Legislature(2005 - 2006)

06/03/2006 12:27 PM JUD


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12:27:25 PM Start
12:27:40 PM HB2003
08:51:55 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                          June 3, 2006                                                                                          
                           12:27 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Lesil McGuire, Chair                                                                                             
Representative Tom Anderson                                                                                                     
Representative John Coghill                                                                                                     
Representative Pete Kott                                                                                                        
Representative Peggy Wilson                                                                                                     
Representative Les Gara                                                                                                         
Representative Max Gruenberg                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Paul Seaton                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Ethan Berkowitz                                                                                                  
                                                                                                                                
Senator Ralph Seekins                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 2003                                                                                                             
"An Act establishing the Alaska  Natural Gas Pipeline Corporation                                                               
to finance,  own, and manage  the state's interest in  the Alaska                                                               
North Slope  natural gas  pipeline project  and relating  to that                                                               
corporation  and  to  subsidiary entities  of  that  corporation;                                                               
relating to owner entities of  the Alaska North Slope natural gas                                                               
pipeline  project, including  provisions concerning  Alaska North                                                               
Slope natural gas pipeline  project indemnities; establishing the                                                               
gas pipeline  project cash reserves  fund in the  corporation and                                                               
establishing the  Alaska natural  gas pipeline  construction loan                                                               
fund in the Department of  Revenue; making conforming amendments;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     - MOVED CSHB 2003(JUD) OUT OF COMMITTEE                                                                                    
                                                                                                                                
HOUSE BILL NO. 2002                                                                                                             
"An Act  conferring original jurisdiction  on the  Alaska Supreme                                                               
Court for the purpose of  providing judicial review of a contract                                                               
executed  under  the Alaska  Stranded  Gas  Development Act,  and                                                               
setting the  time in which  a contract developed under  that Act,                                                               
or  a statute  of limitations  regarding that  contract, must  be                                                               
legally challenged; and providing for an effective date."                                                                       
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB2003                                                                                                                  
SHORT TITLE: NATURAL GAS PIPELINE CORPORATION                                                                                   
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
05/31/06       (H)       READ THE FIRST TIME - REFERRALS                                                                        
05/31/06       (H)       JUD, FIN                                                                                               
06/02/06       (H)       JUD AT 10:00 AM CAPITOL 120                                                                            
06/02/06       (H)       Heard & Held                                                                                           
06/02/06       (H)       MINUTE(JUD)                                                                                            
06/03/06       (H)       JUD AT 11:15 AM CAPITOL 120                                                                            
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
LOUISIANA W. CUTLER, Attorney at Law                                                                                            
Preston Gates & Ellis, LLP                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   On behalf of  the administration, continued                                                               
with a sectional analysis of HB 2003 and responded to questions.                                                                
                                                                                                                                
STEVEN B. PORTER, Deputy Commissioner                                                                                           
Office of the Commissioner                                                                                                      
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   On behalf of  the administration, responded                                                               
to questions during discussion of HB 2003.                                                                                      
                                                                                                                                
PHILLIP C. GILDAN, Attorney at Law                                                                                              
Greenberg Traurig, LLP                                                                                                          
West Palm Beach, Florida                                                                                                        
POSITION  STATEMENT:    Provided  comments  and  suggestions  for                                                               
change during discussion of HB 2003, and responded to questions.                                                                
                                                                                                                                
TAMARA COOK, Director                                                                                                           
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency (LAA)                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Responded to  questions during discussion of                                                               
proposed amendments to HB 2003.                                                                                                 
                                                                                                                                
DENNIS DeWITT, Special Staff Assistant                                                                                          
Capitol Office                                                                                                                  
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Responded to  questions during discussion of                                                               
proposed amendments to HB 2003.                                                                                                 
                                                                                                                                
NICHOLAS J. SPILIOTES, Attorney at Law                                                                                          
Morrison & Foerster, LLP                                                                                                        
Washington, D.C.                                                                                                                
POSITION STATEMENT:  Responded to  questions during discussion of                                                               
proposed amendments to HB 2003.                                                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  LESIL   McGUIRE  called   the  House   Judiciary  Standing                                                             
Committee meeting,  which had  been recessed  on 6/2/06,  back to                                                               
order  at   12:27:25  PM.    Representatives   McGuire,  Coghill,                                                             
Gruenberg, Wilson,  Kott, and  Gara were present  at the  call to                                                               
order.   Representative Anderson  arrived as  the meeting  was in                                                               
progress.  Representative Seaton was also in attendance.                                                                        
                                                                                                                                
HB 2003 - NATURAL GAS PIPELINE CORPORATION                                                                                    
                                                                                                                                
12:27:40 PM                                                                                                                   
                                                                                                                                
CHAIR McGUIRE announced that the  only order of business would be                                                               
HOUSE BILL NO. 2003, "An  Act establishing the Alaska Natural Gas                                                               
Pipeline  Corporation to  finance,  own, and  manage the  state's                                                               
interest in the  Alaska North Slope natural  gas pipeline project                                                               
and relating  to that corporation  and to subsidiary  entities of                                                               
that corporation; relating to owner  entities of the Alaska North                                                               
Slope   natural  gas   pipeline  project,   including  provisions                                                               
concerning  Alaska  North  Slope  natural  gas  pipeline  project                                                               
indemnities; establishing the gas  pipeline project cash reserves                                                               
fund in the  corporation and establishing the  Alaska natural gas                                                               
pipeline  construction loan  fund in  the Department  of Revenue;                                                               
making  conforming amendments;  and  providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
12:29:00 PM                                                                                                                   
                                                                                                                                
LOUISIANA  W. CUTLER,  Attorney at  Law, Preston  Gates &  Ellis,                                                               
LLP, relayed that in Article 5  of HB 2003, proposed AS 41.42.520                                                               
provides  that  the  Alaska   Natural  Gas  Pipeline  Corporation                                                               
("ANGPC")  is  subject to  the  Public  Records Act  though  with                                                               
certain explicit exceptions outlined on page 21, lines 7-20:                                                                    
                                                                                                                                
     (1) information  pertaining to  the particulars  of the                                                                    
     business or affairs of an  owner entity of the project,                                                                    
     including, without  limitation, tax  returns, financial                                                                    
     statements, and business plans;                                                                                            
     (2)  information containing  a  trade  secret or  other                                                                    
     proprietary  information of  the corporation  or of  an                                                                    
     owner entity of the project;                                                                                               
     (3)  information  that  is confidential  or  privileged                                                                    
     under the laws  of the state, whether at  common law or                                                                    
     by statute or court rule;                                                                                                  
     (4)   information  that   is   required   to  be   kept                                                                    
     confidential under  an agreement  with an  owner entity                                                                    
     of the project, or with  other participants in an owner                                                                    
     entity of the project;                                                                                                     
     (5)  information  that  would  affect  the  competitive                                                                    
     position of the  corporation or an owner  entity of the                                                                    
     project;                                                                                                                   
     (6) information  of the corporation or  an owner entity                                                                    
     of the project that has  commercial value that might be                                                                    
     significantly diminished by public disclosure.                                                                             
                                                                                                                                
MS. CUTLER  relayed that proposed AS  41.42.520(b) specifies that                                                               
the Public  Records Act doesn't apply  to an owner entity  of the                                                               
gas pipeline  project unless the  ANGPC wholly owns  that entity.                                                               
Proposed  AS  41.42.520(c)  in part  outlines  the  circumstances                                                               
under which confidential information can be disclosed:                                                                          
                                                                                                                                
     (1)  for the  purpose  of an  official law  enforcement                                                                    
     investigation; (2)  when its production is  required by                                                                    
     an  administrative   or  court  order;  (3)   when  its                                                                    
     production is  required for a confidential  briefing of                                                                    
     the  governor,   the  legislature,  or   a  legislative                                                                    
     committee;  (4)  when  its production  is  required  to                                                                    
     lenders or  potential lenders to the  corporation or an                                                                    
     affiliated  entity  of the  corporation,  underwriters,                                                                    
     guarantors,  or insurers;  and  (5) in  the  case of  a                                                                    
     public  offering  of  bonds,   if  such  disclosure  is                                                                    
     required by law or market  practice and all other owner                                                                    
     entities  of the  project receive  prior notice  of the                                                                    
     disclosure.                                                                                                                
                                                                                                                                
MS. CUTLER  mentioned that producing confidential  information as                                                               
stipulated in paragraph  (4) does not mean  that that information                                                               
will then become  public information.  She pointed  out that page                                                               
21, line  31, currently says,  "and (5)",  but she would  like to                                                               
see it  changed to say "or  (5)"; such an amendment  will clarify                                                               
that  information   can  be   disclosed  for   any  one   of  the                                                               
aforementioned  purposes rather  than needing  all five  purposes                                                               
present.                                                                                                                        
                                                                                                                                
12:33:24 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG made  a motion to adopt  Amendment 1, to                                                               
change "and (5)" on  page 21, line 31, to "or  (5)".  There being                                                               
no objection, Amendment 1 was adopted.                                                                                          
                                                                                                                                
