction date of July  1, 2011; it would have been                                                                    
very challenging  to meet that  deadline. The change  from a                                                                    
construction date  to a  gas pipeline  plan has  reduced the                                                                    
number  of required  employees. He  did not  know the  exact                                                                    
number  off-hand,  although  the   fiscal  note  listed  the                                                                    
required positions.                                                                                                             
Co-Chair Hawker  added that in the  detailed narrative there                                                                    
are  partial  positions  representing  time  that  would  be                                                                    
required  from   existing  agency  personnel;  there   is  a                                                                    
difference between increasing  personnel and using personnel                                                                    
already in  place. He  detailed that the  FY 11  fiscal note                                                                    
provides for seven new full-time employees.                                                                                     
1:54:13 PM                                                                                                                    
Representative Austerman  referred to a  project coordinator                                                                    
at the  Department of  Environmental Conservation  listed on                                                                    
page 2 of  the narrative. He asked whether  the position was                                                                    
separate  from  the  seven already  mentioned.  Mr.  Swenson                                                                    
answered that  in the FY 11  budget they had tried  to break                                                                    
out the exact  personnel required; the positions  may or may                                                                    
not already  exist in the  agency. He wanted  the department                                                                    
to answer.                                                                                                                      
Representative  Austerman did  not want  to delve  into each                                                                    
component  for  each of  the  six  departments involved.  He                                                                    
pointed  to the  fact  more than  seven  employees would  be                                                                    
Representative Gara wanted  to know the cheapest  way to get                                                                    
natural gas to Alaskans. He  asked whether the plan would be                                                                    
presented  with  information  about  cost-effectiveness.  He                                                                    
referred to potential  gas reserves in Cook  Inlet and asked                                                                    
whether the  plan would  consider the  cost of  in-state gas                                                                    
from  Cook  Inlet as  compared  to  building a  larger  pipe                                                                    
south.  Mr. Swenson  responded that  the bill  was aimed  at                                                                    
bringing  North Slope  natural  gas  to Southcentral  Alaska                                                                    
(including  Valdez);  the  relative cost  of  possible  Cook                                                                    
Inlet gas would not be determined through the project.                                                                          
Representative Gara  was concerned  about choosing  the most                                                                    
expensive option.  He asked whether  comparative information                                                                    
would  be available  to the  legislature before  going ahead                                                                    
with North Slope  gas plans. Mr. Swenson  replied that there                                                                    
were on-going  studies. He referenced a  presentation at the                                                                    
recent  Anchorage  Resource  Development Council  by  ENSTAR                                                                    
Natural Gas Company using a  Department of Natural Resources                                                                    
(DNR)  study   of  costs   associated  with   accessing  gas                                                                    
reserves. He  thought the  comparison information  should be                                                                    
brought   into  discussions   with   the  legislature   when                                                                    
decisions are made.  He pointed out that HB 369  did not say                                                                    
that, but  he maintained  that all  options related  to [in-                                                                    
state  use of]  North  Slope would  be  considered and  that                                                                    
there would be comparative cost analysis.                                                                                       
Representative  Gara believed  the public  did not  have all                                                                    
the  information  and  stated  for the  record  that  a  big                                                                    
gasline would  result in cheaper  gas than a  smaller bullet                                                                    
line; the question was whether  the state could wait for the                                                                    
big line.  He maintained that  there is no  analysis showing                                                                    
that a  small bullet line  would produce cheaper gas  than a                                                                    
big gasline.  Mr. Swenson replied that  current analysis did                                                                    
not show the costs associated with  a spur line from a large                                                                    
diameter line,  whether the larger  line went to  Alberta or                                                                    
1:59:38 PM                                                                                                                    
Co-Chair Hawker  interjected that HB  369 (page 4,  lines 10                                                                    
and  11)  stipulates  that the  first  requirements  of  the                                                                    
development  team are  analysis of  routes and  selection of                                                                    
routes; Item 1 states that  it must be economically feasible                                                                    
