Legislature(2011 - 2012)HOUSE FINANCE 519

03/21/2012 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 6:30 pm Today --
Scheduled But Not Heard
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
<Bill Held Over to 6:30 pm Today>
** Meeting will Recess @ 3:30 pm Today and will
Reconvene @ 6:30 pm for HB 9 Public Testimony **
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 21, 2012                                                                                            
                         1:40 p.m.                                                                                              
1:40:31 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:40 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Joseph Masters,  Commissioner, Department of  Public Safety;                                                                    
Michael  Geraghty,  Attorney  General,  Department  of  Law;                                                                    
Richard   Svobodny,   Deputy  Attorney   General,   Criminal                                                                    
Division,  Department of  Law; Joe  Michel, Staff,  Co-Chair                                                                    
Stoltze;    Representative     Mike    Chenault,    Sponsor;                                                                    
Representative Mike  Hawker, Co-Sponsor; Tom  Wright, Staff,                                                                    
Representative  Mike  Chenault;   John  Hutchins,  Assistant                                                                    
Attorney  General,  Oil,  Gas   and  Mining  Section,  Civil                                                                    
Division,   Department  of   Law;  Rena   Delbridge,  Staff,                                                                    
Representative Mike Hawker.                                                                                                     
PRESENT VIA TELECONFERENCE                                                                                                    
Lieutenant  Rodney Dial,  Alaska State  Troopers, Department                                                                    
of Public  Safety; Joshua  Decker, Attorney,  American Civil                                                                    
Liberties  Union-Alaska;  Quinlan Steiner,  Public  Defender                                                                    
Agency,  Anchorage;   Stuart  Goering,   Assistant  Attorney                                                                    
General,  Department  of  Law;  Richard  Odsather,  Odsather                                                                    
International  Marketing, Fairbanks;  Merrick Peirce,  Board                                                                    
Member,  Alaska Gasline  Port Authority,  North Pole;  Larry                                                                    
Wood, Self, Palmer; Jim Sykes,  Self, Palmer; Michael Dukes,                                                                    
Assembly Member,  Fairbanks North Star Borough,  North Pole;                                                                    
Alan LeMaster, Self, Gakona;  Park Kriner, Self, Glennallen;                                                                    
Randy Wagner, Self, Glennallen.                                                                                                 
HB 9      IN-STATE GASLINE DEVELOPMENT CORP                                                                                     
          HB 9 was HEARD and HELD in Committee for further                                                                      
HB 296    CRIME OF ESCAPE/DEF. OF CORRECT. FACILITY                                                                             
          HB 296 was SCHEDULED but not HEARD.                                                                                   
HB 359    SEX CRIMES; TESTIMONY BY VIDEO CONFERENCE                                                                             
          HB 359 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
HB 361    DISPOSALS OF STATE RESOURCES                                                                                          
          HB 361 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HOUSE BILL NO. 359                                                                                                            
     "An  Act   relating  to  conspiracy  to   commit  human                                                                    
     trafficking in  the first degree or  sex trafficking in                                                                    
     the first  degree; relating to the  crime of furnishing                                                                    
     indecent  material  to  minors,  the  crime  of  online                                                                    
     enticement of  a minor, the crime  of prostitution, and                                                                    
     the crime  of sex  trafficking; relating  to forfeiture                                                                    
     of property used in  prostitution offenses; relating to                                                                    
     sex  offender registration;  relating  to testimony  by                                                                    
     video  conference; adding  Rule 38.3,  Alaska Rules  of                                                                    
     Criminal  Procedure;  and  providing for  an  effective                                                                    
1:41:39 PM                                                                                                                    
JOSEPH MASTERS,  COMMISSIONER, DEPARTMENT OF  PUBLIC SAFETY,                                                                    
introduced himself and others present.                                                                                          
Co-Chair Stoltze congratulated  Deputy Attorney General Rick                                                                    
Svobodny for his 30-plus years of state service.                                                                                
Commissioner Masters  thanked the  committee for  hearing HB                                                                    
359.  He  explained  that the  bill  furthered  the  state's                                                                    
efforts to  strengthen laws that  protect children  and hold                                                                    
offenders accountable.  He expressed strong support  for the                                                                    
legislation.  He discussed  that many  sections of  the bill                                                                    
reflected   a   change   in  terminology   from   "promoting                                                                    
prostitution"   to  "sex   trafficking";  the   change  made                                                                    
important   distinctions   by  accurately   describing   the                                                                    
criminal act  and using terms  that were more  common within                                                                    
law enforcement nationwide. The  bill was more respectful of                                                                    
the victims  who were lured  and coerced into the  sex trade                                                                    
by offenders.  He stated that  the crimes were  occurring in                                                                    
Alaska  and young  girls/children were  targeted and  forced                                                                    
into the  sex trade  by traffickers.  Changing the  title of                                                                    
the crime  would help  lessen the shame  and stigma  many of                                                                    
the victims had associated  with experiencing the crimes. He                                                                    
quoted  from  a  statement  Governor Parnell  made  when  he                                                                    
presented the bill:                                                                                                             
     The  crimes of  sex trafficking  and human  trafficking                                                                    
     are  serious offences,  which  violate  the most  basic                                                                    
     human  rights and  deprives victims  of every  shred of                                                                    
     personal freedom.                                                                                                          
Commissioner  Masters relayed  that  the  crimes were  often                                                                    
perpetrated by  offenders working together  including, human                                                                    
and sex trafficking in the  first degree. The list of felony                                                                    
offences  acknowledged the  reality and  allowed individuals                                                                    
who conspired  to commit the  crimes more  accountable under                                                                    
the state's conspiracy laws. He  noted that Attorney General                                                                    
Michael  Geraghty and  Mr.  Svobodny  would provide  further                                                                    
detail on the legislation.                                                                                                      
1:45:06 PM                                                                                                                    
MICHAEL  GERAGHTY,  ATTORNEY  GENERAL,  DEPARTMENT  OF  LAW,                                                                    
echoed Commissioner  Masters' testimony. He stated  that the                                                                    
bill  was  a  priority  of  the governor  and  should  be  a                                                                    
societal  and legislative  priority  as  well. He  expressed                                                                    
that  the  department looked  forward  to  working with  the                                                                    
committee on  the legislation. He  highlighted items  in the                                                                    
bill:  Section  4  addressed  concerns   raised  by  a  U.S.                                                                    
district court judge decision  regarding the distribution of                                                                    
indecent material to minors; the  judge had found the law to                                                                    
be over-broad and unconstitutional.                                                                                             
Co-Chair  Stoltze asked  who filed  the cases  on behalf  of                                                                    
sexual predators. He wondered what  had taken place that led                                                                    
to the court challenge.                                                                                                         
Attorney General  Geraghty believed that the  American Civil                                                                    
Liberties  Union (ACLU)  had challenged  the  law the  prior                                                                    
June as drafted  in the specific case. He  explained that as                                                                    
the law  applied to an  individual the language  turned into                                                                    
"and as applied challenge to the law."                                                                                          
Co-Chair Stoltze  remarked on  his earlier  question related                                                                    
to who had filed the case.                                                                                                      
Mr. Geraghty replied  that the ACLU had thought  the law was                                                                    
too  broad  and had  challenged  it.  He believed  that  the                                                                    
deficiencies in the bill had  been corrected and that it was                                                                    
constitutionally  enforceable. He  addressed that  Section 6                                                                    
increased  the penalty  for a  patron of  a prostitute  to a                                                                    
Class  C felony  when the  prostitute  was a  minor and  the                                                                    
patron was 18 years or older  and at least three years older                                                                    
than  the  minor.  The department  believed  that  a  higher                                                                    
penalty for adults  was appropriate when the  person paid to                                                                    
have  sex with  a minor  who could  be participating  in the                                                                    
trade  against their  will. There  were other  sections that                                                                    
dealt  with   videoconferencing  of  witnesses,   given  the                                                                    
state's  obligation to  establish competency  of defendants,                                                                    
many of whom  were in rural Alaska;  other logistical issues                                                                    
existed  including  arranging testimony  from  professionals                                                                    
such as psychiatrists.                                                                                                          
Mr. Geraghty  recognized Mr.  Svobodny for  his 35  years of                                                                    
service and shared a related story.                                                                                             
1:49:57 PM                                                                                                                    
RICHARD   SVOBODNY,   DEPUTY  ATTORNEY   GENERAL,   CRIMINAL                                                                    
DIVISION, DEPARTMENT OF LAW, discussed  that the core of the                                                                    
information discussed  by Commissioner Masters  and Attorney                                                                    
General Geraghty  was on page  5, line 9, which  changed the                                                                    
nomenclature for promoting prostitution.                                                                                        
Representative  Guttenberg asked  for  clarification of  the                                                                    
bill version. Co-Chair Stoltze replied  that the bill up for                                                                    
consideration was a House Judiciary Committee CS.                                                                               
Vice-chair Fairclough MOVED the bill before the committee.                                                                      
Mr.  Svobodny   continued  to   explain  that   the  changes                                                                    
beginning on  page 5, line 9  appeared in Sections 7  and 11                                                                    
of the legislation.  The provisions dealt with  the crime of                                                                    
promoting prostitution in the  first through fourth degrees.                                                                    
He addressed that the bill  changed the term associated with                                                                    
the crime  of promoting  prostitution to  "sex trafficking,"                                                                    
which recognized that there was  a victim. He discussed that                                                                    
provisions 1, 2,  7, 14, and 17 through 23  changed the term                                                                    
from "promoting prostitution" to  "sex trafficking" in other                                                                    
statutes (i.e.  the term promoting prostitution  was changed                                                                    
to sex trafficking  under Title 47 related  to defenses that                                                                    
may be waived to adult court).                                                                                                  
Mr. Svobodny  pointed to  the importance  of a  section that                                                                    
began on page  3, line 6 of the bill,  which added the crime                                                                    
of  human   trafficking  to  the  list   of  serious  felony                                                                    
offences. The  crime was different than  sex trafficking and                                                                    
includes  labor   slavery  and  adult   entertainment  using                                                                    
coercion or force  where a person is brought  into the state                                                                    
for  the  specific purpose.  He  elaborated  that the  state                                                                    
could  bring   a  conspiracy   charge  for   serious  felony                                                                    
offences; conspiracy involved a  group of people that gather                                                                    
together to plan to engage in the illegal activity.                                                                             
Co-Chair Stoltze  queried whether a recent  case involving a                                                                    
person   in  Chugiak/Eagle   River   who   had  brought   in                                                                    
entertainers and  held their passports fell  under the scope                                                                    
of the  bill. Mr. Svobodny  answered in the  affirmative. He                                                                    
continued to  provide detail on the  legislation. There were                                                                    
not  many of  the cases  because  the main  witness was  the                                                                    
person engaging  in prostitution; the bill  provided another                                                                    
tool to  prosecute people without  needing the victim  to be                                                                    
1:56:30 PM                                                                                                                    
Representative  Wilson  questioned  whether  the  department                                                                    
believed that every prostitute was a victim.                                                                                    
Mr.   Svobodny  replied   in   the   negative;  however,   a                                                                    
significant  portion of  young people  were victims  because                                                                    
they  needed  shelter and  ended  up  being forced  to  sell                                                                    
themselves in  order to make  money for the person  who took                                                                    
them in.  He acknowledged  that there were  also individuals                                                                    
who  voluntarily  engaged  in prostitution;  however,  there                                                                    
were a substantial number of  young people that were victims                                                                    
and victimized.                                                                                                                 
Co-Chair  Stoltze  surmised  that  by  statute,  minors  who                                                                    
engaged in  sexual activity with adults  would be considered                                                                    
Mr. Svobodny agreed. He detailed  that the bill did not take                                                                    
away the  ability to  prosecute people  for sexual  abuse of                                                                    
minors. The  age of consent  in Alaska was 16  and increased                                                                    
to 18 if the person was  in a position of authority; because                                                                    
of the law regarding position  of authority it was sometimes                                                                    
possible to prosecute pimps for  sexual abuse of a minor. He                                                                    
furthered that  the cases  were hard  to prove  because they                                                                    
involved examining a pattern  of conduct including, inducing                                                                    
a person  to move  away from their  home, keeping  them away                                                                    
from  responsible  adults, depriving  them  of  a phone  and                                                                    
communication,  creating dependence  for  food and  shelter,                                                                    
and  other.  The  bill  provided   the  necessary  tools  to                                                                    
prosecute such  cases. He discussed  that two  years earlier                                                                    
the  legislature   had  changed  the  statutes   related  to                                                                    
providing indecent  materials to  a minor at  the governor's                                                                    
request; the  change resulted  from a  lawsuit the  ACLU had                                                                    
filed  against  the state.  He  expounded  that the  federal                                                                    
court  determined  that  under current  statute  there  were                                                                    
explicit  sexual  materials  that could  be  distributed  to                                                                    
minors; the bill resolved the  problem of the "over breadth"                                                                    
issue by making the intent to  sell the materials to a minor                                                                    
a  crime including  when the  distributor  knew or  believed                                                                    
that the person was under the age of 16.                                                                                        
2:01:20 PM                                                                                                                    
Mr. Svobodny  explained that Sections  5 and 6 dealt  with a                                                                    
change  in law  related  to prostitution.  He believed  that                                                                    
prostitution had been made illegal  in Alaska in 1954 and it                                                                    
had  become  a  criminal  offense   to  be  a  patron  of  a                                                                    
prostitute  in   2006.  The   bill  increased   the  penalty                                                                    
provisions to a  Class C felony when the patron  is over the                                                                    
age of  18, is  three years older  than the  prostitute, and                                                                    
the prostitute is under the age  of 18. Currently the act of                                                                    
prostitution and the patronage of  a prostitute were a Class                                                                    
B misdemeanor. The House Judiciary  Committee had included a                                                                    
provision that allowed a case to  go to a jury if the patron                                                                    
asserted  that  he/she  had a  reasonable  belief  that  the                                                                    
prostitute was  18 years of  age or older;  similar language                                                                    
was used  related to  sexual abuse  of minors.  The language                                                                    
essentially meant that a patron  would have needed to card a                                                                    
prostitute in order to have a valid defense.                                                                                    
2:04:39 PM                                                                                                                    
Representative  Doogan  asked  for  an  explanation  of  the                                                                    
sentence "another person that  the person believes" (page 4,                                                                    
line 7).  Mr. Svobodny  explained that the  sentence applied                                                                    
to  a  person  distributing  the [indecent]  material  to  a                                                                    
person that they believe is under the age of 16.                                                                                
Representative  Doogan  surmised  that  the  words  "another                                                                    
person" referred  to the first  person [responsible  for the                                                                    
distribution of  materials]. Mr.  Svobodny responded  in the                                                                    
Representative Wilson asked for  verification that under the                                                                    
proposed legislation  a 20  year-old could  be charged  as a                                                                    
felon unless he could prove  that he believed the prostitute                                                                    
was  over  the  age  of  18. Mr.  Svobodny  replied  in  the                                                                    
affirmative.  He restated  that  a person  could be  charged                                                                    