MS.  CUTLER   explained  that   proposed  AS   41.42.520(c)  also                                                               
stipulates  that the  information disclosed  under it  remains an                                                               
exception to the  right of inspection of public  records under AS                                                               
40.25.110 and AS 40.25.120, and  that except for information used                                                               
in the  case of a public  offering for bonds, a  person receiving                                                               
information   shall   maintain   the   confidentiality   of   the                                                               
information.  She pointed out  that for bond issuances, there are                                                               
going  to be  some reporting  requirements regarding  information                                                               
that would  otherwise be considered confidential.   She mentioned                                                               
that   proposed  AS   41.42.520(d)   contains  typical   language                                                               
stipulating  that   the  publication  of  statistics   and  other                                                               
information is  allowed as long  as it is  done in a  manner that                                                               
doesn't breach confidentiality.                                                                                                 
                                                                                                                                
REPRESENTATIVE   GRUENBERG   raised   the  issue   of   requiring                                                               
compliance  with  Alaska law  for  all  members of  the  proposed                                                               
Pipeline Project Mainline Limited  Liability Company (LLC) Entity                                                               
("Mainline LLC").   He asked whether HB  2003 currently specifies                                                               
that the agreement between the  entities forming the Mainline LLC                                                               
must include  a provision requiring  that Alaska law  controls to                                                               
the extent that it's not prohibited by some other law.                                                                          
                                                                                                                                
MS. CUTLER said the administration would  not be in favor of such                                                               
a provision and none such is included in the bill at this time.                                                                 
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked what  is  to  prevent the  other                                                               
partners in  the Mainline LLC from  saying they are not  bound by                                                               
[the bill].                                                                                                                     
                                                                                                                                
MS.  CUTLER  again explained  that  HB  2003 simply  creates  the                                                               
ANGPC, the public  corporation through which the  state will take                                                               
its  membership  interest  in  the Mainline  LLC,  but  does  not                                                               
regulate the Mainline LLC itself,  though the bill does include a                                                               
few  provisions  that  would  apply  to  the  Mainline  LLC;  for                                                               
example,  the   indemnification  provision  and   the  provisions                                                               
stipulating that  the Open  Meetings Act  and the  Public Records                                                               
Act won't apply to the Mainline LLC.                                                                                            
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted  that language  in  proposed  AS                                                               
41.42.530 refers to  other owner entities and thus  would seem to                                                               
govern any disclosures in the state.                                                                                            
                                                                                                                                
MS.  CUTLER clarified  that this  language is  merely stipulating                                                               
that information in the possession  of the ANGPC or another state                                                               
entity  that  pertains to  the  particulars  of the  business  or                                                               
affairs  of   an  owner  entity   in  the  project   will  remain                                                               
confidential.     She   again  pointed   out  that   proposed  AS                                                               
41.42.520(b)  specifies  that the  Public  Records  Act does  not                                                               
apply to information in the possession  of an owner entity of the                                                               
project.  In  response to a comment, she noted  that the Mainline                                                               
LLC agreement will also contain confidentiality provisions.                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG  surmised that proposed  AS 41.42.520(a)                                                               
won't prevent  a third party  such as a reporter  from disclosing                                                               
the information outlined therein.                                                                                               
                                                                                                                                
12:42:01 PM                                                                                                                   
                                                                                                                                
STEVEN   B.   PORTER,   Deputy  Commissioner,   Office   of   the                                                               
Commissioner, Department  of Revenue  (DOR), concurred;  one must                                                               
view  this legislation  as  the state's  grant  of authority  and                                                               
rights to an entity it's  creating, and therefore does not govern                                                               
third party  actions.  Furthermore,  if the four partners  in the                                                               
Mainline LLC together determine  that something that is otherwise                                                               
confidential  can be  made public,  nothing in  HB 2003  prevents                                                               
them from doing so.                                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG opined  that proposed AS 41.42.520(a)(5)                                                               
would  seem to  make  everything confidential,  and could  confer                                                               
standing that any owner entity  of the Mainline LLC could demand,                                                               
even of  third parties, that something  be kept secret.   It also                                                               
leaves  open   the  question  of  who   decides  whether  certain                                                               
information  would affect  the competitive  position of  an owner                                                               
entity.  He characterized this language as too broad.                                                                           
                                                                                                                                
MR. PORTER said that language is very common in the industry.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG acknowledged  that point, but questioned                                                               
whether it constitutes good public policy.                                                                                      
                                                                                                                                
MR.  PORTER mentioned  that the  Alaska Stranded  Gas Development                                                               
Act has  similar language.   When  dealing with  private parties,                                                               
their competitive  positions must  be protected;  furthermore, as                                                               
an owner  entity of  the Mainline  LLC, the  state -  through the                                                               
ANGPC  - may  be  negotiating with  contractors  and other  third                                                               
parties,  and   therefore  information   vital  to   the  state's                                                               
competitive position must also be held confidential.                                                                            
                                                                                                                                
REPRESENTATIVE  GRUENBERG  pointed  out, however,  that  in  some                                                               
sense, the other  three owner entities may be  competitors of the                                                               
state  and   the  ANGPC,  and   that  language  is   saying  that                                                               
information  about  the  other  three  owner  entities  can't  be                                                               
disclosed even  if it means  that the  ANGPC - and  therefore the                                                               
state - would be harmed.                                                                                                        
                                                                                                                                
12:46:37 PM                                                                                                                   
                                                                                                                                
MR.  PORTER clarified  that the  language is  not preventing  the                                                               
partners of the Mainline LLC  from disclosing information amongst                                                               
themselves.   All  the partners  of  the Mainline  LLC will  have                                                               
access to all the information, even confidential information.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether  the agreement referred to                                                               
in proposed  AS 41.42.520(a)(4)  could be  between a  third party                                                               
and one of the owner entities.                                                                                                  
                                                                                                                                
MR. PORTER indicated that it could be.                                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG  surmised, then, that  information which                                                               
would  otherwise  be disclosed  under  state  law could  be  kept                                                               
confidential  simply because  one  of the  owner  entities and  a                                                               
third party  deem that it  should be, thus  unilaterally trumping                                                               
state law.                                                                                                                      
                                                                                                                                
MS. CUTLER  characterized that as  an overstatement,  adding that                                                               
proposed  paragraph  (4) can't  be  read  in isolation  but  must                                                               
instead be read in context with  subsection (a); the ANGPC, as an                                                               
owner entity in  the Mainline LLC agreement, will  have rights to                                                               
confidential    information   and    must   therefore    maintain                                                               
confidentiality.    Entering  into  an agreement  with  an  owner                                                               
entity  of  the Mainline  LLC  does  not mean  that  confidential                                                               
information automatically becomes part  of the public record just                                                               
because the Mainline LLC has as one of its owners the ANGPC.                                                                    
                                                                                                                                
MR.  PORTER  explained that  if  certain  information is  already                                                               
public,   two   entities  cannot   simply   agree   to  make   it                                                               
confidential,  but if  an owner  entity and  a third  party enter                                                               
into an  agreement and then  share confidential  information with                                                               
the ANGPC, that information will remain confidential.                                                                           
                                                                                                                                
12:53:24 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARA  surmised that nothing in  the bill regulates                                                               
the information held by the Mainline LLC.                                                                                       
                                                                                                                                
MS. CUTLER concurred.                                                                                                           
                                                                                                                                
MR.  PORTER  clarified  that  public   information  held  by  the                                                               
Mainline  LLC   remains  public,  and   confidential  information                                                               
remains  confidential;  existing  law  is  not  changed  in  that                                                               
regard,  and merely  going into  partnership  with a  state-owned                                                               
public corporation won't change that.                                                                                           
                                                                                                                                
REPRESENTATIVE  GARA opined  that  the bill  ought  to contain  a                                                               
provision   that  would   allow  [the   legislature]  to   access                                                               
[confidential] information  held by  the Mainline  LLC.   He also                                                               
opined  that  proposed AS  41.42.520(a)(4)  will  allow an  owner                                                               
entity   of  the   Mainline  LLC   to  keep   illegal  activities                                                               
confidential.                                                                                                                   
                                                                                                                                
MR. PORTER  offered his understanding  that criminal  acts cannot                                                               
be kept  secret, and assured the  committee that that is  not the                                                               
intent  of that  language  -  should the  ANGPC  become aware  of                                                               
illegal acts, it will disclose them.                                                                                            
                                                                                                                                
REPRESENTATIVE GARA  argued that as written,  that language would                                                               
allow information about illegal acts to be kept confidential.                                                                   
                                                                                                                                
MS. CUTLER  echoed that  that is not  the intent,  and reiterated                                                               
that proposed  AS 41.42.520(c)  stipulates that  information that                                                               
is considered  confidential may be  disclosed for the  purpose of                                                               
an  official  law enforcement  investigation.    She offered  her                                                               
understanding that  in virtually  every joint venture,  there are                                                               
typical  provisions in  confidentiality agreements,  and evidence                                                               
of  illegal acts  is  not  considered to  be  confidential.   She                                                               
indicated  that her  firm  would be  amenable  to considering  an                                                               
amendment clarifying that point.                                                                                                
                                                                                                                                