and  Item  2  requires  that natural  gas  be  available  to                                                                    
residents [of the state] at the lowest possible cost.                                                                           
Representative Gara  asserted that he  had been told  in the                                                                    
past  that a  big gasline  would result  in lower  cost than                                                                    
smaller   line.  Mr.   Swenson  replied   that  the   volume                                                                    
transmitted  down a  larger line  would  be larger.  Without                                                                    
proper  economic  analysis,  he  opined  that  costs  [of  a                                                                    
smaller line] would  be less than a stand-alone  line to the                                                                    
North Slope.                                                                                                                    
Representative Gara  did not want  the public to  think that                                                                    
the state  could build  a smaller  line with  more expensive                                                                    
gas  and then  switch over  to cheaper  gas when  the bigger                                                                    
line  is  built.  He  asked  whether  the  public  would  be                                                                    
obligated to keep  paying for the gas from  the smaller line                                                                    
for a certain number of  years. Mr. Swenson noted that there                                                                    
was a letter regarding the  issue that the committee had not                                                                    
yet received. He opined that  the answer would depend on the                                                                    
configuration of the pipeline  with different commitments. A                                                                    
contract carrier or a common  carrier with financing through                                                                    
normal means would mean a  20-year commitment. The length of                                                                    
commitment would be less if the  state chose to buy down the                                                                    
debt. Commitments would  not be related to  financing if the                                                                    
state fully financed the line.                                                                                                  
Co-Chair  Hawker   echoed  that   there  are   many  complex                                                                    
variables  at  work and  stressed  that  the choice  is  not                                                                    
narrowed  to  between  only two  alternatives.  He  did  not                                                                    
believe there was  a dilemma. He wanted to  keep the state's                                                                    
options open to make sure gas was available to Alaskans.                                                                        
2:03:56 PM                                                                                                                    
Representative  Joule asked  whether the  difference between                                                                    
importing gas  and using  in-state gas  would be  clear when                                                                    
the legislature gets the plan  in 2011. Mr. Swenson answered                                                                    
that liquid natural gas (LNG)  imports were not contemplated                                                                    
in HB 369; the bill  considered using the current LNG export                                                                    
market and vying for that.                                                                                                      
Representative Joule  pointed out  that the state  would not                                                                    
know whether  it would be  cheaper to import gas  than using                                                                    
in-state  gas.   He  thought   the  information   should  be                                                                    
available to the legislature  before making final decisions.                                                                    
Mr.  Swenson  agreed  that  there  were  significant  issues                                                                    
related to imported LNG that  should be looked at, including                                                                    
the  Federal  Energy  Regulatory Commission  (FERC)  license                                                                    
associated  with the  import  as well  as  the volumes  that                                                                    
could   come  through   in  a   re-gasification  plant   and                                                                    
associated issues.                                                                                                              
Co-Chair Hawker  acknowledged that the question  deserved an                                                                    
acceptable response,  but pointed out  that HB 369  does not                                                                    
address  the issue.  He asked  whether feasible  information                                                                    
would be available to  the legislature regarding comparative                                                                    
costs for LNG  (presuming HB 369 goes forward  and a project                                                                    
plan  is  considered  after  July   1,  2011).  Mr.  Swenson                                                                    
believed that was correct.                                                                                                      
Representative  Joule understood  that expecting  short-term                                                                    
gas might be challenging when considering a big line.                                                                           
Co-Chair Hawker referred to a  report released in March 2010                                                                    
compiled  by Resource  Alaska at  the request  of the  three                                                                    
major  Southcentral  public  utilities. He  noted  that  the                                                                    
report had  a "stark"  premise and conclusion:  unless there                                                                    
is  significant  new  development   in  Cook  Inlet  in  the                                                                    
immediate future,  the state  will have to  import LNG  as a                                                                    
short-term  solution. The  report  also  indicated that  the                                                                    