with a  felony if they were  over the age of  18, were three                                                                    
years  older than  the prostitute,  and  the prostitute  was                                                                    
under the age of 18.                                                                                                            
Representative  Wilson  asked  for verification  that  a  17                                                                    
year-old  would  be  charged  as   a  juvenile  and  with  a                                                                    
misdemeanor, but  a person  who was  20 or  21 years  of age                                                                    
would be  charged as a  felon. Mr. Svobodny answered  that a                                                                    
17  year-old would  not be  charged with  a misdemeanor  and                                                                    
would be  charged as  a delinquent  in children's  court. He                                                                    
elaborated  that the  punishment could  range from  "go home                                                                    
and  stay  with  your  parents  to two  years  in  a  locked                                                                    
institution" depending  on the  youth's history  and ability                                                                    
to be rehabilitated.                                                                                                            
2:08:21 PM                                                                                                                    
Representative Wilson  questioned how  a person would  go to                                                                    
court  to say  that they  "knowingly or  reasonably" thought                                                                    
that the prostitute had been over the age of 18.                                                                                
Mr. Svobodny  answered that the  state would bring  a charge                                                                    
of  prostitution and  the accused  would need  to prove  the                                                                    
elements  of  the offence  to  a  jury beyond  a  reasonable                                                                    
doubt.  He  detailed that  the  burden  would shift  to  the                                                                    
defendant  if  they chose  to  raise  the defense  that  the                                                                    
prostitute looked  over the age  of 18. The  defendant would                                                                    
then be  required to show  how they had determined  that the                                                                    
person was  over 18 years  of age (i.e. checking  ID, asking                                                                    
the  prostitute's  friends,  or other).  The  defense  would                                                                    
acquit the  defendant of the underlying  offence if [he/she]                                                                    
convinced   the  jury   that  [he/she]   had  believed   the                                                                    
prostitute was above the age of 18.                                                                                             
Representative  Wilson wondered  whether he  had ever  heard                                                                    
that  a   person  had  asked   for  identification   from  a                                                                    
prostitute.  She was  uncomfortable with  the provision  and                                                                    
believed that 20  and 21 year olds were  still children. She                                                                    
concluded that  unless the patron  asked for ID,  they would                                                                    
be guilty of a felony.                                                                                                          
Mr. Svobodny replied that in  the context of sexual abuse of                                                                    
a  minor  the  specific  defense  was  used  frequently.  He                                                                    
explained that a  defendant could convince a  jury by saying                                                                    
something like "she  looked to me like she was  21. She told                                                                    
me she  was 19.  I asked  her girlfriends  how old  she was,                                                                    
they said  she was  18"; however, the  defense would  not be                                                                    
plausible if it was obvious the  person was under the age of                                                                    
2:10:58 PM                                                                                                                    
Representative  Joule wondered  about  the  ability to  plea                                                                    
bargain related charges.                                                                                                        
Mr. Svobodny  answered that approximately  93 percent  to 97                                                                    
percent of  cases nationwide  ended with  plea negotiations.                                                                    
In Alaska people  could engage in plea  negotiations for sex                                                                    
offences, but  they were  still required  to be  included in                                                                    
the offender  registry. He believed  that it was a  "fact of                                                                    
life" in the U.S. that  most cases would be resolved through                                                                    
plea  bargains. He  reiterated that  given  concerns by  the                                                                    
legislature and governor,  he did not allow  sex offences to                                                                    
be  reclassified  as  another  type of  offense  such  as  a                                                                    
Representative  Joule agreed  that the  reality [related  to                                                                    
plea bargains] was a sad fact.                                                                                                  
Co-Chair Thomas  commented on two  fish violations  that had                                                                    
been prosecuted  by the state  recently: the  individual who                                                                    
plea bargained received a smaller  fine than the person that                                                                    
plead guilty. He  wondered why the state  would plea bargain                                                                    
on  an offense  when it  had  proof of  guilt. Mr.  Svobodny                                                                    
replied that he would be happy  to discuss the cases once he                                                                    
had all of the information.                                                                                                     
Co-Chair Thomas  responded that the  Department of  Fish and                                                                    
Game had  video of  the offence for  the individual  who had                                                                    
received a plea bargain. He told a personal story.                                                                              
Mr. Geraghty clarified  that the state tried  cases that had                                                                    
to be  tried and did not  agree to any plea  bargains simply                                                                    
because it did  not want the expense or could  not afford to                                                                    
try them. He detailed  that experienced attorneys understood                                                                    
how  the   cases  were   typically  resolved;   without  the                                                                    
agreement of  the judge  the plea  bargain was  rejected and                                                                    
the case  may go to  trial. He  stated that the  reality was                                                                    
that  most   cases  were  plea   bargained,  which   was  an                                                                    
appropriate result when  there were experienced prosecutors.                                                                    
He  stressed that  the state  would not  agree to  any deals                                                                    
"simply for  the sake of  cutting a  deal." He was  happy to                                                                    
look into the specific case and he appreciated the point.                                                                       
Co-Chair Thomas did not think  it was necessary to look into                                                                    
it; however,  he did  not believe a  plea bargain  should be                                                                    
allowed when  there was  evidence of an  offence. He  told a                                                                    
personal story about a fine  he had received. He referred to                                                                    
the $4000  fine the fisherman  had received and  opined that                                                                    
it was too small.                                                                                                               
2:19:53 PM                                                                                                                    
Representative  Doogan pointed  to Section  6 language  that                                                                    
read "Prostitution  is a Class  C felony if" and  asked what                                                                    
the current crime was.                                                                                                          
Mr.   Svobodny  responded   that   under  current   statute,                                                                    
provision A specified that it  was a Class B misdemeanor for                                                                    
a person to solicit or engage  in sex for money. Provision C                                                                    
in  the legislation  related to  prostitutes who  were under                                                                    
the age of  18. He relayed that the bill  did not change the                                                                    
penalty  unless the  prostitute  was under  the  age of  18,                                                                    
there   was  a   three-year  age   difference  between   the                                                                    
prostitute  and the  patron, and  whether  the patron  acted                                                                    
reasonable to determine the age of the prostitute.                                                                              
Representative  Doogan understood,  but  did  not agree.  He                                                                    
pointed  to   an  escalation  of  charging   that  had  been                                                                    
occurring.  He opined  that all  crimes would  be a  Class C                                                                    
felony or higher  if the current rate continued.  He was not                                                                    
convinced that  the specific set of  circumstances justified                                                                    
the charge.                                                                                                                     
Representative Gara  remarked that a person's  belief that a                                                                    
crime should  be classified  as a  less serious  offence did                                                                    
not mean that  they did not think it was  a crime. He opined                                                                    
that the  person committing the  most egregious  offense was                                                                    
the patron  who hired a prostitute  under the age of  18. He                                                                    
wondered whether  the crime level  should be raised  for the                                                                    
"John" or "pimp."                                                                                                               
Mr. Svobodny pointed to Sections  7 through 11 and explained                                                                    
that  the existing  offences were  strong. He  detailed that                                                                    
the   bill   would   change   the   term   from   "promoting                                                                    
prostitution"  to  "sex  trafficking." He  agreed  that  the                                                                    
offence was  probably more serious  and had  been considered                                                                    
that way since the legislature  passed the statutes in 1978.                                                                    
He  believed  that  promoting prostitution  ranged  from  an                                                                    
unclassified felony to a Class C felony.                                                                                        
Mr.  Geraghty   added  that  Section  7   talked  about  sex                                                                    
trafficking including,  inducing a  person under the  age of                                                                    
18 to engage  in prostitution, which would become  a Class A                                                                    
felony under the legislation.                                                                                                   
Mr.  Svobodny clarified  that the  offence  was currently  a                                                                    
Class  A  felony. Mr.  Geraghty  remarked  that current  law                                                                    
already punished the pimp more seriously.                                                                                       
Representative Gara noted that he  had asked the question in                                                                    
relation to Representative Doogan's comment.                                                                                    
Co-Chair  Stoltze  asked  for verification  that  Section  6                                                                    
addressed the "John" and Section  7 addressed the agent. Mr.                                                                    
Svobodny believed  that promoting prostitution in  the first                                                                    
degree was currently a Class A felony.                                                                                          
2:27:20 PM                                                                                                                    
AT EASE                                                                                                                         
2:34:56 PM                                                                                                                    
Mr.  Svobodny  relayed  that  currently  the  prostitute  or                                                                    
patron were each guilty of  a Class B misdemeanor. Section 6                                                                    
of the  bill increased the  penalty to  a Class C  felony if                                                                    
the patron  was over the age  of 18, three years  older than                                                                    
the prostitute, and the prostitute was under the age of 18.                                                                     
Co-Chair Stoltze  wondered whether the following  age ranges                                                                    
were examples of  the three-year age difference:  a 20 year-                                                                    
old with  a 17 year-old; a  19 year-old with a  16 year-old;                                                                    
and an  18 year-old with a  15 year-old. He asked  about the                                                                    
terms related to a person over the age of 18.                                                                                   
Mr.  Svobodny replied  that it  was midnight  on a  person's                                                                    
[18th] birthday.  The offense was  a Class B  misdemeanor if                                                                    
the patron was 19 and the prostitute was 17.                                                                                    
Representative Gara asked why it  was more "gross" to have a                                                                    
21 year-old  hire a prostitute  that was just under  the age                                                                    
of  18 versus  a  50  year-old hiring  an  18 year-old.  Mr.                                                                    
Svobodny  replied the  administration's position  is that  a                                                                    
line needed to be drawn somewhere.  The goal was to create a                                                                    
greater protection  for people under  the age of 18;  it was                                                                    
not  the grossness  factor, but  the protection  of children                                                                    
2:40:35 PM                                                                                                                    
Representative Gara  understood that  the line was  that the                                                                    
person was a minor.                                                                                                             
Vice-chair Fairclough  believed that the  administration was                                                                    
trying to  place the burden  on a  person who was  older and                                                                    
had more  experiences with the difference  between right and                                                                    
wrong. The  purpose was to  stress that an adult  should not                                                                    
have sex  with a  minor. She  opined that  the intent  of an                                                                    
increased penalty was  to make an adult think  twice and ask                                                                    
for ID if the person could be under the age of 18.                                                                              
Mr. Svobodny  added that the  discussion was about  an adult                                                                    
engaging in  a conduct  that was  already illegal.  The goal                                                                    
was to target  individuals who went to  prostitutes with the                                                                    
idea that they wanted somebody very young.                                                                                      
Mr.  Svobodny  directed  attention   to  Section  12,  which                                                                    
specified that  the promotion of  prostitution in  the first                                                                    
through  third degrees  did  not  require corroboration  and                                                                    
could rely  on one  person's testimony;  the bill  added the                                                                    
promotion of  prostitution or sex trafficking  in the fourth                                                                    
degree.   Under  current   law  property   was  subject   to                                                                    
forfeiture  when it  was used  to promote  prostitution; the                                                                    
bill added the crime of  prostitution to the list of crimes.                                                                    
He  added that  the House  Judiciary Committee  had narrowed                                                                    
the scope  to Class  C felony  prostitution. Section  15 was                                                                    
conforming. Section 16 would allow  witnesses to testify via                                                                    
videoconferencing related to the competency of a defendant.                                                                     
Mr.  Svobodny  relayed  that Section  19  was  a  conforming                                                                    
amendment that  dealt with trafficking. Section  25 included                                                                    
a  rule  change  that would  allow  videoconferencing  under                                                                    
special  circumstances  where a  witness  was  found by  the                                                                    
court to be unavailable  for trial (i.e. individuals serving                                                                    
in    the   military    out-of-state    and   other).    The                                                                    
videoconferencing represented a savings  of time, money, and                                                                    
limited  resources.  He  added  that  there  was  a  special                                                                    
statute  that  applied to  sex  cases  related to  children.                                                                    
Sections 26 through 27 related to the effective date.                                                                           
2:47:12 PM                                                                                                                    
Co-Chair Stoltze  clarified that  there were  no retroactive                                                                    
effective dates. Mr. Svobodny agreed.                                                                                           
Representative Gara asked at what  point did the penalty for                                                                    
sex trafficking increase  based on the age  of a prostitute.                                                                    
Mr. Svobodny  replied that the  age was 18 for  promotion of                                                                    
prostitution  in the  first degree;  it was  an unclassified                                                                    
felony if the prostitute was under  the age of 18 and it was                                                                    
a Class A felony if the prostitute was over the age of 18.                                                                      
Representative Gara asked for  verification that the penalty                                                                    
was an unclassified  felony if the prostitute  was under the                                                                    
age of  18 and a Class  A felony if the  prostitute was over                                                                    
the  age of  18.  Mr. Svobodny  replied  in the  affirmative                                                                    
related  to  the  promotion of  prostitution  in  the  first                                                                    
degree; it was the most  egregious form of a person bringing                                                                    
a person into the prostitution trade.                                                                                           
Representative Gara believed the age  should be 21 and would                                                                    
discuss it further when amendments were introduced.                                                                             
LIEUTENANT  RODNEY DIAL,  ALASKA STATE  TROOPERS, DEPARTMENT                                                                    
OF PUBLIC  SAFETY (via  teleconference), voiced  support for                                                                    
the bill.                                                                                                                       
2:50:25 PM                                                                                                                    
JOSHUA  DECKER,  ATTORNEY,  AMERICAN CIVIL  LIBERTIES  UNION                                                                    
(ACLU)-ALASKA  (via   teleconference),  referred   to  email                                                                    
testimony  that   had  been  submitted  by   ACLU  Executive                                                                    
Director Jeffrey Mittman. The  ACLU had concern that Section                                                                    
16,   which  allowed   video   conferencing  in   competency                                                                    
hearings,  violated the  confrontation  clauses of  Alaska's                                                                    
Constitution. The union anticipated  that the state would be                                                                    
presented with  facial challenges  as well as  challenges by                                                                    
individual   defendants,  resulting   in  "needless"   legal                                                                    
Representative Gara  asked for  verification that  Section 8                                                                    
limited  the  circumstances  where  video  conferencing  was                                                                    
allowed. He clarified that he had meant Section 16(h).                                                                          
Mr. Decker  replied that Section 16(h)  listed circumstances                                                                    
in  which  video  conferencing  was  available.  The  agency                                                                    
believed that the circumstances  were over-broad and outside                                                                    
the baseline the  U.S. Supreme Court had  established in the                                                                    