REPRESENTATIVE  GARA  offered  his belief  that  law  enforcement                                                               
agencies won't be investigating  possible breaches of contractual                                                               
duties.   He  suggested  that language  on page  21,  line 5,  be                                                               
changed  to  say that  the  information  is confidential  to  the                                                               
extent that it doesn't involve  illegal conduct.  He also offered                                                               
his belief  that the  language in  proposed AS  41.42.520(a)(1) -                                                               
information  pertaining to  the  particulars of  the business  or                                                               
affairs of  an owner  entity of  the project,  including, without                                                               
imitation, tax returns, financial  statements, and business plans                                                               
-  is "everything  relating to  that business";  in other  words,                                                               
none of the information that the  ANGPC has access to is going to                                                               
be  accessible to  the public.   He  indicated that  it would  be                                                               
acceptable to  him to  limit the public's  access to  tax returns                                                               
and  business plans,  but  he  has a  problem  with limiting  the                                                               
public's  access  to  information  that could  be  considered  as                                                               
pertaining to the affairs or particulars of a business.                                                                         
                                                                                                                                
MR. PORTER,  in response to  a question, offered his  belief that                                                               
there   is   a   conceptual  difference   between   proposed   AS                                                               
41.42.520(a)(1) and proposed  AS 41.42.520(a)(5), and recommended                                                               
that both provisions be kept in the bill.                                                                                       
                                                                                                                                
1:02:40 PM                                                                                                                    
                                                                                                                                
CHAIR McGUIRE noted that Article 6 contains definitions.                                                                        
                                                                                                                                
MS.  CUTLER indicated  that  Section  3 of  HB  2003 exempts  the                                                               
ANGPC, any  subsidiary entities ("Ancillary LLCs")  of the ANGPC,                                                               
and any  owner entity of  the project from the  procurement code;                                                               
that Sections  4 and 5  make changes  that will exempt  the ANGPC                                                               
and  any Ancillary  LLCs  from the  prohibitions  outlined in  AS                                                               
37.10.085 - that  the state or political  subdivisions can't make                                                               
a subscription  to the capital  stock of a corporation,  lend its                                                               
credit for the use of a  corporation, or borrow money for the use                                                               
of a  corporation; and that Section  6 - Article 7  - establishes                                                               
an  Alaska natural  gas pipeline  construction loan  fund in  the                                                               
DOR.  This fund will provide  the ANGPC another option with which                                                               
to  meet  its financial  obligations.    For  example, if  it  is                                                               
determined  that it  makes  sense  for the  state  to loan  money                                                               
directly to the  ANGPC [or to an Ancillary LLC],  this fund could                                                               
be utilized.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether  Article 7 is establishing                                                               
a dedicated fund, which is unconstitutional.                                                                                    
                                                                                                                                
MS.  CUTLER said  it wasn't  a  dedicated fund  according to  her                                                               
view.                                                                                                                           
                                                                                                                                
MR. PORTER  added that it could  be viewed in the  same manner as                                                               
the state's education fund.                                                                                                     
                                                                                                                                
MS. CUTLER relayed  that Section 7 of HB 2003  makes the staff of                                                               
the ANGPC board  exempt service employees; that Sections  8 and 9                                                               
pertain  to financial  disclosures  [of staff];  that Section  10                                                               
pertains to  the Alaska Executive  Branch Ethics Act  [and boards                                                               
of  Ancillary LLCs];  that Section  11  exempts [the  information                                                               
described in proposed AS 41.42.520]  from the Public Records Act;                                                               
and that Sections  12 and 13 "deal with an  issue that has arisen                                                               
with respect  to how  [the ANGPC]  and the  other members  of the                                                               
[Mainline   LLC]  will   essentially  pay   for  the   inevitable                                                               
negligence  and other  forms of  liability that  will occur  in a                                                               
project of this magnitude."                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG   asked  why,   via  Section   10,  the                                                               
administration  is proposing  to exempt  the boards  of Ancillary                                                               
LLCs from the Alaska Executive Branch Ethics Act.                                                                               
                                                                                                                                
MS.  CUTLER said  it is  because  there may  be different  ethics                                                               
requirements for  boards of Ancillary  LLCs established  in other                                                               
jurisdictions, such as  Canada, and Canadian counsel  has a great                                                               
deal  of concern  that the  State be  able to  take advantage  of                                                               
having the laws of Canada apply to those Ancillary LLCs.                                                                        
                                                                                                                                
REPRESENTATIVE GRUENBERG pointed out,  however, that as currently                                                               
written, Section 10  is just a carte blanche  exemption - leaving                                                               
the boards  of Ancillary LLCs  subject to  no law with  regard to                                                               
ethics.                                                                                                                         
                                                                                                                                
MR. PORTER, in response to  a request, pointed out that Ancillary                                                               
LLCs would be wholly owned subsidiaries  of the ANGPC, as if they                                                               
were  staff  to the  ANGPC,  and  the  ANGPC will  have  absolute                                                               
control and  authority over  the membership  of those  [boards of                                                               
directors],  which  will  have a  responsibility  to  the  ANGPC.                                                               
Also, nothing  exempts the Ancillary  LLCs and their  boards from                                                               
existing laws  governing illegal activities.   Furthermore, if an                                                               
Ancillary  LLC  is  formed  in  Canada, it  will  be  subject  to                                                               
Canadian law, including Canadian ethics  laws, though they may be                                                               
slightly different  than Alaska's.  He  offered his understanding                                                               
that the ANGPC will probably own all the interests in Alaska.                                                                   
                                                                                                                                
1:13:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  expressed  a  concern  that  exempting  the                                                               
boards of  Ancillary LLCs might  result in them  making decisions                                                               
and taking  actions that benefit  their personal  businesses, and                                                               
opined that  it is not accurate  to simply say that  those boards                                                               
will be  subject to the  laws of  other jurisdictions.   He asked                                                               
that the  ethics laws of  Canada be provided  to him.   He added,                                                               
"If  we're going  to give  somebody the  privilege of  a probably                                                               
substantial salary  to run  an important  state project,  I don't                                                               
think it's  too much  to ask of  them to be  subject to  our laws                                                               
relating to ethics."                                                                                                            
                                                                                                                                
MR. PORTER  clarified that  the boards of  directors will  not be                                                               
receiving substantial salaries.                                                                                                 
                                                                                                                                
MS.   CUTLER   acknowledged    Representative   Gara's   concern;                                                               
reiterated that  this provision  was developed  on the  advice of                                                               
the state's Canadian counsel; and  agreed to ask Canadian counsel                                                               
for more information [regarding Canadian ethics laws].                                                                          
                                                                                                                                
REPRESENTATIVE GARA  asked whether an [executive  director] - who                                                               
could be  receiving a substantial  salary from the state  - would                                                               
be considered part of the governing body under Section 10.                                                                      
                                                                                                                                
MS. CUTLER said she would research that issue.                                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG opined that  the bill's current language                                                               
is so broad that it will  allow "other things" to occur, and that                                                               
the  language  ought  to  be narrowed  with  some  sideboards  or                                                               
control, particularly  given that the  public is so  sensitive to                                                               
ethics issues.   He said  that he would  like to have  this issue                                                               
resolved with  the help Ms.  Cutler and Mr.  Porter, specifically                                                               
that they consider the worst  case scenario and strive to prevent                                                               
it via a change in the language.                                                                                                
                                                                                                                                
MS. CUTLER acknowledged Representative Gruenberg's concern.                                                                     
                                                                                                                                
1:19:25 PM                                                                                                                    
                                                                                                                                
MS. CUTLER returned attention to Sections  12 and 13, and said it                                                               
attempts to  make the  project exempt from  AS 45.45.900  and any                                                               
[similar]  common law  doctrine, because  there is  case law,  in                                                               
addition  to  AS  45.45.900,   that  holds  that  indemnification                                                               
agreements in  construction contracts are against  public policy.                                                               
The current statute, she posited,  was designed with much smaller                                                               
projects in  mind.   With a project  of this  magnitude, however,                                                               
and with  the typical model  that is used for  building pipelines                                                               
and other large construction projects  around the world, normally                                                               
the  operators are  indemnified  and the  parties indemnify  each                                                               
other,  and this  is  intended  to save  everyone  money.   In  a                                                               
project of such magnitude, there is  going to be liability - this                                                               
project is  expected to employ  10,000 people - things  are going                                                               
to happen,  mistakes are going to  be made, and there  won't just                                                               
be mistakes occurring  - there will also be  gross negligence and                                                               
willful misconduct.   Such things are inevitable in  a project of                                                               
this size, and so what folks  can do to prepare themselves is for                                                               
either the  operator to get  all the insurance that's  required -                                                               
but  then members  will  pay  the operator  more  -  or for  each                                                               
member, as  a part  of its capital  contribution to  the Mainline                                                               
LLC, to  pay the cost  of any negligence, willful  misconduct, or                                                               
[reckless] behavior.   Sections 12  and 13 provide  the statutory                                                               
authority required to do the latter.                                                                                            
                                                                                                                                