long-term  solution  involved  in-state   gas.  He  did  not                                                                    
believe  the  HB  369 proposal  was  incompatible  with  the                                                                    
possible need for a short-term solution as well.                                                                                
2:09:00 PM                                                                                                                    
Representative Gara  stated that his major  concern with the                                                                    
legislation  was  that  it only  provides  a  cost  analysis                                                                    
comparing  other in-state  gasline projects  from the  North                                                                    
Slope.  He wanted  cost  analysis of  all  other options  as                                                                    
other options might be less expensive.                                                                                          
Representative Kelly believed all  the pieces were in place,                                                                    
such as temporary gas storage and the utility study.                                                                            
Co-Chair Hawker commented that  his personal vision included                                                                    
the  evolution  of the  hydrocarbon  potential  of the  Cook                                                                    
Inlet region. He  believed the region could  become a global                                                                    
trading  hub  for  natural  gas   because  of  its  position                                                                    
relative to Asian  trade routes and the North  Slope as well                                                                    
as  its gas  storage capacity.  He asserted  that the  state                                                                    
could become a  major trading center, the "Henry  Hub or the                                                                    
Alberta of the North."                                                                                                          
2:13:20 PM                                                                                                                    
Representative  Austerman  directed  attention  to  page  4,                                                                    
starting at  line 7, regarding  what the  development team's                                                                    
work product  would include,  especially making  natural gas                                                                    
available  to  residents at  the  lowest  possible cost.  He                                                                    
stated that  he supported the  bill because he  believed the                                                                    
least expensive route was the  state paying for the line. He                                                                    
noted that the state had the  assets to back up the project,                                                                    
including  the Permanent  Fund.  He  suggested building  the                                                                    
line and recovering the costs through the tariff.                                                                               
Co-Chair Hawker  observed that  the CS  had been  crafted to                                                                    
provide for a broad array of options for the state.                                                                             
Vice-Chair Thomas pointed to page  4, line 20 related to the                                                                    
transfer of  assets. He asked  who would decide to  sell and                                                                    
TOM  WRIGHT, STAFF,  REPRESENTATIVE MIKE  CHENAULT, SPONSOR,                                                                    
responded  that  the  legislature  would  ultimately  decide                                                                    
after the project plan was developed and presented.                                                                             
Vice-Chair  Thomas  turned  to  page 4,  line  27  regarding                                                                    
rights-of-way. He queried the  authority to purchase rights-                                                                    
of-way  before   the  money  is  appropriated.   Mr.  Wright                                                                    
responded that  some of the  rights-of-way can  be purchased                                                                    
with funds  available through the  fiscal note;  any further                                                                    
funds  needed  would  require   an  appropriation  from  the                                                                    
2:17:23 PM                                                                                                                    
Vice-Chair  Thomas directed  attention  to page  4, line  29                                                                    
regarding  purchase contracts.  He asked  who the  contracts                                                                    
would be  purchased from. Mr. Wright  believed that shippers                                                                    
would be the primary purchasers.                                                                                                
Representative  Fairclough stated  concerns related  to page                                                                    
5, line  12 regarding  the transfer of  eminent domain  to a                                                                    
private  entity. She  requested language  that would  ensure                                                                    
that the  state would maintain possession  of any additional                                                                    
rights-of-way  taken  from  a private  property  owner  upon                                                                    
construction  or  failure  of  a  project.  She  wanted  the                                                                    
property  to  be  used  later  if it  did  not  need  to  be                                                                    
maintained for right-of-way purposes.                                                                                           
FRANK  RICHARDS,  DEPUTY  COMMISSIONER,  HIGHWAYS  &  PUBLIC                                                                    
FACILITIES,   DEPARTMENT   OF  TRANSPORTATION   AND   PUBLIC                                                                    
FACILITIES, replied  that he had  posed the question  to the                                                                    
legal  team but  had not  yet  received the  answer. He  had                                                                    
discussed the issue of state assets and permanent rights-                                                                       
of-way   for   the   pipeline  with   the   state   pipeline                                                                    