Maryland  v. Craig  decision. He  explained that  the reason                                                                    
for depriving  a criminal  defendant of  their right  to in-                                                                    
person,  face-to-face  confrontation had  to  be  a need  to                                                                    
further  an  important  public policy;  federal  courts  had                                                                    
determined  that items  such as  convenience, cost  savings,                                                                    
and  efficiency  did  not  meet the  test.  The  agency  had                                                                    
determined  that  the section  as  drafted  was outside  the                                                                    
minimum  standards  that had  been  set  forth by  the  U.S.                                                                    
Supreme Court  and would expose the  state to constitutional                                                                    
Co-Chair  Stoltze  asked whether  the  ACLU  would sue.  Mr.                                                                    
Decker replied  that he  could not  answer the  question and                                                                    
that the  ACLU took litigation decisions  one-by-one as they                                                                    
Co-Chair Stoltze  referred to language  that the  "the court                                                                    
may at  the court's  discretion." He wondered  whether there                                                                    
were  "run-away"  courts  in  Alaska.  Mr.  Decker  did  not                                                                    
believe the bill or testimony  impugned the integrity of the                                                                    
courts. The agency's concern was  that the language would be                                                                    
inconsistent with requirements of  the U.S. Constitution and                                                                    
potentially the Alaska Constitution.                                                                                            
Representative Gara  remarked that  it was  a constitutional                                                                    
principle that  allowed defendants  to be  face-to-face with                                                                    
the  accuser. He  surmised that  the  principle should  also                                                                    
apply to a competency hearing.  He believed that if a person                                                                    
was presented with  the possibility of a  life jail sentence                                                                    
that the accuser  should be present in person  for the judge                                                                    
to determine whether the person was telling the truth.                                                                          
Co-Chair  Stoltze invited  the Court  System to  provide any                                                                    
commentary as the bill included a court-rule issue.                                                                             
2:55:04 PM                                                                                                                    
Vice-chair  Fairclough thought  the  video conferencing  was                                                                    
currently allowed  for children and  had been upheld  by the                                                                    
supreme court.                                                                                                                  
Mr.  Svobodny  replied that  the  Alaska  Supreme Court  had                                                                    
upheld two-way videoconferencing with  children; there was a                                                                    
statute  that allowed  for the  video conferencing  when the                                                                    
court determined that  it would be detrimental  to the child                                                                    
to appear  in court.  He remarked  that the  situations were                                                                    
slightly  different. The  competency hearings  were slightly                                                                    
different  as well;  competency  hearings in  the Ninth  and                                                                    
Fifth Circuit  Courts in California  were civil  matters and                                                                    
not  criminal matters.  He stated  that competency  hearings                                                                    
were pre-trial matters, which could  result from the request                                                                    
of the court, the state,  and the defense. He furthered that                                                                    
there were  a significant number of  different items related                                                                    
to a  competency hearing versus  a trial; the  supreme court                                                                    
had ruled that in relation  to competency hearings there was                                                                    
not a  Fifth Amendment right  or a Sixth Amendment  right as                                                                    
it  related  to  counsel  (the   Sixth  Amendment  right  of                                                                    
confrontation had not been addressed).                                                                                          
Co-Chair Stoltze CLOSED public  testimony with the option to                                                                    
reopen it at a later time.                                                                                                      
Mr.   Geraghty    looked   forward   to    the   committee's                                                                    
consideration of the bill.                                                                                                      
Commissioner  Masters  echoed  Attorney  General  Geraghty's                                                                    
remarks. He expounded that the  bill was aimed at increasing                                                                    
protection for children  in the state; many of  whom were 15                                                                    
to 17  years of age.  In addition to changing  the statutory                                                                    
definition of  the crime to  sex trafficking, the  bill also                                                                    
provided additional protections to youths.                                                                                      
Representative Gara  asked whether  Section 16  (that waived                                                                    
in-person  witness  requirements  in a  competency  hearing)                                                                    
would  impact   the  fairness  for  a   defendant  in  cross                                                                    
QUINLAN  STEINER,  PUBLIC  DEFENDER AGENCY,  ANCHORAGE  (via                                                                    
teleconference),  responded  that the  constitutionality  of                                                                    
the two-way  video conferencing  in the  state had  not been                                                                    
determined. He stated that if  the law passed the legitimacy                                                                    
would  be challenged.  He believed  that  there were  strong                                                                    
arguments  stating that  confrontation should  apply because                                                                    
it was  a criminal proceeding.  He observed that  there were                                                                    
arguments on  the other  side as  well. The  relevant policy                                                                    
questions were  convenience and money versus  reliability of                                                                    
the fact  finding process; cross  examination was  best done                                                                    
in person and  was a critical part of ensuring  that a court                                                                    
was presented with the best evidence.                                                                                           
Co-Chair   Stoltze    remarked   on   the    occurrence   of                                                                    
HB  359  was  HEARD  and   HELD  in  Committee  for  further                                                                    
3:01:57 PM                                                                                                                    
AT EASE                                                                                                                         
3:04:15 PM                                                                                                                    
HOUSE BILL NO. 361                                                                                                              
     "An  Act relating  to the  Alaska  Land Act,  including                                                                    
     certain lease,  sale, and other disposal  of state land                                                                    
     and  materials; relating  to production  royalties from                                                                    
     miners;  relating to  rights to  use  state water;  and                                                                    
     providing for an effective date."                                                                                          
Vice-chair  Fairclough  MOVED  to adopt  proposed  committee                                                                    
substitute  for  HB  361, Work  Draft  27-GH2717\B  (Bailey,                                                                    
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
JOE  MICHEL,  STAFF,  REPRESENTATIVE BILL  STOLTZE,  relayed                                                                    
that the CS made four  changes to the original bill. Section                                                                    
1  had  been  inserted  on  page 1  to  address  sealed  bid                                                                    
language. Alaska Statute 38.05.565  was inserted to the list                                                                    
of statutes on  page 2; the statute was created  by the bill                                                                    
on page 9.                                                                                                                      
Vice-chair Fairclough  asked for  the specific  location the                                                                    
change had been made on page 2.                                                                                                 
Mr. Michel replied that AS  38.05.565 had been added to page                                                                    
4, line 11; the statute  referenced a new statute created by                                                                    
the bill, which was located on  page 8. The third and fourth                                                                    
changes  inserted  the language  "or  sealed  bid" into  new                                                                    
Sections 10 and 11 on page 5.                                                                                                   
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Work draft 27-GH2717\B was adopted.                                                                          
Co-Chair  Stoltze discussed  that  any  amendments would  be                                                                    
addressed at a later date.                                                                                                      
HB  361  was  HEARD  and   HELD  in  committee  for  further                                                                    
3:08:25 PM                                                                                                                    
AT EASE                                                                                                                         
3:14:14 PM                                                                                                                    
HOUSE BILL NO. 9                                                                                                              
     "An   Act   requiring   the  Joint   In-State   Gasline                                                                    
     Development   Team  to   report   to  the   legislature                                                                    
     recommended changes  to state law that  are required to                                                                    
     enable  or   facilitate  the  design,   financing,  and                                                                    
     construction  of an  in-state natural  gas pipeline  so                                                                    
     that the in- state  natural gas pipeline is operational                                                                    
    before 2016; and providing for an effective date."                                                                          
3:14:43 PM                                                                                                                    
Co-Chair Stoltze addressed amendments to the legislation.                                                                       
Representative Gara MOVED to ADOPT Amendment 1, 27-                                                                             
LS0075\K.1 (Bullock, 3/16/12):                                                                                                  
     Page 4, following line 4:                                                                                                  
     Insert new subsections to read:                                                                                            
          "(b)  Notwithstanding the  powers  granted to  the                                                                    
          Alaska Gasline  Development Corporation by  (a) of                                                                    
          this  section and  granted by  the Alaska  Housing                                                                    
          Finance    Corporation,    the   Alaska    Gasline                                                                    
          Development Corporation  may not proceed  with the                                                                    
          construction of  an in-state natural  gas pipeline                                                                    
          if  the  Alaska  Gasline  Development  Corporation                                                                    
          determines,  after  a  full and  objective  study,                                                                    
          that one or more  of the following options provide                                                                    
          a greater  benefit to the  state than  an in-state                                                                    
          natural  gas pipeline  constructed  by the  Alaska                                                                    
          Gasline Development Corporation:                                                                                      
               (1)  continuing  to  develop  a  natural  gas                                                                    
               pipeline  capable  of transporting  not  less                                                                    
               than 3,000,000,000 cubic  feet of natural gas                                                                    
               a  day,  but  only   if  the  Alaska  Gasline                                                                    
               Development   Corporation  finds   there  are                                                                    
               adequate  natural gas  resources in  the Cook                                                                    
               Inlet   sedimentary   basin   that   may   be                                                                    
               economically   produced   to  meet   in-state                                                                    
               (2)  delivering   natural  gas   and  propane                                                                    
               produced in  the state by a  means other than                                                                    
               the  development and  construction of  an in-                                                                    
               state  natural  gas  pipeline by  the  Alaska                                                                    
               Gasline Development Corporation,  but only if                                                                    
               the  Alaska  Gasline Development  Corporation                                                                    
               finds   that   the  alternative   means   for                                                                    
               delivering natural  gas and propane  are less                                                                    
               expensive  than the  construction  of an  in-                                                                    
               state natural gas pipeline;                                                                                      
               (3)  continuing  to  develop  a  natural  gas                                                                    
               pipeline  capable  of transporting  not  less                                                                    
               than 3,000,000,000  cubic feet  of gas  a day                                                                    
               if    the    Alaska    Gasline    Development                                                                    
               Corporation  finds  that the  development  of                                                                    
               the  larger capacity  pipeline would  deliver                                                                    
               cheaper natural  gas to markets in  the state                                                                    
               and  provide the  state with  greater revenue                                                                    
               when  compared  to  an in-state  natural  gas                                                                    
               pipeline  developed  and constructed  by  the                                                                    
               Alaska Gasline Development Corporation;                                                                          
               (4) delivering  natural gas  by truck  to the                                                                    
               Fairbanks North Star  Borough and subsidizing                                                                    
               facilities  for delivering  propane to  rural                                                                    
               communities  in   the  state  that   are  not                                                                    
               connected  to  the  state's  contiguous  road                                                                    
               system if  those alternatives are  more cost-                                                                    
               effective    than    the   development    and                                                                    
               construction  of  an   in-state  natural  gas                                                                    
               pipeline  by the  Alaska Gasline  Development                                                                    
          (c)  During development  of  the in-state  natural                                                                    
          gas pipeline and before  the start of construction                                                                    
          of an  in-state natural  gas pipeline,  the Alaska                                                                    
          Gasline  Development  Corporation shall  determine                                                                    
          whether   a  natural   gas  pipeline   capable  of                                                                    
          delivering  3,000,000,000  cubic feet  of  natural                                                                    
          gas a day  or more from the North  Slope to market                                                                    
          is  a  viable  project.   If  the  Alaska  Gasline                                                                    
          Development Corporation determines  that a natural                                                                    
          gas pipeline  capable of  delivering 3,000,000,000                                                                    
          cubic feet of  natural gas a day or  more from the                                                                    
          North  Slope to  market remains  a viable  project                                                                    
          and  there is  an  adequate  supply of  marketable                                                                    
          natural  gas in  Cook  Inlet to  meet natural  gas                                                                    
          demand  in   the  Railbelt,  the   Alaska  Gasline                                                                    
          Development   Corporation   shall   research   and                                                                    
          consider  whether  a  small-diameter  natural  gas                                                                    
          pipeline  from Cook  Inlet to  the Fairbanks  area                                                                    
          could  be  built  to  deliver  natural  gas  at  a                                                                    
          reasonably  economic cost.  If the  Alaska Gasline                                                                    
          Development  Corporation   finds  that   a  small-                                                                    
          diameter natural  gas pipeline from Cook  Inlet to                                                                    
          the  Fairbanks  area  could be  built  to  deliver                                                                    
          natural gas  at a  reasonably economic  cost under                                                                    
          the  circumstances described  in this  subsection,                                                                    
          the Alaska  Gasline Development  Corporation shall                                                                    
          stop the  development of  an in-state  natural gas                                                                    
          pipeline  from  the  North  Slope  and  study  the                                                                    
          viability of a small-diameter natural gas                                                                             
          pipeline from Cook Inlet to the Fairbanks area."                                                                      
     Reletter the following subsections accordingly.                                                                            
     Page 5, line 15:                                                                                                           
          Delete "(c) and (d)"                                                                                                  
          Insert "(e) and (f)"                                                                                                  
Co-Chair Stoltze OBJECTED.                                                                                                      
Representative Gara  explained that Amendment 1  went to the                                                                    
"crux" of  his concerns  about the  bill. He  discussed that                                                                    
Alaskans were  interested in the cheapest  gas available and                                                                    
did not want the state to  make a decision that would result                                                                    
in more  expensive gas. He  calculated that by the  time the                                                                    
gas reached Asia  the gas would be approximately  $16 to $17                                                                    
if  a .5  billion cubic  feet  (bcf) gasline  was built.  He                                                                    
listed costs contained within  in his calculation including,                                                                    
a  $7.75  tariff  to  Big   Lake,  approximately  $2.00  for                                                                    
transportation to Nikiski,  $2.00 for the price  of gas, the                                                                    
cost of  conditioning the gas  at an LNG facility  (the cost                                                                    
was not known,  but at some facilities it was  between $3 to                                                                    
$4  per million  cubic  feet (mcf)),  and  shipping to  Asia                                                                    
could  be approximately  $1.00 to  $1.50. He  expounded that                                                                    
the  gas would  also be  expensive for  Anchorage consumers;                                                                    
with a 250  mcf line, gas to Anchorage  consumers would cost                                                                    
$13.82 plus $2.00 for distribution by the Enstar system.                                                                        
Representative Gara remarked  that the state may  get to the                                                                    
point where  the proposal in  the bill was the  only option;                                                                    
however,  Amendment  1  proposed  that  the  Alaska  Gasline                                                                    