MS.  CUTLER said  the hope  is that  this statutory  authority is                                                               
drafted broadly enough  to cover any language  that's included in                                                               
the  Mainline  LLC agreement,  language  that  will govern  "this                                                               
particular  relationship  between  the parties."    However,  the                                                               
intent is  for this  authority to  also cover  all possibilities,                                                               
one  of which  could include  the operator  not always  being the                                                               
entity that has  all the people needed  to do all the  jobs.  For                                                               
example, it could be that one  of the other members has employees                                                               
with particular expertise in a  particular field, and it could be                                                               
better, more efficient, or cheaper  for that member's employees -                                                               
either  via  contract  or  via   "subordining"  -  to  perform  a                                                               
particular function.   These provisions, which  she characterized                                                               
as necessary,  are designed to  allow all parties,  regardless of                                                               
who actually  fulfills a function,  to be indemnified by  all the                                                               
other parties,  so that the  inevitable instances  of negligence,                                                               
willful misconduct, mistakes, et cetera can be dealt with.                                                                      
                                                                                                                                
1:25:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  offered his  recollection that if  the state                                                               
were to  indemnify another party,  it is essentially  saying that                                                               
the  state  will pay  for  that  party's  costs incurred  due  to                                                               
negligence,  willful misconduct,  recklessness, or  other illegal                                                               
activities.  He asked why  the state should indemnify the members                                                               
of the  Mainline LLC from  such behavior, and whether  Section 13                                                               
would indemnify an entity from any taxes it owes.                                                                               
                                                                                                                                
MR. PORTER explained that the State  is normally in a position of                                                               
hiring  contractors to  do particular  jobs for  it, but  for the                                                               
proposed  pipeline  project,  the  State  will  actually  be  the                                                               
contractor's partner and thus participating  in a different role.                                                               
Where  normally  the contractor  hired  to  do  a job  would  buy                                                               
insurance and charge  its partner more money, the state  now - as                                                               
a partner -  has the choice of either going  that route and being                                                               
charged overhead  by the  operator, or  sharing equally  with all                                                               
the  other  owners  in  all  additional risk.    Again,  via  the                                                               
language of Sections 12 and 13,  the state is choosing the latter                                                               
route.  In  response to a question, he  offered his understanding                                                               
that  all the  partners will  be  required to  indemnify all  the                                                               
other partners.                                                                                                                 
                                                                                                                                
MS. CUTLER clarified  that the bill itself  doesn't require such;                                                               
instead  it  simply  provides  the   authority  that  allows  the                                                               
Mainline  LLC  agreement  to  contain   a  requirement  that  all                                                               
partners  indemnify all  the other  partners.   In response  to a                                                               
further question,  she assured the  committee that the  intent is                                                               
to have  the Mainline LLC  agreement contain such  a requirement;                                                               
furthermore, every entity  involved in the project,  not just the                                                               
four partners in the Mainline  LLC, will be required to indemnify                                                               
every other entity.                                                                                                             
                                                                                                                                
REPRESENTATIVE  GARA pointed  out, though,  that the  language in                                                               
the bill  itself only says  every entity may indemnify  all other                                                               
entities; whether such will actually  be required in the Mainline                                                               
LLC agreement is as yet unknown.                                                                                                
                                                                                                                                
MS. CUTLER and MR. PORTER concurred.                                                                                            
                                                                                                                                
CHAIR McGUIRE  mentioned that the legislature's  consultants will                                                               
be available later in the meeting to answer questions.                                                                          
                                                                                                                                
1:32:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA  sought  assurance that  the  aforementioned                                                               
indemnification would not be applied  to the tax liability from a                                                               
proposed reserves tax.                                                                                                          
                                                                                                                                
MS. CUTLER said it wouldn't.                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  questioned, however, whether a  reserves tax                                                               
would fit  under the language of,  "any and all liability  ... of                                                               
any kind or character" found in proposed AS 45.45.905(a).                                                                       
                                                                                                                                
MS. CUTLER  cautioned that  that language should  be read  in the                                                               
context of the sentence as a whole:                                                                                             
                                                                                                                                
     An owner entity that  constructs, owns, or operates the                                                                    
     Alaska  North Slope  natural gas  pipeline project,  or                                                                    
     any portion  of the  project, or  disposes of  gas from                                                                    
     the field  to a gas  treatment plant or  that pipeline,                                                                    
     or  any  person  or  entity  that  holds  an  ownership                                                                    
     interest in such  an owner entity, may  agree, in whole                                                                    
     or  in part,  to indemnify,  defend, release,  and hold                                                                    
     harmless from any  and all liability or  damages of any                                                                    
     kind or  character, including any degree  of negligence                                                                    
     or other  misconduct, whether  sole or  partial, direct                                                                    
     or  imputed  from any  other  person,  arising from  or                                                                    
     relating  to  construction,  establishment,  ownership,                                                                    
      operation, or any other use or activity relating to                                                                       
     constructing or operating the project, the following:                                                                      
                                                                                                                                
MS.  CUTLER  characterized  this language  as  typical  indemnity                                                               
language,  adding that  it relates  to a  particular thing,  that                                                               
being,  "construction,  establishment, ownership,  operation,  or                                                               
any other use  or activity relating to  constructing or operating                                                               
the  project",  and  thus  won't   address  anything  outside  of                                                               
constructing or operating  the project.  It is not  the intent of                                                               
this  language to  indemnify "the  producers" -  the other  three                                                               
corporations/owners   of   the   [Mainline  LLC]   -   from   the                                                               
aforementioned proposed reserves tax, she reiterated.                                                                           
                                                                                                                                
REPRESENTATIVE  GARA asked  whether the  administration would  be                                                               
amenable to  having language inserted  that stipulates  that this                                                               
provision won't apply to state tax or royalty liability.                                                                        
                                                                                                                                
MR.    PORTER    characterized    the   current    language    as                                                               
straightforward, and  opined that it  would be  inappropriate and                                                               
an example of poor draftsmanship to insert exclusions into it.                                                                  
                                                                                                                                
REPRESENTATIVE GARA indicated that  he remains concerned with the                                                               
current language of proposed AS 45.45.905(a).                                                                                   
                                                                                                                                
1:35:02 PM                                                                                                                    
                                                                                                                                
MS. CUTLER  relayed that she  does not have any  written comments                                                               
from the  legislature's consultants  regarding this  provision of                                                               
the bill.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA  said he  is referring to  the May  23, 2006,                                                               
memorandum written by  Phillip C. Gildan [of  the consulting firm                                                               
of Greenberg Traurig, LLP], specifically  the comments on page 2,                                                               
paragraph 3.                                                                                                                    
                                                                                                                                
MS. CUTLER  clarified that she  is familiar with  those comments,                                                               
but had thought that Representative  Gara was indicating that the                                                               
consultants were suggesting different language for the bill.                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   surmised  that   the  indemnification                                                               
provision would indemnify willful misconduct.                                                                                   
                                                                                                                                
MS. CUTLER concurred.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG  suggested  to   Ms.  Cutler  that  the                                                               
language in proposed  AS 45.45.905(a) may go  beyond "what you're                                                               
trying to cover."                                                                                                               
                                                                                                                                
MS. CUTLER agreed to research that issue further.                                                                               
                                                                                                                                
CHAIR  McGUIRE  announced that  the  committee  would recess  for                                                               
lunch.                                                                                                                          
                                                                                                                                
2:51:44 PM                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE  called  the House  Judiciary  Standing  Committee                                                               
meeting  back  to  order.   Representatives  McGuire,  Gruenberg,                                                               
Gara, Kott,  and Wilson were present  at the call back  to order.                                                               
Representatives Anderson  and Coghill  arrived as  the reconvened                                                               
meeting  was   in  progress.    Representatives   Guttenberg  and                                                               
Berkowitz were also in attendance.                                                                                              
                                                                                                                                
2:52:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA,   referring  to  both   the  aforementioned                                                               
memorandum  and  others  by Greenberg  Traurig,  LLP,  asked  Mr.                                                               
Gildan to express his concerns with HB 2003.                                                                                    
                                                                                                                                
PHILLIP  C.  GILDAN, Attorney  at  Law,  Greenberg Traurig,  LLP,                                                               
relayed that his  consulting firm has very few  concerns with the                                                               
bill, but he'd wanted to ensure  that the ANGPC has the requisite                                                               
flexibility to address  all of the various needs  likely to arise                                                               
once the Mainline LLC is established,  and to that end, [his June                                                               
2,  2006, memorandums,  beginning on  page 3,]  contain suggested                                                               
changes  to Section  2 of  the  bill as  well as  a new  proposed                                                               
subsection  (c)  for  AS  42.06.230.     He  mentioned  that  his                                                               
suggested changes are also intended  to provide clarity regarding                                                               
the intent of the legislation.                                                                                                  
                                                                                                                                