coordinator's office. He reported that only the rights-of-                                                                      
way would  be provided, not  the underlying interest  of the                                                                    
land. He  noted that  at the next  level, land  purchased by                                                                    
the  state  through  any   means,  either  through  purchase                                                                    
agreement or  eminent domain, would  become an asset  of the                                                                    
state. He  envisioned that the  project would  purchase just                                                                    
the rights-of-way for pipeline use  and that the state would                                                                    
retain the fee simple interest  to the land. The state would                                                                    
not divest itself of the asset.                                                                                                 
Representative Fairclough  thought the intent was  noble but                                                                    
did  not think  the  language was  adequate  to protect  the                                                                    
public's interest.  She noted that the  attorney general had                                                                    
stated that the language had  to be explicit. She questioned                                                                    
whether  the sponsor  was amenable  to an  amendment on  the                                                                    
floor regarding the issue.                                                                                                      
REPRESENTATIVE  MIKE CHENAULT,  SPONSOR,  responded that  he                                                                    
wanted the information and would be open to an amendment.                                                                       
2:21:38 PM                                                                                                                    
Representative  Kelly asked  whether  anything  in the  bill                                                                    
would prevent  the state from  having anywhere from  zero to                                                                    
100 percent  ownership in the line.  Representative Chenault                                                                    
responded that  the only thing  that would prevent  that was                                                                    
the  legislature  and  the  governor   not  coming  to  that                                                                    
Representative  Kelly asked  whether the  bill itself  would                                                                    
prevent state  ownership. Representative  Chenault responded                                                                    
in the affirmative.                                                                                                             
Representative Doogan  spoke in  support of  the legislation                                                                    
but stated  that he did  not think  Alaska should go  in the                                                                    
direction. He  believed sincere efforts  were being  made to                                                                    
figure out how  much the project would cost,  but noted that                                                                    
there have  been many  "can't miss"  projects in  Alaska. He                                                                    
did  not  think  the  fastest   route  was  necessarily  the                                                                    
smartest. He stated that he had  not made his mind up on the                                                                    
Representative Gara  emphasized that he  did not want  to do                                                                    
anything  that would  harm the  chances of  a large  gasline                                                                    
that would  bring revenue  to the state.  He noted  that in-                                                                    
state gas would  not produce revenue; gas  going outside the                                                                    
state  would. He  intended to  honor a  requirement in  past                                                                    
legislation  that  that  the  state  not  jeopardize  a  big                                                                    
pipeline  through  more  than  .5 bcf/day  of  gas  into  an                                                                    
alternative  project. He  stated  that he  did  not want  it                                                                    
reported outside the state that  there was any intent to not                                                                    
honor the obligation.                                                                                                           
2:26:12 PM                                                                                                                    
Co-Chair  Stoltze spoke  in support  of the  legislation. He                                                                    
did not have as much  confidence in the TransCanada line. He                                                                    
emphasized  the   need  for  in-state  gas,   especially  in                                                                    
Southcentral. He  did not know  whether the  legislation was                                                                    
the right route  but wanted something moving  forward with a                                                                    
promise of in-state gas.                                                                                                        
Representative Austerman  did not  think HB 369  would break                                                                    
or  intended  to break  the  Alaska  Gasline Inducement  Act                                                                    
(AGIA) contract in any way.                                                                                                     
Co-Chair  Stoltze  MOVED  to report  CSHB  369(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note with  the ten-page fiscal analysis.                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
CSHB  369(FIN) was  REPORTED  out of  Committee  with a  "do                                                                    
pass"  recommendation  and   with  accompanying  new  fiscal                                                                    
impact note by the Office of the Governor.                                                                                      
2:30:46 PM          AT EASE                                                                                                   
2:44:53 PM          RECONVENED                                                                                                
HOUSE BILL NO. 50                                                                                                             
     "An Act  relating to limitations on  mandatory overtime                                                                    