Development Corporation (AGDC) should  make sure that it was                                                                    
necessary  to move  forward with  the option.  The amendment                                                                    
required the  agency to  assess whether  it agreed  with the                                                                    
U.S.  Geological Survey  findings that  there were  adequate                                                                    
stores of  Cook Inlet  natural gas to  tide the  state over.                                                                    
The question that arose was  whether the cheapest way to get                                                                    
gas  to  Fairbanks was  a  bullet-line  north if  there  was                                                                    
adequate gas in  Cook Inlet. He opined  that adequate stores                                                                    
in  Cook Inlet  would  probably result  in  cheaper gas  for                                                                    
Southcentral than  the proposed bullet-line. He  referred to                                                                    
a proposal  in Fairbanks that  would truck natural  gas from                                                                    
the North  Slope to  Fairbanks that  would cost  between $11                                                                    
and $16  per mcf; he  surmised that  it could be  smarter to                                                                    
subsidize  the  Fairbanks  proposal  at a  much  lower  cost                                                                    
versus the cost of the proposal in HB 9.                                                                                        
Representative  Gara  expounded  that  the  amendment  would                                                                    
require AGDC to determine  whether there were less expensive                                                                    
options  than the  project  in  HB 9  that  would cost  $400                                                                    
million to  reach project sanction  and $7 billion  to build                                                                    
the  gasline. He  opined that  the project  would result  in                                                                    
expensive gas  for Alaskans  and that a  study had  not been                                                                    
conducted   to  determine   whether  cheaper   options  were                                                                    
available. He stated  that the ultimate goal  of the bullet-                                                                    
line  was to  ship gas  to  Asia, but  based on  all of  the                                                                    
information,  a large  line would  result in  less expensive                                                                    
gas to Asia  and Alaskans and increased  gas development and                                                                    
jobs on  the North Slope. He  relayed that the tariff  for a                                                                    
large line  was between $1  and $2 versus  $7 to $9  for the                                                                    
smaller line. He did not  believe the state should "jump off                                                                    
the diving board"  on what could be a  very important option                                                                    
if  the other  options were  not feasible.  He believed  the                                                                    
bill constituted a  $400 million bet that all  of the better                                                                    
options would fail.                                                                                                             
3:20:41 PM                                                                                                                    
REPRESENTATIVE MIKE CHENAULT, SPONSOR,  referred to the USGS                                                                    
and gas  that was  "yet to  be found"  in Alaska.  He stated                                                                    
that there was  a large difference between gas  that was yet                                                                    
to be found and actual  gas production. He furthered that in                                                                    
1995 the USGS estimated that  there was 2.14 [trillion cubic                                                                    
feet (tcf)]  of gas that  may be recoverable in  Cook Inlet;                                                                    
the number had changed to 19  tcf. He did not believe anyone                                                                    
knew  whether   the  gas  was  there.   He  questioned  what                                                                    
formation  the gas  was  in and  what  the development  cost                                                                    
would be  if the gas  existed. He  referred to a  recent gas                                                                    
find  in  Cook  Inlet;  he   was  proud  that  the  drilling                                                                    
companies were  working in the  area. He  and Representative                                                                    
Mike Hawker had  worked hard in recent  years to incentivize                                                                    
companies to  work in Cook  Inlet. The recent  find involved                                                                    
one well, drilled into a  formation at 8,000 feet; there had                                                                    
been no  testing done and he  believed no mud logs  had been                                                                    
taken. He  stated that there  had been  no way to  know what                                                                    
was  there  without  knowing specifics  about  an  area  and                                                                    
developing a formula to determine the amount of gas.                                                                            
Representative Chenault  hoped gas was found  because anyone                                                                    
living  on  the  gas  distribution  system  was  faced  with                                                                    
potential rolling  brownouts. He referred to  television ads                                                                    
in the  area that indicated  whether people could  expect to                                                                    
lose power  or needed to  conserve energy. He  stressed that                                                                    
Cook Inlet was  running low on gas  reserves. He recommended                                                                    
that people talk to Enstar and  Chugach to find out how long                                                                    
gas  supplies  would last.  He  recalled  that in  the  past                                                                    
companies had believed  there was oil in  certain areas that                                                                    
ended  up being  dry.  He remembered  the Sunfish  discovery                                                                    
that  had  amounted  to nothing;  it  had  involved  initial                                                                    
projections of  four or five platforms,  millions of barrels                                                                    
of oil, gas,  and thousands of jobs. He  was concerned about                                                                    
a long-term  energy supply for  Alaska. He pointed  to items                                                                    
in the amendment  related to the study of a  3 billion cubic                                                                    
feet  (bcf)  per day  gasline  and  gas transportation  from                                                                    
Prudhoe Bay to  Fairbanks or other. He relayed  that some of                                                                    
the information was currently in proposed legislation.                                                                          
3:25:29 PM                                                                                                                    
Representative Chenault queried whether  the state was going                                                                    
to make people  wait until the state  determined whether the                                                                    
proposed  line  was  large  enough  or  until  a  study  was                                                                    
conducted. He  opined that  AGDC had  not been  set up  as a                                                                    
study group. The  organization had been formed to  look at a                                                                    
project that  met the current Alaska  Gasline Inducement Act                                                                    
(AGIA) process. He believed that  telling the agency that it                                                                    
needed to  study a 3 bcf  per day line would  invoke "treble                                                                    
damages"  and was  going against  what some  members of  the                                                                    
legislature had  felt was the right  way to go at  a certain                                                                    
time period. He stated that  the current system only allowed                                                                    
a 500 bcf per day line. He  would like to see a larger line,                                                                    
but  the  state had  put  the  constraints upon  itself.  He                                                                    
remarked  that  he  could  pick   legislators  out  who  had                                                                    
supported and  continued to support  the system at  the cost                                                                    
of gas to Alaskans.                                                                                                             
Representative Chenault  agreed that  a 3  bcf per  day line                                                                    
would be less  expensive than the one proposed  in the bill.                                                                    
He did not agree with  Amendment 1. He believed that waiting                                                                    
to  build a  line  from  Cook Inlet  to  Fairbanks would  do                                                                    
Fairbanks more  harm; he stressed  his desire to get  gas to                                                                    
the  community.  He opined  that  the  state would  have  to                                                                    
import  foreign  LNG  if  gas in  Cook  Inlet  continued  to                                                                    
decline,  which would  make gas  in the  Fairbanks area  the                                                                    
most expensive  in the  world due to  LNG import  and tariff                                                                    
costs. He felt  passionate about the direction  the bill was                                                                    
headed; it  was not  everything he  wanted because  he would                                                                    
like to  see a larger line.  He could not predict  whether a                                                                    
larger line would  be built. He stated that  the project was                                                                    
currently the only  one that would bring gas  from the North                                                                    
Slope to tidewater and if  the legislature continued to stop                                                                    
projects from moving  forward it would be doing  the state a                                                                    
disservice. He  cited from a  poll that 48 percent  of those                                                                    
polled believed  Alaska did  not have  a gasline  because of                                                                    
leadership. He  emphasized that leadership "had  a bad habit                                                                    
of  getting  in the  way  of  moving projects  forward."  He                                                                    
stated  that Alaskans  were ready  to make  a move  and were                                                                    
willing to pay to subsidize a pipeline if needed.                                                                               
3:30:03 PM                                                                                                                    
Representative   Chenault   relayed    that   the   proposed                                                                    
legislation would  not subsidize a pipeline.  He stated that                                                                    
Alaskans were  tired of not  having gas. He opined  that the                                                                    
state could wait for the  largest pipeline to come along; he                                                                    
could argue that a 48 inch  line was not the best investment                                                                    
because a 52  inch line would be better, but  he opined that                                                                    
it was necessary  to live in the real world  related to what                                                                    
was possible.                                                                                                                   
REPRESENTATIVE    MIKE    HAWKER,    CO-SPONSOR,    endorsed                                                                    
Representative Chenault's comments.                                                                                             
Representative  Gara  responded  that Amendment  1  did  not                                                                    
violate AGIA.  He explained  that the  bill was  built under                                                                    
current law  and the  amendment did not  seek to  change the                                                                    
law;  AGIA specified  that  a pipeline  larger  than .5  bcf                                                                    
could  not be  built without  changing  the law.  The 3  bcf                                                                    
pipeline in  the amendment was  an AGIA pipeline.  He opined                                                                    
that the problem  with the current bill was  that it assumed                                                                    
there was  an export market  to Asia through Nikiski  and it                                                                    
would  also   produce  very  expensive  gas.   He  suggested                                                                    
building  the AGIA  line to  Valdez if  there was  an export                                                                    
market to Asia;  a bigger line would provide  cheaper gas to                                                                    
Alaskans  and Asia.  He  pointed to  work  the governor  was                                                                    
currently doing  with the major  three oil companies  on the                                                                    
concept of a gasline to Valdez.  He stated that a large line                                                                    
would produce  roughly 50 percent  cheaper gas; the  cost of                                                                    
gas  would  be  roughly  $16  under  the  current  bill.  He                                                                    
reiterated his  earlier testimony  that a larger  line would                                                                    
create more  jobs, more North Slope  development and cheaper                                                                    
gas for Alaskans.  He stressed that the  proposed line would                                                                    
not  work without  a "massive"  subsidy in  the billions  of                                                                    
dollars if the market did not  exist in Asia. He opined that                                                                    
without  the export  the line  became half  the size,  which                                                                    
would cost Alaskans $17 to  $18 per million cubic feet (mcf)                                                                    
of gas. He believed less  expensive options had to exist. He                                                                    
remarked  that  utilities  had   repeatedly  said  that  the                                                                    
rolling  brownout concern  was related  to the  gas delivery                                                                    
system in Southcentral Alaska and not gas supply.                                                                               
3:34:27 PM                                                                                                                    
Representative  Chenault  responded  that there  was  a  gas                                                                    
delivery problem, but  there was also a  gas shortage issue.                                                                    
He  wondered why  gas storage  construction was  underway if                                                                    
there was not  a gas shortage issue; the gas  storage was in                                                                    
place to ensure that gas  was available on the coldest days.                                                                    
He stated that  if the gas was not available  on the coldest                                                                    
days that it did equate to a gas shortage.                                                                                      
Representative  Gara  agreed  that  the  storage  facilities                                                                    
would  ease the  problems  in  Cook Inlet,  but  he did  not                                                                    
believe that the state had  reached the point that it needed                                                                    
to  pass  legislation  that would  spend  $400  million  for                                                                    
expensive  gas. He  surmised that  the state  may reach  the                                                                    
point in the future; however,  he believed there should be a                                                                    
chance to build  a "better, cheaper line  that gets Alaskans                                                                    
cheaper gas."                                                                                                                   
A ROLL Call was taken on Amendment 1.                                                                                           
IN FAVOR: Gara, Guttenberg                                                                                                      
OPPOSED:  Costello,   Doogan,  Fairclough,   Joule,  Neuman,                                                                    
Stoltze, Thomas                                                                                                                 
The MOTION FAILED (7-2).                                                                                                        
Co-Chair Thomas  MOVED Amendment 2,  27-LS0075\K.2 (Bullock,                                                                    
     Page 6, lines 24 -28:                                                                                                      
          Delete "certain  information may not  be disclosed                                                                    
          without impairing  the rights of a  third party to                                                                    
          maintain the  confidentiality of  the information,                                                                    
          the state  agency may  require the  Alaska Gasline                                                                    
          Development Corporation  to obtain the  consent of                                                                    
          the third party before  the state agency transfers                                                                    
          that information"                                                                                                     
          Insert "a law or provision  of a contract to which                                                                    
          the  state agency  is a  party requires  the state                                                                    
          agency  to  preserve  the confidentiality  of  the                                                                    
          information  and that  delivering the  information                                                                    
          to  the  Alaska  Gasline  Development  Corporation                                                                    
          would  violate  the confidentiality  provision  of                                                                    
          that  law  or  contract, the  state  agency  shall                                                                    
          identify the applicable  law or contract provision                                                                    
          to the Alaska  Gasline Development Corporation and                                                                    
          may   require  the   Alaska  Gasline   Development                                                                    
          Corporation to  obtain the  consent of  the person                                                                    
          who has the right  to waive the confidentiality of                                                                    
          the  information  under   the  applicable  law  or                                                                    
          contract   provision  before   the  state   agency                                                                    
          transfers  the information  to the  Alaska Gasline                                                                    
          Development Corporation"                                                                                              
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
TOM WRIGHT,  STAFF, REPRESENTATIVE MIKE  CHENAULT, explained                                                                    
that Amendment 2  had been recommended by  the Department of                                                                    
Law and  AGDC. The  amendment would allow  state information                                                                    
to be made  available to AGDC from another  state agency; if                                                                    
the  information belonged  to a  third-party, AGDC  would be                                                                    
required to  obtain permission from  that party to  view the                                                                    
confidential information.                                                                                                       
Representative Gara  remarked that  there was  no limitation                                                                    
in the  amendment regarding what  type of  information would                                                                    
remain confidential. The  language "certain information" was                                                                    
not defined and could mean  any information. He believed the                                                                    
amendment   allowed   third   parties  to   determine   what                                                                    
information they  could choose to  keep from the  public. He                                                                    
opined that without a better  definition of what information                                                                    
would be kept  private, the public would not  have access to                                                                    
information that may  be important on items  like cost, fair                                                                    
prices,  and  feasibility.  He  requested  a  more  in-depth                                                                    
definition of "certain information" if one existed.                                                                             
3:38:08 PM                                                                                                                    
Mr. Wright replied that the  information was proprietary and                                                                    
confidential.  He reiterated  that a  third party's  consent                                                                    
would be required for AGDC  to obtain the information from a                                                                    
state agency.  He added that  some of the  information would                                                                    
be available to the  public; information labeled proprietary                                                                    
or confidential would not be made available.                                                                                    
Representative Gara  noted that  he had misread  Amendment 2                                                                    
and understood that the  "certain information" portion would                                                                    
be deleted. He stated  that proprietary information language                                                                    
the  amendment  would  insert upheld  his  concerns  that  a                                                                    
third-party  could limit  the information  available to  the                                                                    
Representative  Doogan  remarked  that  he did  not  have  a                                                                    
problem with Amendment  2, but he did not  understand it. He                                                                    
asked for verification that the  state agency with access to                                                                    