MR. GILDAN  relayed that some  of his suggestions  include adding                                                               
six more "powers" to proposed  AS 41.42.210; adding a proposed AS                                                               
41.42.090  to   provide  for   the  appointment   of  corporation                                                               
representatives and  ensure that  they have  more pre-established                                                               
authority;  and rewriting  proposed  AS 41.42.220(c)  and (d)  to                                                               
provide that members  of the governing body of  Ancillary LLCs be                                                               
the  members of  the board  of the  ANGPC so  as to  maintain the                                                               
administration's  chain  of command  and  control  and so  as  to                                                               
provide for continuity  with regard to board membership.   On the                                                               
latter  point,  though, providing  an  exception  for a  Canadian                                                               
entity might be appropriate, he  acknowledged.  Another suggested                                                               
change would  be the  addition of a  proposed AS  41.42.450 which                                                               
would  - in  subsection (a)  -  specify that  in the  event of  a                                                               
conflict between  proposed AS 41.42  and existing AS  43.82, that                                                               
AS   43.82   would  prevail;   he   noted,   however,  that   the                                                               
administration  has made  cogent arguments  regarding why  it may                                                               
not want to deal with that issue in advance.                                                                                    
                                                                                                                                
MR. GILDAN  indicated that his  proposed AS 41.42.450(b)  and (c)                                                               
would narrow the definition of  dispute and clarify what would be                                                               
covered  under HB  2003, because  he  wanted to  ensure that  the                                                               
"dispute resolution processes were  coordinated among and between                                                               
the two  ... entities and the  various contracts" so as  to avoid                                                               
"forum shopping"  or races to  file disputes.  He  also indicated                                                               
that  the new  proposed  subsection (c)  for  AS 42.06.230  would                                                               
allow  the  ANGPC  to  operate   without  running  afoul  of  the                                                               
Regulatory Commission  of Alaska  (RCA); although  this provision                                                               
may not be necessary, he wanted  to ensure that any conflict with                                                               
the RCA wouldn't handcuff or delay the project.                                                                                 
                                                                                                                                
MR.  GILDAN concluded  by saying  that  all of  his concerns  are                                                               
addressed via his suggested changes.                                                                                            
                                                                                                                                
3:02:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA,  referring to paragraph  3 of page 2  of the                                                               
aforementioned  May 23  memorandum, again  relayed that  he still                                                               
has concerns that the indemnity  provisions in Sections 12 and 13                                                               
will allow the producers to  indemnify themselves from a proposed                                                               
reserves tax  that is due  be voted  on in the  general election.                                                               
He asked whether these provisions  could be interpreted such that                                                               
the  producers  would be  indemnified  from  any tax  liabilities                                                               
owed, or  such that the  state would  be forced to  reimburse the                                                               
producers for any taxes they pay.                                                                                               
                                                                                                                                
MR. GILDAN said  that there is the possibility  that the Mainline                                                               
LLC  agreement  might  contain  language  that  could  indirectly                                                               
create such a  situation, but noted that such a  concern might be                                                               
more  directly attributable  to HB  2004; he  suggested that  the                                                               
legislature may want  to include some form of  limitations on the                                                               
indemnification provisions.   He offered his  belief that typical                                                               
indemnification  provisions don't  indemnify  an  entity for  its                                                               
intentional  or criminal  actions.   Another option  might be  to                                                               
place a  cap on  either the  amount or the  type of  damages that                                                               
indemnification would apply to.                                                                                                 
                                                                                                                                
REPRESENTATIVE GARA asked Mr. Gildan  to help draft language that                                                               
would  ensure that  the state  won't be  required to  reimburse a                                                               
producer for taxes or royalties owed to the state.                                                                              
                                                                                                                                
MR. GILDAN  suggested adding  language to page  28 such  that the                                                               
[ANGPC] would  indemnify the Mainline  LLC and any  entities that                                                               
it creates but  not any of the other owners  of the Mainline LLC.                                                               
He acknowledged, however, that such a change might be too broad.                                                                
                                                                                                                                
REPRESENTATIVE GARA  said he  could accept  indemnifying entities                                                               
for negligence relating to construction  and operation, but since                                                               
the language, "all liability ... of  any kind or character" is so                                                               
broad, he want's to clarify that  no one has a right to indemnity                                                               
from tax or royalty payments to the state.                                                                                      
                                                                                                                                
MR.  GILDAN   suggested  adding  the  language:     "however,  no                                                               
indemnity shall extend to tax losses".                                                                                          
                                                                                                                                
REPRESENTATIVE GARA  suggested instead:   "no indemnity  shall be                                                               
extended for  tax or royalty payments".   He asked Mr.  Gildan to                                                               
comment on  whether the  proposed indemnification  provisions are                                                               
really necessary.                                                                                                               
                                                                                                                                
3:16:07 PM                                                                                                                    
                                                                                                                                
MR. GILDAN  said that  indemnity as an  equitable remedy  is very                                                               
useful in  the right situation,  and that joint  indemnities work                                                               
well, particularly  if there are  proper limits to  the indemnity                                                               
and as  long as  one party isn't  indemnifying another  party for                                                               
criminal penalties incurred.                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA suggested  adding to  page 28,  line 5,  the                                                               
language,  "indemnity  for  these things  or  other  non-criminal                                                               
misconduct";  this would  eliminate indemnification  for criminal                                                               
conduct.                                                                                                                        
                                                                                                                                
MR. GILDAN  suggested precluding indemnification  for intentional                                                               
actions also.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA suggested,  then, providing  indemnification                                                               
for, "other non-criminal or unintentional conduct".                                                                             
                                                                                                                                
MR. GILDAN ventured that such language might help.                                                                              
                                                                                                                                
REPRESENTATIVE   GARA  surmised,   then,  that   Mr.  Gildan   is                                                               
suggesting  that  indemnification   be  provided  for  everything                                                               
except intentional misconduct and criminal conduct.                                                                             
                                                                                                                                
MR. GILDAN concurred.                                                                                                           
                                                                                                                                
REPRESENTATIVE GARA expressed comfort with such a change.                                                                       
                                                                                                                                
3:19:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA [referring  to  Section 10]  relayed to  Mr.                                                               
Gildan that he has concerns  about exempting the governing boards                                                               
of Ancillary  LLCs from  the state's ethics  Act.   He questioned                                                               
whether  that  exemption  would   also  apply  to  the  executive                                                               
directors [or staff] of the Ancillary LLCs.                                                                                     
                                                                                                                                
MR. GILDAN  opined that that  exemption should apply only  to the                                                               
boards, and surmised that as written, it does just that.                                                                        
                                                                                                                                
REPRESENTATIVE  GARA  asked whether  board  members  ought to  be                                                               
subject to the state's ethics Act.                                                                                              
                                                                                                                                
MR.  GILDAN,  acknowledging that  he  is  not familiar  with  the                                                               
Alaska  Executive  Branch  Ethics   Act,  said  that  in  certain                                                               
instances,     particularly    those     involving    proprietary                                                               
corporations, one  would want to  provide for the  flexibility to                                                               
appoint  board  members who  have  the  necessary expertise,  but                                                               
sometimes  there  are  elements  of  an  ethics  Act  that  would                                                               
prohibit one from recruiting the  best people, so exempting board                                                               
members from  an ethics Act  can ensure that that  flexibility is                                                               
maintained.   Also, generally there  will be other  provisions in                                                               
an operating  agreement that specify  one can't enter  into "self                                                               
dealing"  agreements.    He  offered  his  belief  that  in  this                                                               
instance,  the  benefits  of  being  able  to  appoint  the  most                                                               
qualified people as board members  warrants an exemption from the                                                               
state's ethics Act.                                                                                                             
                                                                                                                                
REPRESENTATIVE  GARA  indicated  that  he would  be  offering  an                                                               
amendment intended to  insure that the ANGPC  board members don't                                                               
have financial ties to the  oil companies, and questioned whether                                                               
Ancillary LLC  board members ought  to be restricted in  the same                                                               
way.                                                                                                                            
                                                                                                                                
MR. GILDAN  referred to his  suggested change to  subsections (c)                                                               
and (d)  of proposed AS  41.42.220, and reiterated that  it would                                                               
provide that the  ANGPC board members be the  Ancillary LLC board                                                               
members, though,  again, there might  need to be an  exception to                                                               
that requirement with respect to any Canadian Ancillary LLC.                                                                    
                                                                                                                                
3:25:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA suggested  adding  to  that proposed  change                                                               
language  along  the  lines  of,  "unless  the  laws  of  another                                                               
sovereign require otherwise".                                                                                                   
                                                                                                                                
MR. GILDAN concurred.                                                                                                           
                                                                                                                                
REPRESENTATIVE GARA questioned whether  requiring the ANGPC board                                                               
members to be  the board members of all the  Ancillary LLCs would                                                               
be practical.                                                                                                                   
                                                                                                                                
MR.  GILDAN opined  that  it would  be  practical, remarked  that                                                               
other entities already do something  similar, and noted that he'd                                                               
included language  stipulating that the corporate  entity remains                                                               
intact notwithstanding the interlocking  board and that having an                                                               
interlocking board shall not be  cause for piercing the corporate                                                               
veil or disregarding that legal entity.                                                                                         
                                                                                                                                