     for registered nurses and  licensed practical nurses in                                                                    
     health care facilities; and  providing for an effective                                                                    
2:45:07 PM                                                                                                                    
Vice-Chair   Thomas  MOVED   to  ADOPT   Amendment  1   (26-                                                                    
LS0274\U.1, Wayne, 3/23/10):                                                                                                    
     Page 4, line 23, following "hours":                                                                                        
     (9) a nurse who is covered by a collective bargaining                                                                      
     agreement, so long as the work is subject to that                                                                          
Co-Chair Stoltze OBJECTED.                                                                                                      
Vice-Chair Thomas  explained that  the amendment  related to                                                                    
bargaining units.                                                                                                               
REPRESENTATIVE  PEGGY WILSON,  SPONSOR,  testified that  she                                                                    
did not support the amendment.                                                                                                  
REBECCA  ROONEY, STAFF,  REPRESENTATIVE PEGGY  WILSON, noted                                                                    
that   the  unions   had  testified   in   support  of   the                                                                    
legislation. She  argued that HB  50 was not  about contract                                                                    
negotiations  and collective  bargaining  but about  patient                                                                    
safety. She maintained that the  bill would standardize work                                                                    
and rest  practices across the  state and would  ensure that                                                                    
rested  nurses are  caring for  patients  regardless of  how                                                                    
well a bargaining unit has done.                                                                                                
Vice-Chair Thomas stated that  he had proposed the amendment                                                                    
because he  did not want the  legislature to do the  work of                                                                    
bargaining  units. He  did not  recall legislation  that was                                                                    
involved in  collective bargaining decisions  and questioned                                                                    
the legality of such a move.                                                                                                    
Representative Wilson stated that  the amendment would "gut"                                                                    
the bill. She  argued that the unit could  still bargain any                                                                    
way  it wanted,  but  the legislation  would  provide for  a                                                                    
standard of  care for patients  and would make  a difference                                                                    
for nurses  as well. She  wanted to create a  provision that                                                                    
would allow  nurses to  come forward.  She believed  all the                                                                    
nurses that had  come to her regarding the  issue worked for                                                                    
hospitals with unions.                                                                                                          
Vice-Chair Thomas  did not want collective  bargaining units                                                                    
to have an advantage.                                                                                                           
Vice-Chair Thomas WITHDREW Amendment 1.                                                                                         
2:50:41 PM          AT EASE                                                                                                   
2:54:27 PM          RECONVENED                                                                                                
Vice-Chair Thomas MOVED to ADOPT Conceptual Amendment 2:                                                                        
    Nurses cannot moonlight and have two or more jobs.                                                                          
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
Vice-Chair  Thomas explained  that  nurses  should not  have                                                                    
more  than one  or  two  jobs if  the  issue  is truly  work                                                                    
Representative  Fairclough   spoke  in  opposition   to  the                                                                    
amendment. She  knew nurses with multiple  jobs. She relayed                                                                    
the story  of a single  mother who  was a school  nurse that                                                                    
did not make enough income. The  nurse took on two more jobs                                                                    
and  was  able  to  handle her  responsibilities  well.  She                                                                    
thought the amendment was too broad.                                                                                            
2:58:05 PM                                                                                                                    
Vice-Chair  Thomas  talked   about  residential  psychiatric                                                                    
care. He was concerned about  a nurse having two high-stress                                                                    
jobs with long  hours. He believed the measure  needed to be                                                                    
restricted to protect patients.                                                                                                 
Representative Fairclough  reported that  she had  many good                                                                    
friends who are nurses. She  told the story of another nurse                                                                    
friend with two jobs, one  of which was crisis-oriented. She                                                                    
emphasized  that different  people had  different levels  of                                                                    
stamina  and she  did not  want individuals  who can  handle                                                                    
certain situations limited by the legislation.                                                                                  
Vice-Chair Thomas  relayed a story  about fishing  for three                                                                    