third-party information would be  required to obtain consent                                                                    
from the third-party prior to releasing it to AGDC.                                                                             
Mr. Wright read from the amendment:                                                                                             
     A law  or provision  of a contract  to which  the state                                                                    
     agency  is  a  party   requires  the  state  agency  to                                                                    
     preserve  the confidentiality  of  the information  and                                                                    
     that delivering  the information to the  Alaska Gasline                                                                    
     Development     Corporation    would     violate    the                                                                    
     confidentiality provision of that law or contract...                                                                       
Mr.  Wright  explained  that  the  information  was  already                                                                    
confidential  or proprietary;  in order  for AGDC  to obtain                                                                    
the information third-party consent was required.                                                                               
JOHN  HUTCHINS, ASSISTANT  ATTORNEY  GENERAL,  OIL, GAS  AND                                                                    
MINING   SECTION,  CIVIL   DIVISION,   DEPARTMENT  OF   LAW,                                                                    
clarified that  Amendment 2 applied to  information that was                                                                    
required  to  be  kept  confidential   by  current  law  (AS                                                                    
38.05.035 allowed  applicants to  submit information  to the                                                                    
Department  of   Natural  Resources   under  a   promise  of                                                                    
confidentiality) and  by contract.  He elaborated  that most                                                                    
of  the  information could  not  be  used  by the  state  to                                                                    
support a  competing project  and was  used to  evaluate the                                                                    
application. The current bill  language could be interpreted                                                                    
as repealing  the statute as  applicable to  AGDC; therefore                                                                    
the amendment was  aimed at clarifying that  AGDC would have                                                                    
access  to  the  information  only   with  a  third  party's                                                                    
Co-Chair   Stoltze   asked   whether  there   were   similar                                                                    
provisions under  the AGIA contract. Mr.  Hutchinson replied                                                                    
in the negative.                                                                                                                
3:42:35 PM                                                                                                                    
Representative  Hawker  reiterated   that  the  language  in                                                                    
Amendment 2 had been recommended by DOL.                                                                                        
Representative  Guttenberg  believed   the  public  and  the                                                                    
legislature had  a right to  have information  available. He                                                                    
asked  for  verification  that  a  state  agency  could  not                                                                    
divulge information that was designated  by a third-party as                                                                    
confidential even  if the information was  public in another                                                                    
Mr.  Hutchinson  replied state  agencies  did  not have  any                                                                    
obligation to  keep information private that  was already in                                                                    
the   public  domain.   He  added   that  the   confidential                                                                    
information  was primarily  engineering and  financial data;                                                                    
under current  law companies were  entitled to  request that                                                                    
the state keep the information confidential.                                                                                    
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
Representative Gara OBJECTED to  Amendment 2. He voiced that                                                                    
under the  legislation the state  would pay $400  million to                                                                    
get  the project  to project  sanction. He  believed that  a                                                                    
company   should   be   required  to   release   engineering                                                                    
information that the state was essentially buying.                                                                              
A ROLL Call was taken on Amendment 2.                                                                                           
IN FAVOR: Neuman,   Costello,  Doogan,   Fairclough,  Joule,                                                                    
Stoltze, Thomas                                                                                                                 
OPPOSED: Gara, Guttenberg                                                                                                       
The MOTION  PASSED (7-2). There being  NO further OBJECTION,                                                                    
Amendment 2 was ADOPTED.                                                                                                        
Co-Chair Thomas MOVED  Amendment 3, 27-LS0075\K.15 (Bullock,                                                                    
3/19/12)  [Due to  the length  of  the amendment  it is  not                                                                    
included in the minutes; a copy  is available on file and on                                                                    
Co-Chair Stoltze OBJECTED.                                                                                                      
3:45:51 PM                                                                                                                    
Representative   Hawker    explained   that    Amendment   3                                                                    
represented  the  single  greatest policy  addition  to  the                                                                    
legislation;  it created  a framework  for regulation  under                                                                    
the  Regulatory Commission  of Alaska  (RCA) for  an instate                                                                    
gas pipeline  authorized to operate  as a  contract carrier.                                                                    
The   amendment  replaced   the  existing   components  that                                                                    
exempted  an  instate  pipeline from  regulation  under  the                                                                    
common  carrier statutes  of the  public  utilities and  the                                                                    
Alaska Pipeline Act.                                                                                                            
RENA DELBRIDGE, STAFF,  REPRESENTATIVE MIKE HAWKER, provided                                                                    
a  detailed   description  of  Amendment  3   that  replaced                                                                    
Sections 25 through 27 in HB  9, version K. The sections had                                                                    
exempted  an AGDC  instate natural  gasline from  regulation                                                                    
under RCA as a public utility  and as an Alaska Pipeline Act                                                                    
pipeline  for  common  carriers.  The  amendment  created  a                                                                    
structure that  allowed for  regulation under  the RCA  as a                                                                    
contract  carrier. There  was  a change  to  the title  that                                                                    
would  specifically  state  that  the bill  related  to  the                                                                    
regulation of an instate gas  pipeline authorized to provide                                                                    
transportation as a contract  carrier. The language "provide                                                                    
transportation of  natural gas by way  of contract carriage"                                                                    
was inserted on page 4,  line 4 of the legislation following                                                                    
the word  "corporation." The language added  a fifth ability                                                                    
to  allow  AGDC  to  provide  contract  carriage;  the  AGDC                                                                    
gasline  would  then  apply  specifically  to  the  contract                                                                    
carriage section.                                                                                                               
Ms. Delbridge  pointed to Section  6 of the bill  related to                                                                    
the Right-of-Way  Leasing Act and  the exemption of  an AGDC                                                                    
line  from several  covenants  including  covenant 7,  which                                                                    
stated  "it  will  construct and  operate  the  pipeline  in                                                                    
accordance   with   applicable   state   laws   and   lawful                                                                    
regulations  and  orders  of the  Regulatory  Commission  of                                                                    
Alaska."  The  exemption  had only  been  necessary  if  the                                                                    
pipeline  would have  been exempt  from  RCA oversight;  the                                                                    
amendment called  for RCA  oversight; therefore,  it removed                                                                    
the exemption.  She pointed to  a conforming change  on page                                                                    
9, lines  13 to 14 related  to the removal of  the exemption                                                                    
from covenant 7.                                                                                                                
Ms.  Delbridge directed  attention  to page  1,  line 23  of                                                                    
Amendment 3 that provided the  new regulatory structure. The                                                                    
new Section  25 of the  bill would amend the  RCA's decision                                                                    
making procedures to  add a new regulatory  chapter AS 42.08                                                                    
to the  list of chapters  the RCA was able  to administrate.                                                                    
The new Section 26 added a  new section to the Alaska Public                                                                    
Utilities Regulatory  Act. She elaborated that  the contract                                                                    
carrier line  would be regulated  under AS 42.08  and needed                                                                    
to tie into  the way RCA looked at  public utility contracts                                                                    
under AS  42.05. The section  worked to establish a  link by                                                                    
allowing the RCA to include  a covenant in contracts between                                                                    
a utility and AGDC that would  enable the utility to pass on                                                                    
its costs  in rates charged  to consumers; the  RCA approval                                                                    
of the contract with AGDC  and the public utility would make                                                                    
the   covenant   enforceable.   The  amendment   worked   to                                                                    
accommodate utilities  that were  not shippers  that decided                                                                    
to buy  gas shipped  by another  entity or  to store  gas it                                                                    
bought  off of  a  line in  order to  keep  any RCA  filings                                                                    
related  to the  pipeline moving  in a  timely fashion.  She                                                                    
furthered  that the  RCA  would be  required  to review  the                                                                    
utility contracts  to determine whether they  were "just and                                                                    
reasonable" in a 180-day time period.                                                                                           
Ms.  Delbridge discussed  that the  Amendment 3  exempted an                                                                    
AGDC  line from  the two  existing  avenues the  RCA had  to                                                                    
regulate  a gas  pipeline  (as a  public  utility or  common                                                                    
carrier pipeline  under the Pipeline Act).  She relayed that                                                                    
the RCA  regulated pipelines on  a cost-based  formula where                                                                    
rates and  tariffs were regulated.  Sponsors wanted  to make                                                                    
contracts  work that  they believed  could  be entered  into                                                                    
freely by  two parties;  therefore, under the  amendment the                                                                    
RCA would  review the pipeline  contracts for  fairness, but                                                                    
would  not  regulate the  rates  and  tariffs. Sponsors  had                                                                    
wanted backstops  included in the  bill; therefore,  the new                                                                    
regulatory   section   required  all   precedent   agreement                                                                    
contracts that came  out of an open season  between AGDC and                                                                    
shippers to be submitted to the  RCA. The RCA would have 180                                                                    
days  (a  typical timeframe  for  similar  items) to  decide                                                                    
whether a contract  had been done fairly  and without fraud;                                                                    
the contract  would be automatically approved  if the agency                                                                    
failed to make a decision within the designated time limit.                                                                     
3:54:11 PM                                                                                                                    
Ms.   Delbridge  continued   to  discuss   Amendment  3.   A                                                                    
Certificate of  Public Convenience and Necessity  (CPCN) was                                                                    
required   that   would   allow  for   the   operation   and                                                                    
construction of the pipeline. Some  of the requirements that                                                                    
the  RCA  would normally  investigate  in  a CPCN  would  be                                                                    
concluded by the legislature. The  RCA typically looked at a                                                                    
project  to   determine  whether   it  was  in   the  public                                                                    
convenience  and necessity;  the  amendment designated  that                                                                    
the passage  of the bill  would be sufficient  evidence that                                                                    
the project was in the  public convenience and necessity. An                                                                    
applicant's proposal  was also  considered for  its fitness,                                                                    
willingness,  and  ability.  The amendment  stipulated  that                                                                    
through   the  creation   of  AGDC,   the  legislature   had                                                                    
determined that the  corporation was willing and  able to do                                                                    
its work.  The RCA would  determine whether an  operator had                                                                    
sufficient technical  capability to  operate a  pipeline and                                                                    
provide  service. There  were a  number of  RCA empowerments                                                                    
that  enabled  the  commission  to  conduct  its  day-to-day                                                                    
business;   the   regulatory  empowerments   were   repeated                                                                    
throughout  statutes and  included  items  such as  standard                                                                    
decision making  procedures and the ability  to expedite its                                                                    
adjudication  of  matters.  The commission's  annual  report                                                                    
would need  to include any  actions it had taken  related to                                                                    
AS 42.08.                                                                                                                       
Ms.  Delbridge addressed  that Amendment  3 built  backstops                                                                    
into the  legislation. The RCA  traditionally played  a role                                                                    
in dispute resolution (in addition  to its role in approving                                                                    
a project); the amendment would  require that AGDC provide a                                                                    
dispute  resolution  mechanism  within  its  contracts.  She                                                                    
noted that although there were  alternatives to a regulatory                                                                    
body  conducting dispute  resolution  (i.e. adjudication  or                                                                    
arbitration  panel), the  amendment allowed  two parties  to                                                                    
agree  on a  way to  resolve future  disputes. She  observed                                                                    
that there  was always a  risk of dispute  resolution method                                                                    
failure;  the RCA  would intervene  if a  dispute resolution                                                                    
failed and prevented  a public utility from  getting the gas                                                                    
thereby posing a threat to  the public's safety and welfare.                                                                    
She discussed  future unknown items  such as  expansions and                                                                    
interconnections  that  the  RCA   typically  would  take  a                                                                    
detailed role in managing; the  commission would be involved                                                                    
in situation  where other parties  may want to  buy capacity                                                                    
in an expansion or be involved in an interconnection.                                                                           
3:58:45 PM                                                                                                                    
Ms. Delbridge asked whether she  should go through Amendment                                                                    
3 section-by-section.                                                                                                           
Representative Doogan responded in the affirmative.                                                                             
Ms. Delbridge  relayed that legal counsel  was available for                                                                    
any  detailed regulatory  or RCA  questions. She  pointed to                                                                    
lines 21-23  on page 1  of Amendment  3 where Section  25 of                                                                    
the  new   structure  amended  the  RCA's   decision  making                                                                    
procedures.  A new  chapter  was added  for  an instate  gas                                                                    
pipeline  contract   carrier  to  the  list   of  regulatory                                                                    
chapters  that were  exempt from  the RCA's  decision making                                                                    
procedures and  provided that  the RCA  chair may  appoint a                                                                    
panel for hearings.  The language was needed for  the RCA to                                                                    
work into  AS 42.08 and  to run its daily  business. Section                                                                    
26  added  a  new  section  to  include  the  Alaska  Public                                                                    
Utilities Regulatory Act  to AS 42.05 for  review of certain                                                                    
contracts by the commission; the  section established a link                                                                    
between the  existing public utility regulation  and the new                                                                    
regulation  for   the  instate   gasline  (AS   42.08).  She                                                                    
explained that while  an AGDC line would  be regulated under                                                                    
42.08  and exempt  from  public  utility regulation,  public                                                                    
utilities may have associated  contracts for something other                                                                    
than  transportation capacity  that the  RCA would  regulate                                                                    
under  AS  42.05.  The  RCA  would  include  a  covenant  in                                                                    
contracts between a  utility and AGDC that  would enable the                                                                    
utility to pass on its  costs in rates charged to consumers;                                                                    
the RCA  approval of the  contract with AGDC and  the public                                                                    
utility would  make the covenant enforceable.  The amendment                                                                    
worked to accommodate utilities  that were not shippers that                                                                    
decided to  buy gas  shipped by another  entity or  to store                                                                    
gas  it bought  off  of a  line  in order  to  keep any  RCA                                                                    
pipeline filings  moving in a timely  fashion. She furthered                                                                    
that  the  RCA  would  be required  to  review  the  utility                                                                    
contracts  to   determine  whether   they  were   "just  and                                                                    
reasonable" in a 180-day time period.                                                                                           
Representative Doogan queried whether  the contract would be                                                                    
approved  automatically if  the 180-day  limit was  not met.                                                                    
Ms.  Delbridge  replied  that the  180-day  period  was  the                                                                    
maximum time  allowed for  the RCA to  make a  decision. The                                                                    
amendment  also  asked  the RCA  to  expeditiously  consider                                                                    
contracts in order  for the process to move  at a reasonable                                                                    
pace.  She  confirmed  that   the  commission's  failure  to                                                                    
approve  or disapprove  the contract  within the  given time                                                                    
period would be de facto approval.                                                                                              
Representative  Doogan  asked  what   would  happen  if  the                                                                    
decision took  longer than 180 days.  Ms. Delbridge deferred                                                                    
the question  to Stuart Goering  with the Department  of Law                                                                    