MR. GILDAN,  in response to  a question, offered his  belief that                                                               
as the bill  is currently written, the ANGPC would  be subject to                                                               
the jurisdiction  of the  RCA, and  his suggestion  to add  a new                                                               
subsection (c) to  AS 42.06.230 is intended to  provide the ANGPC                                                               
with the  flexibility to address  its own issues without  the RCA                                                               
looking over its shoulder.                                                                                                      
                                                                                                                                
REPRESENTATIVE GARA mentioned  that he'd like to  ensure that the                                                               
ANGPC's revenue is exempt from federal taxes.                                                                                   
                                                                                                                                
3:29:59 PM                                                                                                                    
                                                                                                                                
MR. GILDAN  indicated that  he is not  aware of  anything missing                                                               
from the  bill that  could further  that end.   In response  to a                                                               
question regarding the  bill's proposal to exempt  the ANGPC from                                                               
the Open  Meetings Act, relayed  that he had merely  flagged that                                                               
point  in his  comments because  although there  are good  policy                                                               
reasons for doing so, there are  also "lots of cons" to doing so.                                                               
For example,  in operating a  proprietary business for  the state                                                               
as is  being proposed via  HB 2003,  there are very  good reasons                                                               
for  not  having   the  same  open  meeting   and  public  record                                                               
requirements  as would  normally  apply to  a government  entity;                                                               
however, on  the flip  side of  that is that  there will  be less                                                               
transparency.    He  acknowledged,  though, that  the  bill  does                                                               
attempt to  address that  issue by requiring  that at  least some                                                               
meetings occur in  the public realm.  He said  he has no specific                                                               
recommendations  for change  regarding that  issue, and  surmised                                                               
that it  is addressed  sufficiently in  the bill,  though perhaps                                                               
more flexibility ought to be provided for as well.                                                                              
                                                                                                                                
REPRESENTATIVE  GARA referred  to  proposed  AS 41.42.520,  which                                                               
outlines the  types of  information that  the Public  Records Act                                                               
won't  apply to,  remarked that  generally his  preference is  to                                                               
always  give the  public  access to  information,  and asked  Mr.                                                               
Gildan to comment on that issue.                                                                                                
                                                                                                                                
MR. GILDAN  pointed out that  the types of information  listed in                                                               
that provision  generally are exempted from  public records Acts,                                                               
but suggested that the legislature  ought to make sure that there                                                               
is  some  mechanism  in place  to  determine  whether  particular                                                               
information really counts as one of the listed types.                                                                           
                                                                                                                                
REPRESENTATIVE GARA  said he wants  to ensure that  conduct which                                                               
violates Alaska law won't be kept  from the public via the use of                                                               
that provision.                                                                                                                 
                                                                                                                                
3:35:36 PM                                                                                                                    
                                                                                                                                
MR. GILDAN surmised that including  a caveat to that effect would                                                               
be reasonable and  won't change the intent of the  provision.  He                                                               
offered his belief  that as that provision  is currently written,                                                               
only those items  that are proper and legal and  above board will                                                               
be exempted from the Public Records Act.                                                                                        
                                                                                                                                
REPRESENTATIVE  GARA opined  that  the first  listed exception  -                                                               
proposed AS 41.42.520(a)(1)  - seems to be  written very broadly,                                                               
so  much so  that it  might be  interpreted to  mean "everything"                                                               
relating to the business.                                                                                                       
                                                                                                                                
MR. GILDAN acknowledged  that the current language  is broad, but                                                               
remarked that it  would be difficult to tighten  up that language                                                               
and still  ensure that  confidential information  remain so.   He                                                               
pointed  out   that  although   the  provision   exempts  certain                                                               
information  from  public  disclosure,  the  ANGPC,  as  a  state                                                               
corporation, should  have a  duty and  responsibility to  make as                                                               
much information as possible available to the public.                                                                           
                                                                                                                                
REPRESENTATIVE  GARA acknowledged  that  ideally  it should  work                                                               
that way.                                                                                                                       
                                                                                                                                
MR. GILDAN  also pointed  out that  the state's  attorney general                                                               
will be  the ANGPC's legal counsel  and as such will  have access                                                               
to the types of information listed.                                                                                             
                                                                                                                                
MS. CUTLER  said her  firm agrees  with Mr. Gildan  that it  is a                                                               
policy call  whether to  exempt the ANGPC  from the  state's Open                                                               
Meetings Act, and appreciates his  comment that the drafters have                                                               
done a pretty  good job with the language in  question.  Her firm                                                               
does  not agree,  however, with  Mr. Gildan's  comments regarding                                                               
Section 13,  and would prefer  not to mix up  the indemnification                                                               
already provided  for therein with  the royalty and  reserves tax                                                               
issue  raised by  Representative  Gara; instead  the royalty  and                                                               
reserves  tax issue  would  be better  addressed  via the  Alaska                                                               
Stranded   Gas   Fiscal   Contract  ("ASGF   Contract").      The                                                               
indemnification provision  is intended to  deal with the  need to                                                               
move the  project forward and  indemnify entities in  the context                                                               
of construction  agreements, and is  not intended to  embrace the                                                               
reserves  tax  issue,  but  by  specifically  stating  that  that                                                               
provision  is  not  intended  to  be  used  to  indemnify  a  tax                                                               
liability, it  may bring  that reserves tax  issue into  HB 2003,                                                               
something her firm would prefer didn't happen.                                                                                  
                                                                                                                                
3:44:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA questioned why  they shouldn't simply clarify                                                               
the issue of the reserves tax in HB 2003.                                                                                       
                                                                                                                                
MS.  CUTLER  suggested that  there  is  a difference  of  opinion                                                               
between the administration and  Representative Gara regarding the                                                               
reserves  tax  initiative, and  reiterated  her  belief that  the                                                               
administration  doesn't want  the initiative  issue brought  into                                                               
the bill  and is  not appropriately addressed  in the  context of                                                               
the bill.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA repeated his question.                                                                                      
                                                                                                                                
CHAIR McGUIRE surmised that the  sponsors simply are not amenable                                                               
to including  language drafted  in the  negative stating  all the                                                               
things that the bill is not meant to do.                                                                                        
                                                                                                                                
MS. CUTLER, with  regard to the comments by  Mr. Gildan regarding                                                               
not  indemnifying  criminal   conduct  and  intentional  actions,                                                               
offered  her understanding  that the  bill's current  language is                                                               
indeed  intended to  indemnify  the parties  for  more than  just                                                               
simple  negligence, particularly  given  that in  a workforce  of                                                               
10,000  people,  someone  could  do  something  that  is  grossly                                                               
negligent.     She  pointed   out  that   the  language   of  the                                                               
indemnification   provision  says   in  part,   "any  degree   of                                                               
negligence or  other misconduct, whether sole  or partial, direct                                                               
or imputed  from any  other person, arising  from or  relating to                                                               
...",  adding that  she will  check to  see if  that language  is                                                               
intended  to cover  criminal misconduct,  though she  believes it                                                               
is.                                                                                                                             
                                                                                                                                
MS. CUTLER  added that  if there  is a bad  act that  occurs with                                                               
respect to  the line workers  on the pipeline, that  is something                                                               
that everyone  will have to pay  for anyway, and so  the best way                                                               
to deal with  such potential situations is  through the mechanism                                                               
outlined in the  bill.  She offered her  understanding that there                                                               
will  be a  two-tiered  approach:   for  higher level  personnel,                                                               
there would  not be indemnification  for really bad acts  such as                                                               
fraud or embezzlement, but for  lower level personnel there could                                                               
indeed be indemnification for some bad conduct.                                                                                 
                                                                                                                                
3:50:43 PM                                                                                                                    
                                                                                                                                
MR. GILDAN  remarked that that  two-tiered approach  makes sense,                                                               
adding that his  concern pertains to crimes  and intentional acts                                                               
committed by  upper level personnel, whereas  bad acts undertaken                                                               
by lower  level personnel are  just part  of doing business.   He                                                               
offered his  hope that there  is a mechanism for  addressing this                                                               
issue as she described.                                                                                                         
                                                                                                                                
MS. CUTLER,  acknowledging that HB  2003 is just  the authorizing                                                               
legislation, reiterated  that it  is the  administration's intent                                                               
to  provide such  a  mechanism, and  indicated  that the  sponsor                                                               
would be amenable to an amendment to that effect.                                                                               
                                                                                                                                
REPRESENTATIVE  GARA asked  why they  would not  simply authorize                                                               
self insurance to  cover the potential risks  associated with the                                                               
project.                                                                                                                        
                                                                                                                                
MS. CUTLER again pointed out that  the bill governs the ANGPC and                                                               
not  the Mainline  LLC, which  would  have the  authority to  get                                                               
insurance; the language in the bill  is simply meant to allow for                                                               
indemnification but  does not stipulate how  that indemnification                                                               
will be paid for.                                                                                                               
                                                                                                                                