days without  sleep, which he  can no longer do.  The intent                                                                    
of the amendment  was to encourage older people  not to work                                                                    
as hard as younger people can.                                                                                                  
Vice-Chair Thomas WITHDREW Amendment 2.                                                                                         
3:02:41 PM                                                                                                                    
Representative Fairclough  noted that  age is not  the issue                                                                    
with endurance.                                                                                                                 
Vice-Chair Thomas wanted nurses  restricted to an 8-hour day                                                                    
to relieve  stress. He pointed to  similar restrictions done                                                                    
with the mining industry.                                                                                                       
Representative  Kelly stated  concerns  about  the bill.  He                                                                    
referred  to  testimony  from witnesses  implying  that  the                                                                    
unions are  not up  to the job  of regulating  wages, hours,                                                                    
and  conditions,  including   safety  issues.  He  suggested                                                                    
hearing   from  the   Department  of   Labor  and   Workface                                                                    
Development  (DLWD). He  was  concerned  about labor  issues                                                                    
represented  employees   cannot  solve   themselves  without                                                                    
government stepping in.                                                                                                         
3:07:00 PM                                                                                                                    
GREY  MITCHELL, DIRECTOR,  DIVISION OF  LABOR STANDARDS  AND                                                                    
SAFETY,  DEPARTMENT  OF  LABOR  AND  WORKFORCE  DEVELOPMENT,                                                                    
reported that DLWD is neutral  regarding HB 50. He could not                                                                    
explain why the unions are  having a difficult time with the                                                                    
Representative  Kelly   asked  whether   the  area   was  an                                                                    
unpermitted one  to bargain in. Mr.  Mitchell responded that                                                                    
it was not.                                                                                                                     
Representative Doogan  questioned what percentage  of nurses                                                                    
were  unionized. Representative  Wilson  responded about  50                                                                    
Representative  Kelly   asked  whether   anything  prevented                                                                    
unorganized employees from  becoming organized. Mr. Mitchell                                                                    
answered no.                                                                                                                    
Representative Wilson commented that  hospitals say there is                                                                    
not a  problem. She  questioned why they  are afraid  of the                                                                    
3:10:19 PM                                                                                                                    
Mr. Mitchell  addressed the fiscal  note by  the department.                                                                    
He  described  the  difficulty of  ascertaining  the  fiscal                                                                    
impact. The amount in the fiscal  note is based on review of                                                                    
licensed  nurses. The  Department of  Commerce and  Economic                                                                    
Development  monitors  the  licenses  of  registered  nurses                                                                    
(RNs)  and licensed  practical nurses  (LPNs);  as of  March                                                                    
2010, there  are 10,357  RNs and 1,052  LPNs. He  noted that                                                                    
there is a  separate license for temporary  nurses, of which                                                                    
there are 140 RNs and LPNs combined.                                                                                            
Mr.  Mitchell  reported  that the  department  attempted  to                                                                    
account  for what  type of  work  might be  required by  the                                                                    
bill, which requires the department  to take and investigate                                                                    
complaints based on violations  or coercion when an employee                                                                    
was required to  work over their scheduled  nursing shift or                                                                    
to   accept   an   overtime  assignment   when   safety   is                                                                    
compromised, in the nurse's opinion.  He maintained that the                                                                    
language   about  the   issue  of   a  nurse's   opinion  of                                                                    
compromised safety tends to create  a scenario with a lot of                                                                    
potential for complaints.                                                                                                       
Mr.  Mitchell  continued  that the  average  wage  and  hour                                                                    
investigator   handles  a   caseload  of   approximately  50                                                                    
investigations   per  year   on   overtime,  minimum   wage,                                                                    
prevailing  wage  claims, and  so  on.  Therefore, 50  valid                                                                    
claims by nurses  as a result of  potential violations under                                                                    
the  bill would  keep one  investigator busy  full time.  In                                                                    
addition,  different provisions  in  the  bill will  require                                                                    
enforcement by  the department,  including the  10-hour off-                                                                    
duty  provision  after  the  scheduled  shift,  enforcing  a                                                                    