(DOL).  She  believed  that  the   RCA  found  180  days  to                                                                    
generally   be  a   reasonable  processing   timeframe  when                                                                    
directed by the legislature.                                                                                                    
Representative   Doogan  understood,   but  the   issue  was                                                                    
important and the  deadline put a limit  on the commission's                                                                    
decision  making time.  He wanted  to  fully understand  the                                                                    
reason for  including the provision in  the legislation. Ms.                                                                    
Delbridge  deferred  the question  to  Mr.  Goering if  more                                                                    
information  was   needed  on  the  sponsors'   decision  to                                                                    
restrain the  timeline to prevent  it from  interfering with                                                                    
AGDC's  ability  to  turn  precedent  agreements  into  firm                                                                    
transportation contracts and progress a pipeline.                                                                               
4:04:18 PM                                                                                                                    
Representative   Hawker   firmly    believed   the   180-day                                                                    
requirement  was  necessary  and appropriate.  He  explained                                                                    
that the  legislature had  looked at  the time  limit during                                                                    
the  prior session  when it  reauthorized the  RCA. A  great                                                                    
deal of concern  had been expressed that the  RCA was taking                                                                    
too long to  process requests and impeding the  process as a                                                                    
result.  The reauthorization  had  stipulated  that the  RCA                                                                    
submit  a  report evaluating  the  concerns  to the  current                                                                    
legislature. He  recalled that the commission  had concluded                                                                    
that  it could  make the  improvements without  constraining                                                                    
its  resources. The  goal  of the  180-day  deadline was  to                                                                    
emphasize  the importance  of processing  the requests  on a                                                                    
timely  basis.  He agreed  that  Mr.  Goering would  be  the                                                                    
appropriate person  to provide  a more  detailed description                                                                    
of the RCA's processes.                                                                                                         
Representative  Gara  communicated  that sometimes  the  RCA                                                                    
could  not make  timely a  decision because  the appropriate                                                                    
parties  were not  providing information.  He surmised  that                                                                    
the  amendment   would  allow  parties  to   gain  automatic                                                                    
approval  of proposals  if they  withheld information  until                                                                    
the  180-day deadline.  He requested  to hear  from the  RCA                                                                    
regarding the limit.                                                                                                            
Representative Guttenberg  requested that at some  point the                                                                    
sponsors  discuss   the  location  in  the   Amendment  that                                                                    
provided  a   definition  of  the  project   that  would  be                                                                    
regulated. He  was interested to  know where  the regulatory                                                                    
process began. Ms. Delbridge replied in the affirmative.                                                                        
STUART  GOERING, ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT OF                                                                    
LAW (via teleconference), clarified that  he was not able to                                                                    
speak  on  behalf   of  the  RCA.  He   explained  that  the                                                                    
commission operated  under a  number of  existing timelines,                                                                    
primarily  under AS  42.05.175.  The  timelines had  similar                                                                    
limitations  that  would  give   the  applicant  or  utility                                                                    
applying  for  a  tariff  the  approval  it  sought  if  the                                                                    
commission did not  act within the specified  time. The only                                                                    
variation  between the  provision up  for consideration  and                                                                    
the existing law  was that under the latter the  RCA had the                                                                    
ability to  extend the  timeline one  time with  good cause.                                                                    
The parties also had the  option to consent to extending the                                                                    
timeline beyond  the time  listed in  statute.   He believed                                                                    
that whether 180 days was a  sufficient period of time was a                                                                    
policy question  for the commission.  The RCA would  have to                                                                    
provide its  opinion during the open  meeting setting; there                                                                    
was a public meeting scheduled  the following week where the                                                                    
issue  could be  addressed  if the  House Finance  Committee                                                                    
4:10:00 PM                                                                                                                    
Representative   Doogan    communicated   that    he   would                                                                    
potentially take the matter up again in the future.                                                                             
Representative Hawker appreciated his  decision. He had been                                                                    
consistently reminded in conversations  with the RCA and DOL                                                                    
that the  legislature's job was  to set policy and  that the                                                                    
agencies' responsibility  was to implement the  policies. He                                                                    
worked to  be respectful of  the RCA without  abandoning the                                                                    
legislature's responsibility to an agency.                                                                                      
Ms.  Delbridge  continued  to explain  changes  included  in                                                                    
Amendment  3.  Section 27  added  a  new subsection  to  the                                                                    
Alaska Public Utilities Regulatory  Act exempting an instate                                                                    
gasline  subject  to  AS 42.08  from  regulation  under  the                                                                    
Public Utilities Act; Section  28 exempted the pipeline from                                                                    
the Pipeline Act. She expounded  that the pipeline needed to                                                                    
be  exempt from  regulation under  the other  avenues, given                                                                    
that AS  42.08 had been  created to regulate it.  Section 29                                                                    
added a new chapter to  AS 42 (Public Utilities and Carriers                                                                    
and  Energy  Programs)  titled  In-state  Pipeline  Contract                                                                    
Carrier.  She read  from a  handout prepared  by her  office                                                                    
(copy on file):                                                                                                                 
     Section  42.08.010 Application  of chapter;  exemption.                                                                    
     States that this chapter applies  to an instate natural                                                                    
     gas  pipeline  authorized  by  law   to  operate  as  a                                                                    
     contract  carrier.  Exempts   an  instate  natural  gas                                                                    
     pipeline subject exclusively to federal jurisdiction.                                                                      
     Section 42.08.020  Qualification of the  Alaska Gasline                                                                    
     Development  Corporation;   findings.  Determines  that                                                                    
     AGDC is  financially and managerially fit,  willing and                                                                    
     able  to provide  service under  42.08. States  that an                                                                    
     instate  natural gas  pipeline  is  required by  public                                                                    
     convenience   and  necessity.   Directs   the  RCA   to                                                                    
     determine  whether an  entity applying  under 42.08  is                                                                    
     technically fit, willing and able.                                                                                         
     Section 42.08.220  General powers and  duties. Provides                                                                    
     enabling direction  for the  RCA under  42.08. Requires                                                                    
     permits for  construction, interconnections, expansions                                                                    
     and  abandonment.  Enables  the  RCA  to  intervene  in                                                                    
     disputes  that are  between the  carrier  and a  public                                                                    
     utility,  and  that  are  unable   to  be  resolved  by                                                                    
     contractual  dispute   resolution  methods,   and  that                                                                    
     threaten  the public  safety and  welfare. Directs  the                                                                    
     RCA  to not  require rates  or tariff  regulations, and                                                                    
     not  to conduct  further review  of contracts  approved                                                                    
     under 42.08.                                                                                                               
Ms.  Delbridge  elaborated  that  the  addition  of  Section                                                                    
42.08.220 was a sponsor  position that encouraged an initial                                                                    
limited front-end look and trusted  that the contracts would                                                                    
go  forward  (absent   complaint)  without  an  intermediary                                                                    
ruling by a regulatory body.  She continued to read from the                                                                    
     Section     42.08.230    Commission     decision-making                                                                    
     procedures.  Directs the  RCA  to  follow its  standard                                                                    
     decision-making   procedures,   and  to   expeditiously                                                                    
     adjudicate matters.                                                                                                        
     Section  42.08.240  Publication   of  reports,  orders,                                                                    
     decisions and  regulations. Standard RCA  direction for                                                                    
     publishing reports, orders, decisions and regulations.                                                                     
     Section   42.08.250   Application   of   Administrative                                                                    
     Procedure    Act.   Standard    RCA   exemption    from                                                                    
     Administrative  Procedure Act  adjudication procedures;                                                                    
     the RCA's adjudication procedures would apply.                                                                             
     Section 42.08.260  Annual report.  Requires the  RCA to                                                                    
     include  in its  annual  report  activities related  to                                                                    
     Section 42.08.300  Review of  certain contracts  by the                                                                    
     commission.  AGDC or  its  successors  will submit  all                                                                    
     precedent agreements  to the RCA;  precedent agreements                                                                    
     with  other than  a public  utility may  be kept  under                                                                    
     seal.  The  RCA  will  have  180  days  to  approve  or                                                                    
     disprove precedent  agreements as just  and reasonable,                                                                    
     based  on whether  contracts were  negotiated at  arm's                                                                    
     length  and  whether  there was  unlawful  activity  or                                                                    
     unfair dealing.  Approved contracts are not  subject to                                                                    
     further review.  A contract  is arm's  length if  it is                                                                    
     made between  two unaffiliated parties; or,  if parties                                                                    
     are  affiliated, they  have followed  the standards  of                                                                    
     conduct  for  transmission  providers  adopted  by  the                                                                    
     Federal Energy Regulatory Commission.                                                                                      
Ms.  Delbridge expounded  that precedent  agreements may  be                                                                    
kept under seal  because the agreement was  expected to take                                                                    
several  months  to a  couple  of  years to  negotiate.  She                                                                    
pointed to Section 42.08.310:                                                                                                   
     Section  42.08.310 Contract  carriage certificate.  The                                                                    
     owner of  an instate natural  gas pipeline must  have a                                                                    
     certificate of public  convenience and necessity (CPCN)                                                                    
     to construct a  pipeline and to transport  gas. The RCA                                                                    
     has 180 days to issue  a CPCN once application is made,                                                                    
     providing that the applicant is  found fit, willing and                                                                    
     able  to perform  the services  proposed.  The RCA  may                                                                    
     attach  conditions to  and amend,  suspend or  revoke a                                                                    
     CPCN.  Operating  authority   may  not  be  transferred                                                                    
     without RCA approval.                                                                                                      
Ms. Delbridge noted  that the section marked  the shift from                                                                    
regulation of  contracts to regulating  the gasline  and the                                                                    
service provided. She moved on to Section 42.08.320:                                                                            
     Section  42.08.320  Tariffs,   contracts,  filing,  and                                                                    
     public  inspection.  Requires  an instate  natural  gas                                                                    
     pipeline carrier to file  all rules, regulations, terms                                                                    
     and   conditions  pertaining   to   service,  and   all                                                                    
     contracts  with shippers.  Requires  changes in  tariff                                                                    
     rates/rules  and service  conditions to  be filed  with                                                                    
     the RCA.                                                                                                                   
Ms. Delbridge  furthered that the  filings were  intended to                                                                    
be informational; the  information on file with  the RCA was                                                                    
the  official  record.  She pointed  to  Sections  42.08.330                                                                    
through 42.08.350:                                                                                                              
     Section   42.08.330   Expansion,  dispute   resolution.                                                                    
     Contracts   may  provide   for  expansion,   unless  an                                                                    
     expansion  would  violate  the   terms  of  the  Alaska                                                                    
     Gasline Inducement  Act. Requires contracts  to include                                                                    
     procedures for resolving disputes.                                                                                         
     Section  42.08.340 Regulatory  cost charge.  Implements                                                                    
     standard  RCA assessment  of a  user  fee on  regulated                                                                    
     entities; includes a cap  and directs administration of                                                                    
     the user fee.                                                                                                              
     Section 42.08.350: Nothing to  alter the calculation of                                                                    
     taxes  and royalty.  Nothing in  42.08 will  change the                                                                    
     calculation  of production  taxes or  of royalties  due                                                                    
     the state.                                                                                                                 
4:18:03 PM                                                                                                                    
Ms. Delbridge directed attention to Sections 42.08.400                                                                          
through 42.08.900:                                                                                                              
     Section  42.08.400  Public  records.  RCA  records  are                                                                    
     available to the public, except  when classified by the                                                                    
     RCA as  privileged; precedent  agreements will  be kept                                                                    
     Section  42.08.410 Investigations.  Allows  the RCA  to                                                                    
     investigate matters in 42.08.                                                                                              
     Section  42.08.510   Designation  of   service  agents.                                                                    
     Requires  an instate  natural gas  pipeline carrier  to                                                                    
     file  a   named,  permanent   resident  as   its  agent                                                                    
     (standard RCA provision).                                                                                                  
     Section  42.08.520 Effect  of regulations.  Regulations                                                                    
     adopted by the  RCA under 42.08 have the  effect of law                                                                    
     (standard RCA provision).                                                                                                  
     Section 42.08.530 Judicial  review and enforcement. RCA                                                                    
     final  orders  are  subject   to  the  judicial  review                                                                    
     provisions in Section 13, HB 9.                                                                                            
     Section 42.08.540  Joinder of  actions. Appeals  may be                                                                    
     joined  under  applicable  court  rules  (standard  RCA                                                                    
     Section 42.08.900  Definitions. Defines  terms standard                                                                    
     to  the  RCA  (commission,  commissioner,  record)  and                                                                    
     includes  terms  within  HB   9  (instate  natural  gas                                                                    
     pipeline, instate natural gas pipeline carrier).                                                                           
Representative   Costello   referred  to   Ms.   Delbridge's                                                                    
testimony  that  the  passage  of  the  bill  would  be  the                                                                    
acknowledgement  that there  was  a  public convenience  and                                                                    
necessity  for  the  project;   however,  she  believed  the                                                                    
responsibility  was  given   to  AGDC  on  page   3  of  the                                                                    
Ms.  Delbridge  explained  that  the  amendment  required  a                                                                    
carrier to have  a certificate to operate  the pipeline. The                                                                    
amendment assumed  that if  the legislature  passed HB  9 it                                                                    
would give  AGDC the mission  to build the pipeline  and was                                                                    
by de  facto in  the public  convenience and  necessity. She                                                                    
expounded that a company would  have to meet the standard if                                                                    
the project  transitioned to  an entity  other than  AGDC at                                                                    
the point of certification.                                                                                                     
Representative  Costello  referred  to a  provision  in  the                                                                    
amendment  requiring that  AGIA could  not be  violated. She                                                                    
wondered whether  the state  would be held  to the  terms if                                                                    
AGIA went away in the future.                                                                                                   
Ms. Delbridge  responded in the negative.  She detailed that                                                                    
the requirement was related to  whether or not contracts for                                                                    
shipment on  the line could  provide for terms  of expansion                                                                    
in  the  future.  Section  42.08.330  allowed  contracts  to                                                                    
provide for expansion  if they did not violate  the terms of                                                                    
AGIA.  Contracts  made  in  the near  future  could  have  a                                                                    
contingency plan  in the  event that  AGIA and  its capacity                                                                    
limits were no longer a factor in the future.                                                                                   
Representative Gara communicated that  he would like to make                                                                    
an amendment to the amendment at the appropriate time.                                                                          