CHAIR  McGUIRE surmised  that such  indemnification is  standard.                                                               
What  is  unique in  this  situation  is  that  it is  the  state                                                               
entering into an  LLC, and the provisions of the  bill are simply                                                               
meant to  provide guidance  for the state  as it  undertakes that                                                               
role.                                                                                                                           
                                                                                                                                
MS. CUTLER concurred.                                                                                                           
                                                                                                                                
3:55:22 PM                                                                                                                    
                                                                                                                                
MS. CUTLER, with regard to  the additional powers proposed by Mr.                                                               
Gildan  in  his  May  23  memorandum,  offered  her  belief  that                                                               
"powers" (25),  (26), (27), and  (28) are already dealt  with via                                                               
the other  powers already  listed in  proposed AS  41.42.210, but                                                               
noted that the  sponsor would be amenable,  with certain caveats,                                                               
to  including  the  additional wording  if  the  committee  would                                                               
prefer doing so.  The caveat  with regard to suggested power (25)                                                               
is  that  the  state's  eminent  domain  laws  will  need  to  be                                                               
researched to  ensure that  there isn't a  conflict.   The caveat                                                               
with regard to suggested power (28)  is that most of the statutes                                                               
that   deal   with   public   corporations   don't   specifically                                                               
[highlight] the  option to hire  independent counsel, and  so the                                                               
sponsor  would prefer  that the  status quo  be maintained,  that                                                               
being that the  attorney general will act as  the ANGPC's counsel                                                               
and then it will be up to him/her to hire independent counsel.                                                                  
                                                                                                                                
MS. CUTLER  said that [she and  the sponsor] would prefer  not to                                                               
include suggested  power (29)  in the bill  because of  a concern                                                               
that it will limit power (24).                                                                                                  
                                                                                                                                
MR. GILDAN said he would  be comfortable with removing power (29)                                                               
from his recommendations,  and that he concurs  with Ms. Cutler's                                                               
comments regarding power (28) and the attorney general.                                                                         
                                                                                                                                
MS.  CUTLER,  referring  to  power (30)  as  articulated  in  Mr.                                                               
Gildan's  June 2  memorandum, relayed  that she  and the  sponsor                                                               
would prefer not to  include it at all in the  bill, since as yet                                                               
the  statute   referenced  therein  doesn't  exist   because  the                                                               
legislation proposing  it is  still pending.   If either  HB 2003                                                               
doesn't pass, or  the ANGPC isn't ready by the  time the Mainline                                                               
LLC agreement  or any  Ancillary LLC agreements  are ready  to be                                                               
signed, then  - in the first  instance - the commissioner  of the                                                               
DOR, with the  concurrence of the commissioner  of the Department                                                               
of  Natural Resources  (DNR),  could sign  the  ASGF Contract  on                                                               
behalf of the state and the  ANGPC would have to implement it, or                                                               
- in the second  instance - there might be a  need for a modified                                                               
quorum  requirement  if   only  part  of  the   ANGPC  board  was                                                               
functioning so  that the  project could  still implemented.   She                                                               
elaborated:                                                                                                                     
                                                                                                                                
     We  don't  think  that without  power  (30)  those  two                                                                    
     things can't  happen as along  as they're in  the other                                                                    
     bill,  and,  second  of all,  ...  it's  obviously  our                                                                    
     position that the  collateral agreements, although it's                                                                    
     fully the  intent of the  administration to  share them                                                                    
     with the  legislature, it's not  our intent  that those                                                                    
     amendments require legislative  approval, and therefore                                                                    
     we  would   not  necessarily   be  in   agreement  with                                                                    
     including power (30)  here at all.   I recognize that's                                                                    
     completely  a policy  call  as to  whether  or not  the                                                                    
     legislature  is going  to approve  those agreements  or                                                                    
     not; we also believe  there's a potential separation of                                                                    
     powers  issue  here because  we  do  think that  that's                                                                    
     within  the administration's  bailiwick,  and that  the                                                                    
     collateral  agreements  are  different from  the  [ASGF                                                                    
       Contract] and the reasons for which there will be                                                                        
        legislative approval of the [ASGF Contract].  So                                                                        
     that's our position with respect to power (30).                                                                            
                                                                                                                                
4:02:09 PM                                                                                                                    
                                                                                                                                
MS. CUTLER  referred to Mr.  Gildan's suggested  change regarding                                                               
proposed  AS 41.42.090  - corporation  representative -  and said                                                               
that [her  firm and the  sponsor] chose  to deal with  this issue                                                               
via proposed AS  41.42.050 and the use of  an executive director.                                                               
She  characterized  the  approach  in the  bill  as  broader  and                                                               
simpler than what Mr. Gildan is  proposing, but noted that if the                                                               
committee feels  it is important to  spell out the details  as is                                                               
done in  proposed AS 41.42.090,  then [her firm and  the sponsor]                                                               
would  be willing  to mesh  the two.   One  of her  concerns, she                                                               
relayed, is  that Mr.  Gildan's recommendation  may not  give the                                                               
board   the  ability   to   appoint  a   staff   member  as   its                                                               
representative,  and, whether  it  does or  doesn't, she  doesn't                                                               
want there  to be  confusion in the  legislation because  it will                                                               
probably be  the model envisioned  - that the  executive director                                                               
or one of  the staff of the ANGPC would  be the representative to                                                               
the  management committee  or other  committees, though  the bill                                                               
doesn't currently  say that; so,  again, she would be  willing to                                                               
see  how the  two  proposals  could fit  together  if that's  the                                                               
desire.                                                                                                                         
                                                                                                                                
MS.  CUTLER referred  to Mr.  Gildan's recommendation  to rewrite                                                               
proposed AS 41.42.220(c)  and (d) to provide that  members of the                                                               
governing body of  Ancillary LLCs be the members of  the board of                                                               
the ANGPC,  and said  that she  has not been  able to  reach [the                                                               
state's] Canadian counsel  yet, and although perhaps  some of the                                                               
"simple  fixes that  were  discussed" would  be  okay, she  would                                                               
still prefer  to leave  the language  in the bill  as is  for the                                                               
time being and get Canadian counsel's input before changing it.                                                                 
                                                                                                                                
MS.  CUTLER referred  to  Mr. Gildan's  recommendation  to add  a                                                               
proposed  AS 41.42.450(a)-(c),  and noted  that they  have agreed                                                               
that proposed subsection (a) is  no longer required.  With regard                                                               
to proposed subsection (b), she  relayed, it is not currently the                                                               
intent to have the  same alternative dispute-resolution mechanism                                                               
provided for in the Mainline LLC  agreement as is provided for in                                                               
the ASGF  Contract, and therefore  [she and the sponsor]  are not                                                               
in   favor  of   the   language  in   proposed  subsection   (b);                                                               
furthermore, [she and  the sponsor] do not agree  with Mr. Gildan                                                               
that language  in the ASGF  Contract already covers  the Mainline                                                               
LLC   agreement,  and   therefore  would   prefer  that   dispute                                                               
resolution  mechanisms  be  dealt  with in  the  context  of  the                                                               
individual agreements.   What is  designed for the  ASGF Contract                                                               
is somewhat unusual  and specific to the  unique circumstances of                                                               
the ASGF Contract,  and thus not necessarily  transferable to all                                                               
the other agreements.                                                                                                           
                                                                                                                                
MS.   CUTLER,   with  regard   to   Mr.   Gildan's  proposed   AS                                                               
41.42.450(c), remarked  that it is  [her firm and  the sponsor's]                                                               
view that  using Delaware  law and requiring  the members  of the                                                               
Mainline LLC  to comply with  the duties imposed by  Delaware law                                                               
will favor  Alaska as  a minority interest  holder.   She pointed                                                               
out  that  having  Delaware  law  apply to  the  members  of  the                                                               
Mainline LLC  will not affect  the ANGPC's  duty to the  state of                                                               
Alaska  or the  ANGPC's duty  of care  to the  people of  Alaska;                                                               
instead, Delaware  law will  define the ANGPC's  duty of  care to                                                               
the other  members of  the Mainline  LLC, and  that duty  of care                                                               
will be more minimal  than it would be under Alaska  law.  A more                                                               
minimal  duty of  care can  often benefit  the minority  interest                                                               
holder because it will  be able to vote in a  way that favors its                                                               
own  interest, over  the  interests  of the  larger  entity as  a                                                               
whole, without being sued.                                                                                                      
                                                                                                                                
MS. CUTLER went on to say:                                                                                                      
                                                                                                                                