requirement for the employer to  have an anonymous complaint                                                                    
process, a posting requirement of the rules, and so on.                                                                         
Mr. Mitchell  described a typical investigation.  First, the                                                                    
department receives a  complaint. There needs to  be a quick                                                                    
screening  process   to  determine   the  validity   of  the                                                                    
complaint, since the employer is  required by the bill to be                                                                    
notified  within three  working days  of the  complaint. The                                                                    
department  would  then  follow  up with  the  employer  and                                                                    
collect  records of  the  shifts and  the  time worked.  The                                                                    
documents  might have  to  be subpoenaed,  if  they are  not                                                                    
volunteered. Next,  an audit of the  records would determine                                                                    
whether there was a violation.  In some cases, there may not                                                                    
be good records; witnesses would  need to be interviewed and                                                                    
sworn statements taken. The investigator  would then issue a                                                                    
written finding  with a conclusion  based on the  facts. The                                                                    
department would  issue a reprimand  or civil  penalty under                                                                    
the  statute. Although  the bill  does not  mention it,  the                                                                    
department  would have  regulation  authority to  administer                                                                    
the law; DLWD  believes a hearing process  would be required                                                                    
to  allow people  issued  a reprimand  or  civil penalty  to                                                                    
appeal and potentially have rights to a hearing.                                                                                
3:15:04 PM                                                                                                                    
Mr.  Mitchell  added  that  investigations  of  retaliation,                                                                    
termination, threats,  changes in work schedules,  and other                                                                    
things  could also  happen. Complaints  related to  possible                                                                    
retaliation  can be  extremely difficult  and time-consuming                                                                    
to investigate.  He pointed out that  the amendment removing                                                                    
the Department of Law (DOL)  from the procedure would affect                                                                    
the  fiscal note,  as the  fiscal note  included $5,000  for                                                                    
assistance from them.                                                                                                           
Mr.  Mitchell provided  an overview  of the  numbers in  the                                                                    
fiscal note:                                                                                                                    
   · $71,800: Wage and hour investigator                                                                                        
   · $3,000: Travel related to complaints in distant                                                                            
   · $13,800: Contractual costs (reduced by the $5,000 for                                                                      
   · $3,800: Supplies, including computer and office                                                                            
Co-Chair Hawker commended the detail  on the fiscal note. He                                                                    
queried Mr. Mitchell's presumption  that employers would act                                                                    
in  a  manner  that  would  generate  enough  grievances  to                                                                    
require  an investigator.  Mr. Mitchell  responded that  the                                                                    
department  made  its best  guess  based  on the  number  of                                                                    
employees and  number of facilities. He  emphasized that the                                                                    
testimony generated  by the bill  revealed many  nurses that                                                                    
felt coerced.                                                                                                                   
Co-Chair Hawker  wondered whether  employers had  been lying                                                                    
in  the committees.  He  did  not know  who  to believe.  He                                                                    
stated  that he  was  skeptical of  the department's  fiscal                                                                    
note without actual experience.                                                                                                 
3:19:01 PM                                                                                                                    
Representative  Austerman asked  whether hospital  employees                                                                    
could  come  to  the  department   under  current  law.  Mr.                                                                    
Mitchell responded that the  employees could make complaints                                                                    
to the department  in some circumstances, such  as a minimum                                                                    
wage claim or some overtime situations.                                                                                         
Representative Austerman  established that nurses  could not                                                                    
currently  file a  complaint with  DLWD about  being coerced                                                                    
into  working extra  hours. Mr.  Mitchell agreed  that there                                                                    
was no restriction related the  number of hours nurses could                                                                    
be required to work.                                                                                                            
Representative   Austerman   asked   when   the   department                                                                    
anticipated  hiring the  position  described  in the  fiscal                                                                    