Representative Guttenberg  wondered whether there was  a way                                                                    
to  contest  a  contract  if  necessary  once  it  had  been                                                                    
approved  and  deemed  just and  reasonable.  Ms.  Delbridge                                                                    
replied that  the contract arrangement would  be governed by                                                                    
contract law. She  explained that a company  could choose to                                                                    
include  language  that would  allow  for  a contingency  if                                                                    
there was a change in future circumstances.                                                                                     
Representative Hawker added that  the section applied to the                                                                    
submittal  of precedent  agreements for  firm transportation                                                                    
commitments  to the  RCA for  review. The  arrangements were                                                                    
contractual and would be used  to obtain necessary financing                                                                    
to  construct  a  pipeline.  Once  the  contracts  had  been                                                                    
reviewed  and  approved by  the  RCA  it was  necessary  for                                                                    
potential  financers to  know that  the contracts  were firm                                                                    
and would  not be  second guessed after  capital commitments                                                                    
were made.                                                                                                                      
4:24:55 PM                                                                                                                    
Representative Gara looked  at page 2, line  22 of Amendment                                                                    
3. He  asked what would happen  if parties did not  give the                                                                    
RCA the information it needed to  make a ruling on whether a                                                                    
contract was  just and reasonable.  He wondered  whether the                                                                    
contract  would automatically  be approved  if the  decision                                                                    
was not made within 180  days. Ms. Delbridge did not believe                                                                    
it  was  the intent  of  the  amendment  to allow  de  facto                                                                    
approval  if information  was not  provided within  the time                                                                    
limit. She  deferred the  question to  Mr. Goering  for more                                                                    
Mr. Goering elaborated that a  company would need to produce                                                                    
sufficient evidence  to prove to  the RCA that  approval was                                                                    
warranted and that the contract  was just and reasonable. He                                                                    
opined that currently the burden  of proof requirement would                                                                    
allow  the   commission  to   disapprove  the   contract  if                                                                    
sufficient  information   had  not  been  provided   by  the                                                                    
company.  He believed  it  would be  better  to provide  for                                                                    
other  ways  out  of  the situation  such  as  allowing  the                                                                    
commission to  find good cause  to extend the time  limit or                                                                    
to clarify  that the commission could  disapprove a contract                                                                    
if it had not been properly supported.                                                                                          
Representative Gara stressed that  the amendment would allow                                                                    
for  a  contract to  be  automatically  approved unless  the                                                                    
commission  could  prove  that  a  contract  was  unjust  or                                                                    
unreasonable;  the commission  would  not be  able to  prove                                                                    
that a  contract was  unjust or unreasonable  if it  did not                                                                    
have the information.                                                                                                           
4:29:19 PM                                                                                                                    
Representative  Hawker replied  that the  scenario described                                                                    
by  Representative Gara  was not  the legislative  intent of                                                                    
Amendment 3.                                                                                                                    
Ms. Delbridge  clarified that the  amendment assumed  that a                                                                    
contract  was  just  and  reasonable  if  two  parties  were                                                                    
willing to sign it.                                                                                                             
Mr. Goering responded that the  language related to what the                                                                    
commission  was required  to find  in order  to rule  that a                                                                    
contract was unjust  and unreasonable was found  in AS 42.05                                                                    
and  AS  42.06.  He  explained   that  there  was  a  fairly                                                                    
significant body of precedent  regarding a party's burden of                                                                    
proof.  He  expounded  that  it  would  be  helpful  if  the                                                                    
legislation specified how to handle  the situation should it                                                                    
arise. He  noted that it  would not be an  unusual situation                                                                    
for the commission to find itself  in if the language in the                                                                    
amendment  did  not  change.  Due to  the  timelines  in  AS                                                                    
42.05.175 there would  be the same potential  problem in the                                                                    
public utility  realm as well.  He noted that there  had not                                                                    
been much  of a problem in  the past and the  commission did                                                                    
have ways of dealing with the issues.                                                                                           
Representative Gara was happy to  work with the sponsors' on                                                                    
the issue before the bill moved to the House floor.                                                                             
Representative  Hawker  believed  that  clarity  was  always                                                                    
beneficial and that  the RCA operated best  when given clear                                                                    
direction.  He would  be happy  to work  with Representative                                                                    
Gara on adding  clarity to the section that  would not alter                                                                    
its intent.                                                                                                                     
4:32:32 PM                                                                                                                    
Representative Gara  MOVED to  AMEND Amendment  3 (Amendment                                                                    
10  27-LS0075\K.17 Bullock  3/20/12  became  Amendment 1  to                                                                    
Amendment 3).                                                                                                                   
Co-Chair Stoltze OBJECTED.                                                                                                      
Representative Gara explained that  Amendment 1 to Amendment                                                                    
3 related  to the  tariff the RCA  would allow  companies to                                                                    
charge, which  would then  be passed  off to  consumers; the                                                                    
higher  the  tariff the  higher  consumer  prices would  be.                                                                    
Under  the  current  amendment the  state  would  approve  a                                                                    
contract if two parties (i.e.  a private carrier and private                                                                    
gas supplier) could reach an agreement  as long as it was an                                                                    
arms-length  negotiation  with  no  fraud.  Amendment  1  to                                                                    
Amendment  3 would  require that  the  tariff price  charged                                                                    
should be just  and reasonable as determined by  the RCA. He                                                                    
furthered  that putting  the decision  in the  hands of  the                                                                    
RCA,  followed  the  commission's traditional  role  in  the                                                                    
regulation of consumer gas prices.                                                                                              
Representative  Hawker  did  not   support  Amendment  1  to                                                                    
Amendment   3.  The   sponsors   believed  the   arms-length                                                                    
requirement  was appropriate.  He did  not believe  that the                                                                    
Amendment 1 was applicable and  stated that it would require                                                                    
a  test  established in  AS  42.05.291(c),  which was  about                                                                    
regulating  public utilities  and included  language related                                                                    
to standards  of the measurement of  the "quantity, quality,                                                                    
pressure, initial  voltage, and other  conditions pertaining                                                                    
to the  supply of  the service, the  accuracy of  meters and                                                                    
appliances   for   measurement,   and  providing   for   the                                                                    
examination   and    testing   of   appliances    used   for                                                                    
measurement."  He   discussed  that  the  issue   was  about                                                                    
precedent  agreements and  a sponsor  of a  pipeline project                                                                    
asking the  commercial market  whether there  was commercial                                                                    
transaction  to  be  had.  He   stressed  that  AGDC  had  a                                                                    
statutorial obligation  to make  gas available in  Alaska at                                                                    
the  least possible  cost. He  stated that  public utilities                                                                    
had  an   interest  in   protecting  their   consumers.  The                                                                    
amendment attempted  to respect  the right of  contract with                                                                    
an adequate review  and assurance that a  project would move                                                                    
forward with results in the best interest of the public.                                                                        
4:39:23 PM                                                                                                                    
Representative Costello believed Amendment  1 to Amendment 3                                                                    
was redundant  given that  there was  a separate  portion of                                                                    
the legislation  that required the  RCA to  review precedent                                                                    
agreements. Ms.  Delbridge answered in the  affirmative. She                                                                    
elaborated  that precedents  between  AGDC  and any  shipper                                                                    
(e.g.  a  public utility,  private  entity,  or other)  were                                                                    
required  to be  reviewed  by  the RCA  to  ensure that  the                                                                    
contracts  were  entered  into  under  fair  and  reasonable                                                                    
Representative Gara responded that  unless the amendment was                                                                    
adopted, Amendment  3 exempted  the specific portion  of the                                                                    
gasline  from the  RCA  review.  He pointed  to  line 23  of                                                                    
Amendment  3, which  designated that  the commission  had to                                                                    
determine that the  price was just and reasonable  if it was                                                                    
negotiated  at arms-length.  The commission  did not  get to                                                                    
determine  whether  the  price   was  fair.  He  provided  a                                                                    
hypothetical example  of a negotiation between  Enstar and a                                                                    
gas  supplier.  He opined  that  the  entities may  have  no                                                                    
interest in  protecting consumers, but the  commission would                                                                    
have to find that the price was just and reasonable.                                                                            
Representative  Gara  furthered  that  the  amendment  would                                                                    
enable  the   RCA  to  fulfill   its  traditional   role  of                                                                    
determining whether  the price  was just and  reasonable. He                                                                    
furthered that  the amendment would  require the  pricing to                                                                    
be  just  and  reasonable  under the  standards  adopted  by                                                                    
commission   under  AS   42.05.291(c),  which   allowed  the                                                                    
commission to  adopt regulations  for the  accommodation and                                                                    
convenience of the public. He  believed that the section was                                                                    
broad enough  to allow regulations  to be made.  He referred                                                                    
to  page 6,  line 14  of Amendment  3, which  specified that                                                                    
AGDC had  duties to  the public, but  it could  transfer the                                                                    
gasline to successors that had  a duty to their shareholders                                                                    
and not the  public. He asked committee members  to vote for                                                                    
the  amendment  if  they  believed that  Enstar  and  a  gas                                                                    
supplier did  not have the  public's interest at  heart when                                                                    
setting a price.                                                                                                                
Ms. Delbridge relayed that it  was important for Amendment 3                                                                    
to  apply  to  AGDC  and   its  successors  because  of  the                                                                    
possibility  that AGDC  may partner  with other  entities to                                                                    
form a new  company that would become the  carrier. The bill                                                                    
required  AGDC  to pursue  a  project  that brought  gas  to                                                                    
Fairbanks, through the Railbelt,  and in Southcentral at the                                                                    
lowest  possible  cost. She  opined  that  the sponsors  may                                                                    
disagree  with the  concept that  a producer  and a  company                                                                    
could enter into a contract  without caring about the public                                                                    
because  AGDC had  a statutory  obligation to  carry forward                                                                    
with the public's interest.                                                                                                     
A ROLL CALL was taken on Amendment 1 to Amendment 3.                                                                            
IN FAVOR: Gara, Guttenberg                                                                                                      
OPPOSED:   Joule,   Wilson,    Costello,   Doogan,   Edgmon,                                                                    
Fairclough, Stoltze                                                                                                             
The MOTION FAILED (7-2).                                                                                                        
Representative Gara  WITHDREW his OBJECTION to  Amendment 3.                                                                    
There being NO further OBJECTION, Amendment 3 was ADOPTED.                                                                      
Vice-chair  Fairclough remarked  that she  did not  want her                                                                    
vote  to be  characterized by  a statement  made by  another                                                                    
member.  She  understood that  the  issue  was important  to                                                                    
Alaskans and believed that the  committee wanted to ensure a                                                                    
transparent  process and  that  the public  was well  served                                                                    
with low cost energy.                                                                                                           
4:46:30 PM                                                                                                                    
Co-Chair  Stoltze  held  the remaining  amendments  until  a                                                                    
later time.                                                                                                                     
HOUSE BILL NO. 296                                                                                                            
     "An Act  relating to service  of process  on prisoners;                                                                    
     relating  to  the  crime of  escape;  relating  to  the                                                                    
     definition  of 'correctional  facility'; amending  Rule                                                                    
     4, Alaska  Rules of Civil Procedure;  and providing for                                                                    
     an effective date."                                                                                                        
HB 296 was SCHEDULED but not HEARD.                                                                                             
4:47:36 PM                                                                                                                    
6:54:36 PM                                                                                                                    
Co-Chair   Stoltze   apologized   for   the   teleconference                                                                    
connection difficulties that were  making it hard for people                                                                    
to call into the meeting.                                                                                                       
RICHARD   ODSATHER,    ODSATHER   INTERNATIONAL   MARKETING,                                                                    
FAIRBANKS  (via teleconference),  voiced  his opposition  to                                                                    
the bill.  He remarked  that he did  not understand  why the                                                                    
Joint  Pipeline   Office  had   not  been  used   in  making                                                                    
decisions.   He   believed   the   HB   9   proposals   were                                                                    
counterproductive to Alaska and that  the entire bill should                                                                    
be killed.  The major problem  in Fairbanks was that  one of                                                                    
the  spur  lines  extended  39 miles  through  some  of  the                                                                    
state's  worst  soils  and   terminated  at  the  university                                                                    
experimental farm fields. It fell  far short of the refinery                                                                    
located 20  miles further south  in North Pole. He  said one                                                                    
project would cost over $200  million and wondered who would                                                                    
pay for it. The new project  wanted to export gas, which was                                                                    
never stated  in the public hearings.  Large methane tankers                                                                    
could not operate  in the upper Cook Inlet  basin because of                                                                    
water  depth, steerage,  and  six months  of  ice flow.  New                                                                    
docks would have to be  built a mile offshore to accommodate                                                                    
the tankers. The public had  been told that the off-takes in                                                                    
Nenana and the  Yukon River would have to be  done after the                                                                    
open season; Nenana  had been told it was supposed  to get a                                                                    
methane  and  propane off-take,  but  it  had not  happened.                                                                    
There were  many things in  the bill  that need to  be taken                                                                    
care of. He was concerned about tariff prices.                                                                                  
MERRICK   PEIRCE,   BOARD   MEMBER,  ALASKA   GASLINE   PORT                                                                    
AUTHORITY, NORTH POLE (via  teleconference), did not support                                                                    
the bill.  He offered a shareholder  and public perspective.                                                                    
He stressed  that hundreds of  millions of dollars  had been                                                                    
wasted on  a project that would  not be built. The  bill was                                                                    
good  for  Exxon, given  that  there  was an  estimated  250                                                                    
trillion feet  of gas worth  trillions in the  Asian market.                                                                    
He stated  that Exxon wanted  to grab the  resources cheaply                                                                    
then  sit on  them until  the value  increased; it  had been                                                                    
warehousing the gas in the  North Slope and Pt. Thompson for                                                                    
forty years. He  believed that allowing Alaska  gas to enter                                                                    
the  world market  too early  threatened Exxon  profits. The                                                                    
passage of  HB 9 allowed  for the warehousing of  Alaska gas                                                                    
to  continue  by  diverting   public  attention,  time,  and                                                                    
resources  away  from a  credible  project.  He opined  that                                                                    
Alaska  was  afraid to  act  and  was allowing  others  make                                                                    
decisions  about  Alaska's future.  He  believed  that HB  9                                                                    
offered the wrong route, crossed  the entire state with only                                                                    
two  take-out   points,  did   not  provide   Alaskans  with                                                                    
affordable  energy, did  not provide  gas  for the  military                                                                    