note. Mr. Mitchell replied that  the position would be hired                                                                    
as soon  as possible after  the July 1, 2010  effective date                                                                    
in anticipation of complaints coming in.                                                                                        
Representative  Austerman   thought  the  fiscal   note  was                                                                    
inappropriate  at  this  time  and  thought  the  department                                                                    
should come back the next  year with a supplemental request.                                                                    
He referred  to documentation supplied by  nursing homes and                                                                    
hospitals reported zero overtime complaints.                                                                                    
Representative  Doogan  believed  there were  situations  in                                                                    
which  reasonable  people could  disagree  on  the rules  of                                                                    
working. He  described 30 years of  experience with disputes                                                                    
that  were not  indicative  of  a lack  of  maturity but  of                                                                    
understandable disagreement.  He thought the  bill attempted                                                                    
to  create a  better way  of dealing  with disagreement.  He                                                                    
opined that the department could  absorb the costs until the                                                                    
next legislative session and report  back; if the employer's                                                                    
numbers are correct, not much money would be needed.                                                                            
3:23:36 PM                                                                                                                    
Co-Chair   Hawker    directed   the   preparation    of   an                                                                    
indeterminate fiscal note for the bill.                                                                                         
Vice-Chair  Thomas   asked  whether  the  bill   would  give                                                                    
bargaining  units an  advantage. Mr.  Mitchell replied  that                                                                    
the bill does  not appear to give either  union or non-union                                                                    
entities an advantage.                                                                                                          
Vice-Chair Thomas wanted all groups to be treated equally.                                                                      
Representative  Fairclough  questioned   the  Department  of                                                                    
Health  and   Social  Services   fiscal  note   showing  two                                                                    
additional  full-time positions  at  the Alaska  Psychiatric                                                                    
Institute (API) but no dollar amount.                                                                                           
Representative  Wilson  commented  that  the  positions  are                                                                    
currently unfilled.                                                                                                             
RON ADLER,  DIRECTOR/CEO, ALASKA PSYCHIATRIC  INSTITUTE (via                                                                    
teleconference),  replied  that  he  could  not  answer  the                                                                    
question. He noted  that in FY 09, API had  a total of 374.5                                                                    
hours  of  mandatory  overtime.   In  an  effort  to  reduce                                                                    
mandatory overtime, in the first  six months of 2010 API has                                                                    
logged in 106  hours. He did not know who  would be tracking                                                                    
those hours.                                                                                                                    
3:28:27 PM                                                                                                                    
Representative  Fairclough queried  the  two positions  with                                                                    
zero impact.                                                                                                                    
WILDA  LAUGHLIN, LEGISLATIVE  LIAISON, DEPARTMENT  OF HEALTH                                                                    
AND SOCIAL  SERVICES, pointed to  page 2 of the  fiscal note                                                                    
detailing  that  any  additional cost  associated  with  the                                                                    
physicians and  on-call system  will be  offset by  the cost                                                                    
savings from reduced overtime payments.                                                                                         
Representative  Fairclough  spoke in  favor  of  HB 50.  She                                                                    
believed  the costs  were reasonable  because of  the safety                                                                    
issues. She asserted  that the bill would  level the playing                                                                    
field for non-union  and union hospitals and  set a standard                                                                    
of  care that  all  nurses  and all  employers  can be  held                                                                    
accountable  to. She  believed nurses  had brought  an issue                                                                    
forward that the legislature had an obligation to address.                                                                      
3:32:06 PM                                                                                                                    
Co-Chair  Hawker  MOVED  to  report CSHB  50  (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSHB 50(FIN) was REPORTED out  of Committee with a "do pass"                                                                    
recommendation  and  with  three   new  zero  notes  by  the                                                                    
Department   of  Health   and   Social   Services  and   one                                                                    
indeterminate note by the Department  of Labor and Workforce                                                                    
The meeting was adjourned at 3:34 PM.                                                                                           

Document Name Date/Time Subjects
HB 316 Gov.Trasmittal Letter.pdf HFIN 3/23/2010 1:30:00 PM
HB 316
HB 316 Sectional.pdf HFIN 3/23/2010 1:30:00 PM
HB 316
HB 50 Thomas Amendment #1.pdf HFIN 3/23/2010 1:30:00 PM
HB 50