bases, and sought double digit  return in equity which would                                                                    
cost Alaskans $420  million per year. He  did not understand                                                                    
what rational  policy maker would  want to see  $420 million                                                                    
transferred out of  the Alaska economy to the  owners of the                                                                    
project. He  pointed out that  the projects were  opposed by                                                                    
the  city  of Valdez,  North  Pole  City Council,  Fairbanks                                                                    
North  Star  Borough  Assembly,  and  the  Alaska  Municipal                                                                    
League.  He cautioned  that Alaska  was competing  with five                                                                    
projects in the  lower 48, Canada, Russia  and Australia. He                                                                    
stressed  that the  focus  must  be on  a  large gasline  to                                                                    
7:03:56 PM                                                                                                                    
Representative  Wilson asked  about  the  status and  future                                                                    
plan for  the All Alaskan  project. Mr. Pierce  replied that                                                                    
he could  not publically expose  who the entity  was talking                                                                    
with for  confidentiality restrictions. He declared  that it                                                                    
was hard  to move  forward when  the North  Slope developers                                                                    
did not  want to sell  the gas; it was  hard to move  to the                                                                    
next step without the commitment of the gas.                                                                                    
Representative Wilson  wondered whether he would  be against                                                                    
the project if the gas  reached Fairbanks sooner rather than                                                                    
later. Mr. Pierce remarked that  the Wood MacKenzie research                                                                    
showed a  $419 billion  benefit for  the Alaska  LNG project                                                                    
with  a  large gasline.  He  stated  that Alaska  should  be                                                                    
pursuing a large gasline project  to assure Alaskans get the                                                                    
most affordable  energy. Interior residents would  see an 80                                                                    
percent reduction  with gas from  the large  pipeline rather                                                                    
than a bullet  line. He pointed out that  time and resources                                                                    
should not be spent on a project that was not economical.                                                                       
7:05:55 PM                                                                                                                    
Representative Neuman asked if  Mr. Pierce was proposing and                                                                    
supporting spending  the Permanent Fund Dividend  to build a                                                                    
gas pipeline.                                                                                                                   
Mr.   Pierce  replied   that  the   Alaska  Permanent   Fund                                                                    
Corporation  had  $41.5  billion   in  the  different  state                                                                    
savings accounts;  without ever touching the  Permanent Fund                                                                    
Dividend it  could come  up with the  equity portion  of the                                                                    
project and  the state take  control of the project  and not                                                                    
wait for  others who had  a conflict of interest.  The state                                                                    
had the resources, money, and  talent to build the pipeline.                                                                    
Once the  state has  51 percent  equity position,  the state                                                                    
could  invite partners  into the  project,  who he  believed                                                                    
would come on board immediately.                                                                                                
LARRY WOOD, SELF, PALMER  (via teleconference), testified in                                                                    
opposition to  the bill. In  2002 Alaska voted to  build the                                                                    
pipeline,  but every  legislature and  governor had  ignored                                                                    
the will of the people. He  pointed out that $14 million had                                                                    
been spent so far and nothing  had been done; there had been                                                                    
no permits issued and the route  has not been firmed up. The                                                                    
All Alaska Natural  Gas Pipeline brought the  benefit of the                                                                    
pipeline  to  Fairbanks,  Ft. Greely,  down  the  Richardson                                                                    
Highway, and a  spur across the Dalton  Highway. He wondered                                                                    
what  the legislative  body did  not understand  about value                                                                    
added  resource  development.  Alaskans voted  for  the  All                                                                    
Alaska Natural  Gas Pipeline that  existed in  statute under                                                                    
Title  41, Section  41  to  keep the  gas  in-state for  the                                                                    
interior  and   long-term  benefit  of  Alaska.   Japan  was                                                                    
interested in  the gas. A  Japanese delegation was  in town,                                                                    
but the  public was not privy  to anything that was  said to                                                                    
the governor  or the legislature.  There had been  no public                                                                    
discussion  from the  legislature. He  could not  understand                                                                    
why  the public  was  being ignored  in  the discussion.  He                                                                    
wondered where the outrage was  when the president of Conoco                                                                    
pulled out of  the Denali project because  they had intended                                                                    
to  warehouse Alaska's  gas all  along; he  opined that  the                                                                    
project had been fostered on the  state and it was done in a                                                                    
way to influence public decision.                                                                                               
7:12:28 PM                                                                                                                    
JIM  SYKES,  SELF,  PALMER (via  teleconference),  testified                                                                    
strongly against  the bill. He  was troubled by  many things                                                                    
related to  the legislation. The Alaska  Gasline Development                                                                    
Corporation  would   have  almost  unlimited   authority  to                                                                    
determine  ownership, operation,  and financing.  The agency                                                                    
would  be  exempt  from   Regulatory  Commission  of  Alaska                                                                    
regulation  which could  result in  forcing Alaskans  to pay                                                                    
the highest  price for  gas in the  world. Although  the gas                                                                    
would be  Alaskan, the  consumers would  be forced  to repay                                                                    
for the  cost of the line  while the owner company  would be                                                                    
assured of  long-term profit regardless  of the cost  of the                                                                    
line. He found  it to be troubling. The  current route along                                                                    
the  Parks Highway  would bypass  three military  bases. The                                                                    
spur  lines  for  Fairbanks the  bases  and  the  Richardson                                                                    
Highway had not  been included in the costs.  It was unclear                                                                    
if  there would  be an  export  component and  there was  an                                                                    
underestimation  of what  it would  be;  without export  the                                                                    
line  would  only be  half  full.  The  tariff would  be  so                                                                    
excessive  it  would  be  uneconomical.  The  Department  of                                                                    
Natural Resources  estimated that there  was as much  gas in                                                                    
Cook Inlet as there had  been taken out. He sympathized with                                                                    
the desire  to get  North Slope  gas, but  opined that  HB 9                                                                    
needed  to  be  on   backburner  while  other  options  were                                                                    
seriously considered.  There had been talk  about the larger                                                                    
line. He  felt that HB  9 was the  worst of all  the gasline                                                                    
options and was a loser.                                                                                                        
7:16:10 PM                                                                                                                    
Representative   Mike   Hawker   recapped   the   Regulatory                                                                    
Commission of  Alaska amendment adopted earlier  in the day.                                                                    
The sponsors of the  legislation brought forth the amendment                                                                    
that  provided a  regulatory structure  for the  pipeline in                                                                    
the Alaska  that was specifically  authorized by  statute to                                                                    
operate as  contact carriers. That regulatory  authority was                                                                    
vested  in  the  authority  of the  RCA  and  fulfilled  the                                                                    
discussion in the House Resources  committee. He stated that                                                                    
the  House Finance  Committee passed  the amendment  without                                                                    
Representative Gara  interjected that he  and Representative                                                                    
Guttenberg  had  tried  to  amend   the  RCA  Amendment  and                                                                    
believed the  regulations could have been  stronger. He felt                                                                    
that  the RCA  should  have  the power  to  ensure that  the                                                                    
tariff  rates were  just and  reasonable. His  amendment had                                                                    
not passed. He relayed that  the committee's support for the                                                                    
bill was not unanimous.                                                                                                         
7:18:19 PM                                                                                                                    
MICHAEL  DUKES,   ASSEMBLY  MEMBER,  FAIRBANKS   NORTH  STAR                                                                    
BOROUGH,  NORTH   POLE  (via  teleconference),   voiced  his                                                                    
opposition to the  bill for several reasons.  He believed it                                                                    
contradicted the  will of the  people as stated  by previous                                                                    
testifiers. The  fact that the  people voted  to incorporate                                                                    
and create an  agency that would develop  their own pipeline                                                                    
had  been ignored  by  administrations  and legislators.  He                                                                    
believed  it was  insulting  to the  people  of Alaska.  The                                                                    
economics  of the  proposed line  would have  the people  in                                                                    
Fairbanks  paying more  than Anchorage.  The  line would  be                                                                    
passing  outside Dunbar  and although  Representative Wilson                                                                    
stated there could be an  amendment to pass the gasline into                                                                    
Fairbanks, the  problem was  that the  tariff cost  could be                                                                    
close to  the cost of  current heating oil, which  would not                                                                    
help.  There had  to be  a  difference in  the cost  between                                                                    
natural  gas and  heating oil.  He  stated that  for a  mass                                                                    
conversion to take  place in a market for  natural gas there                                                                    
had  to be  a  substantive difference  between  the cost  of                                                                    
natural gas and the cost of  heating oil or people would not                                                                    
spend  the thousands  of dollars  to convert  to gas.  There                                                                    
will be no  benefits in air quality or space  heating in the                                                                    
homes. He  opined that the  proposal completely  ignored the                                                                    
military  bases  even  though they  have  been  using  those                                                                    
numbers to  justify the  pipeline. He  felt that  there were                                                                    
many  things  wrong  with  HB  9  and  that  the  people  in                                                                    
Fairbanks  did not  really support  it. He  stated that  the                                                                    
proposed  pipeline in  HB  9 would  not  solve the  problem.                                                                    
[Lost call for  short period]. He believed  that the problem                                                                    
was  a failure  in  leadership with  the administration  and                                                                    
legislature  to put  forth  a line  that  would benefit  the                                                                    
entire state. He  stressed that HB 9 needed  to be defeated.                                                                    
Japan was  currently looking for  30 million metric  tons of                                                                    
gas; therefore  it was  the time to  strike to  bring needed                                                                    
revenue into the state. He urged the defeat of HB 9.                                                                            
7:23:13 PM                                                                                                                    
Representative  Guttenberg pointed  out that  Mr. Dukes  was                                                                    
not speaking for the borough  assembly, but for himself. Mr.                                                                    
Dukes replied that the borough  assembly passed a resolution                                                                    
supporting an  All Alaska Gas  Pipeline along with  the City                                                                    
of Valdez and the Alaska Municipal League.                                                                                      
ALAN LEMASTER, SELF,  GAKONA (via teleconference), testified                                                                    
against  the  bill. He  owned  a  small business  in  Copper                                                                    
Valley  and paid  extremely high  energy rates,  which would                                                                    
not  get better  with  the passage  of HB  9.  He urged  the                                                                    
committee to  put aside  his or her  own limited  vision for                                                                    
their districts,  personal ambitions, and legacy  hopes, and                                                                    
instead  to support  what was  best  for all  the people  of                                                                    
Alaska.  He  asked the  committee  to  widen its  vision  to                                                                    
include the future  of the children in Alaska.  He felt that                                                                    
HB 9 was  not the best plan  on the table to  bring low cost                                                                    
energy  to the  greatest number  of Alaskans.  The inability                                                                    
for Alaska's  judiciary, the  RCA, and  the citizens  of the                                                                    
state  to  challenge  and  object  to any  and  all  of  the                                                                    
provisions within the bill exhibited  a lack of transparency                                                                    
and was  not acceptable. He  stated that it  was technically                                                                    
legal to  repeal a ballot  measure but, he advised  that the                                                                    
ballot  represented   the  will  of  the   people  and  that                                                                    
repealing  it (i.e.  Section 29  of the  bill) would  not be                                                                    
popular  with  the  people. He  remarked  that  any  project                                                                    
considered must  include producing  a pipeline  to tidewater                                                                    
for export to ports outside  the state of Alaska; the bullet                                                                    
line did  not meet the  directive on several  levels. Valdez                                                                    
was the only  port in the state that could  handle the large                                                                    
ships necessary  for such  a project.  He pointed  to public                                                                    
concern  that the  process was  superfluous, resulting  in a                                                                    
great deal of effort, a lot  of money spent, for very little                                                                    
or no  gain. He urged denying  HB 9 until it  was compatible                                                                    
with all  the provisions of  the many bills  and regulations                                                                    
that preceded it.                                                                                                               
7:28:11 PM                                                                                                                    
Co-Chair  Stoltze once  again  explained the  teleconference                                                                    
difficulties  and  apologized to  the  people  who might  be                                                                    
waiting to speak.                                                                                                               
PARK KRINER,  SELF, GLENNALLEN (via  teleconference), voiced                                                                    
opposition to the bill. After  41 years of living and having                                                                    
a business in  the Alaska he believed that  the Valdez route                                                                    
was   financially,   socially,  employment   percent   wise,                                                                    
business wise, and morally the  right way to go. He believed                                                                    
the health  and future of  Alaska depended on  the decisions                                                                    
made. He  stressed the extremely  large energy costs  to his                                                                    
business  over  the  years.  He   believed  there  would  be                                                                    
substantial savings  with propane and natural  gas. With the                                                                    
savings he  would hire, build,  and expand his  business. He                                                                    
remarked on  the advantages of  an All Alaska  Gas Pipeline.                                                                    
He recommended  ending HB  9 and  promoted the  proposals of                                                                    
knowledgeable   experts,   like  Representative   Gara.   He                                                                    
recommended   that   people   read   Representative   Gara's                                                                    
"sensible" amendment recommendation.                                                                                            
Representative Gara thanked him for his support.                                                                                
7:33:38 PM                                                                                                                    
RANDY   WAGNER,  SELF,   GLENNALLEN  (via   teleconference),                                                                    
testified against  the bill. He  agreed with  the amendments                                                                    
of  Representative   Gara  and  the   former  teleconference                                                                    
speakers. He supported the pipeline  to send the gas down to                                                                    
Valdez. He  believed that Alaska  and the U.S.  could profit                                                                    
from selling the  gas to Japan. He indicated  that there was                                                                    
an economic war  with China; the Japanese  could buy Chinese                                                                    
gas, but that would result in a loss of money for Alaska.                                                                       
7:36:20 PM                                                                                                                    
AT EASE                                                                                                                         
7:54:31 PM                                                                                                                    
HB  9   was  HEARD  and   HELD  in  Committee   for  further                                                                    
The meeting was adjourned at 7:56 PM.                                                                                           

Document Name Date/Time Subjects
HB 296 Supporting Document - Hertz v Carothers.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB 296 Supporting Document - Bridge v State.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB 296 Sponsor Request HFIN.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB 296 Sectional Analysis.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB 296 CS Comparison.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB359 Changes House Jud amendments.docx HFIN 3/21/2012 1:30:00 PM
HB 359
HB359 Gov Transmittal Letter.pdf HFIN 3/21/2012 1:30:00 PM
HB 359
CSHB 359(JUD) sectional.doc HFIN 3/21/2012 1:30:00 PM
HB 359
HB9 Amendments 4-9 Gara-Guttenberg.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB9 Fbks Chamber Letter Regarding High Cost of Energy Priorities 3 19 2012.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB9 Amendment-10 Gara.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB9 Amendments- 11-12 Gara-Guttenberg.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB296 sponsorstatement.pdf HFIN 3/21/2012 1:30:00 PM
HB 296
HB361 Summary of Changes for CSHB361(FIN).pdf HFIN 3/21/2012 1:30:00 PM
HB 361
HB361 CS WORKDRAFT 27-GH2717B.pdf HFIN 3/21/2012 1:30:00 PM
HB 61
HB361 AMENDMENTS 1-2 GARA CS-B Version.pdf HFIN 3/21/2012 1:30:00 PM
HB 361
HB361 CS WORKDRAFT 27-GH2717B.pdf HFIN 3/21/2012 1:30:00 PM
HB 361
.HB 359.ACLU Review.2012.03.21.pdf HFIN 3/21/2012 1:30:00 PM
HB 359
HB9 Ahtna Inc Letter.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB9 Testimony Glennallen 3.20.12.pdf HFIN 3/21/2012 1:30:00 PM
HB 9
HB359 Suppport Letters.pdf HFIN 3/21/2012 1:30:00 PM
HB 359