     As we  keep stressing here,  this is a  proprietary and                                                                    
     commercial venture  that the state is  getting involved                                                                    
     in.   As the chair  pointed out, that's what  makes all                                                                    
     of this  so difficult,  because we're used  to thinking                                                                    
     of ourselves in  a public role, which  we obviously are                                                                    
     still in here - obviously  we have duties to the public                                                                    
     -  but we're  trying to  be involved  in essentially  a                                                                    
     private commercial  venture.  And again,  because we're                                                                    
     the minority interest holder, this  could be helpful to                                                                    
     us.    There  are  various provisions  that  are  under                                                                    
     negotiation in  the [Mainline LLC] agreement  where ...                                                                    
     [the ANGPC] has  the ability to block a  vote, and with                                                                    
     the minimal duty  of care, there's ...  less likely the                                                                    
     possibility that if  you do block then  somehow you can                                                                    
     be sued  for not  having fulfilled  your duties  to the                                                                    
     entity as  a whole.   My understanding is,  [there are]                                                                    
     over 150,000 LLCs  that are organized under  the law of                                                                    
     Delaware, so Delaware  law is a well  known entity when                                                                    
     it  comes to  operating LLCs,  and I'm  not aware  that                                                                    
     this  is always  ... used  to perpetrate  some sort  of                                                                    
     fraud or some sort of bad  act.  That is not the intent                                                                    
     here; the intent is to  protect the state of Alaska and                                                                    
     its  ability  to  do  everything   it  can,  under  the                                                                    
     [Mainline  LLC]  agreement,  to  make  sure  that  [the                                                                    
     ANGPC]  is  taken  care  of, again,  because  it  is  a                                                                    
     minority interest holder.                                                                                                  
                                                                                                                                
MS. CUTLER referred to Mr.  Gildan's recommendation to remove the                                                               
ANGPC from  the jurisdiction of the  RCA, and said that  [she and                                                               
the sponsor] are not sure that  that issue needs to be dealt with                                                               
via HB  2004, particularly  given that the  issue is  being dealt                                                               
with  in the  ASGF Contract.   She  offered her  belief that  Mr.                                                               
Gildan   was    merely   making   broad    suggestion   regarding                                                               
jurisdiction.  Furthermore, the Mainline  LLC will fall under the                                                               
jurisdiction of the Federal Energy Regulatory Commission (FERC).                                                                
                                                                                                                                
MS.  CUTLER said  she would  want  to see  any proposed  language                                                               
change designed to make sure  that the ANGPC's exemption from the                                                               
Public Records  Act won't apply  in instances of fraud  or [other                                                               
crimes],  but  doesn't have  a  problem  with  such a  change  in                                                               
concept.                                                                                                                        
                                                                                                                                
4:12:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA, referring  to  Mr. Gildan's  May 22,  2006,                                                               
memorandum  regarding  the  issue  of allowing  Delaware  law  to                                                               
govern the Mainline LLC, noted that it says in part:                                                                            
                                                                                                                                
     ...  decisions by  Delaware courts  on business  entity                                                                    
     issues  more  often  favor  management/majority  owners                                                                    
     over  minority owners.  ... Without  the  duty of  care                                                                    
     that  the Alaska  Act provides,  a manager  or managing                                                                    
     members controlling  an entity  could act in  their own                                                                    
     self  interest  and contrary  to  the  interest of  the                                                                    
     entity's business, ....                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA asked  Mr. Gildan  whether those  points are                                                               
still of concern.                                                                                                               
                                                                                                                                
MR. GILDAN, referring to Ms.  Cutler's comments that Delaware law                                                               
would favor the state as  a minority interest holder, pointed out                                                               
that it would  work the same way in favor  of a majority interest                                                               
holder - a  majority interest holder could, for  example, take an                                                               
action contrary to the state's  interest without being penalized.                                                               
Therefore, the  question from  a policy perspective  is:   Who is                                                               
more likely to  take an action in its own  self interest contrary                                                               
to the project  or the Mainline LLC  as a whole?   Alaska, or one                                                               
of the other Mainline LLC  partners?  If the legislature believes                                                               
that  it wouldn't  be  Alaska,  then the  state  would be  better                                                               
served  by Alaska  law.   He  opined that  all  the Mainline  LLC                                                               
partners should  have a duty  to the project  and a duty  to make                                                               
sure  that it  goes forward  regardless  of whether  doing so  is                                                               
contrary to an individual partner's self interest.                                                                              
                                                                                                                                
4:16:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG made  a  motion to  adopt Amendment  2,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
         page 4 line 31 after "revenue" insert "or the                                                                          
     commissioner's designee"                                                                                                   
                                                                                                                                
     page 5 line 1 after "public facilities" insert "or the                                                                     
     commissioner's designee"                                                                                                   
                                                                                                                                
     page 5 lines 11-16 delete all of subsection "(b)"                                                                          
                                                                                                                                
     Make conforming amendments as necessary                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON objected.                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked members to [compare]  Amendment 2                                                               
with Amendment 3, which read [original punctuation provided]:                                                                   
                                                                                                                                
     Pg. 5 line 14                                                                                                              
                                                                                                                                
           delete:  The designee appointed under this                                                                           
       subsection is a member of the board at the meeting                                                                       
     designated in the instrument                                                                                               
                                                                                                                                
     renumber accordingly                                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG characterized  Amendment  2 as  broader                                                               
than Amendment  3, noting  that it would  eliminate the  need for                                                               
proposed AS 41.42.020(b).                                                                                                       
                                                                                                                                
REPRESENTATIVE KOTT  said he favors  the approach of  Amendment 3                                                               
because  part of  the language  currently in  proposed subsection                                                               
(b)   allows  a   commissioner   to  appoint   either  a   deputy                                                               
commissioner or  an assistant commissioner as  a designee, adding                                                               
that  he takes  some comfort  that the  designee won't  be anyone                                                               
below  that  level and  that  the  commissioner  has to  file  an                                                               
instrument with the board stating who his/her designee is.                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  pointed  out, however,  that  proposed                                                               
subsection  (b) seems  to  require that  a  commissioner file  an                                                               
instrument for  each meeting that he/she  was going to miss.   He                                                               
said he  would have  no problem changing  Amendment 2  to specify                                                               
that the designation must be in  writing and that a designee must                                                               
be either a deputy commissioner or an assistant commissioner.                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG  [made a  motion to]  conceptually amend                                                               
Amendment 2 such  that the designation must be in  writing via an                                                               
instrument filed with the board, and  that the designee must be a                                                               
deputy commissioner  or assistant commissioner.   [Amendment 2 as                                                               
treated as amended.]                                                                                                            
                                                                                                                                
REPRESENTATIVE  KOTT   opined  that  simply  deleting   the  last                                                               
sentence  in  proposed  AS  41.42.020(b)  accomplishes  the  same                                                               
thing.  Without removing that  last sentence, then the instrument                                                               
must be filed for each  meeting the commissioner can't attend, he                                                               
surmised.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  said his  intent is for  the instrument                                                               
naming the  designee to just be  on file so that  it doesn't have                                                               
to be submitted for each meeting.                                                                                               
                                                                                                                                
REPRESENTATIVE  KOTT again  pointed out  that the  last sentence,                                                               
which  would be  deleted via  Amendment  3, uses  the phrase,  "a                                                               
member  of   the  board   at  the   meeting  designated   in  the                                                               
instrument".                                                                                                                    
                                                                                                                                
MS.  CUTLER indicated  that either  Amendment 2,  as amended,  or                                                               
Amendment 3 would be acceptable.                                                                                                
                                                                                                                                
REPRESENTATIVE WILSON  said she would  like the last  sentence of                                                               
proposed AS 41.42.020(b) to be removed.                                                                                         
                                                                                                                                
REPRESENTATIVE KOTT noted that both amendments would do so.                                                                     
                                                                                                                                
4:25:05 PM                                                                                                                    
                                                                                                                                
TAMARA COOK,  Director, Legislative Legal and  Research Services,                                                               
Legislative Affairs  Agency (LAA),  relayed that  as long  as the                                                               
committee's  intent  is  clear, Legislative  Legal  and  Research                                                               
Services can come up with the appropriate language.                                                                             
                                                                                                                                
REPRESENTATIVE COGHILL  expressed a  preference for  Amendment 3,                                                               
characterizing its proposed change as cleaner.                                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG withdrew Amendment 2, as amended.                                                                      
                                                                                                                                
REPRESENTATIVE  KOTT made  a motion  to adopt  Amendment 3  [text                                                               
provided previously].  There being  no objection, Amendment 3 was                                                               
adopted.                                                                                                                        
                                                                                                                                
4:26:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG made  a  motion to  adopt Amendment  4,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     page 4 line 11 add a new "(b)"                                                                                             
          "All board members shall be Alaskan residents."                                                                       
                                                                                                                                
     renumber following subsections.                                                                                            
                                                                                                                                
REPRESENTATIVE  WILSON  objected  and  made  a  motion  to  amend                                                               
Amendment  4 such  that the  language being  inserted would  say,                                                               
"All board members,  with the exception of one,  shall be Alaskan                                                               
residents."   Such a  change would allow  for the  appointment of                                                               
someone with the  appropriate expertise even if he/she  is not an                                                               
Alaskan resident.                                                                                                               
                                                                                                                                
MS. CUTLER  said that  the administration's  position is  that it                                                               
would like  to have as much  flexibility as possible in  order to                                                               
find board members with the appropriate expertise.                                                                              
                                                                                                                                
REPRESENTATIVE KOTT pointed  out that there might also  be a need                                                               
to have  a Canadian  serve on the  board, and so  he is  not sure                                                               
that  he wants  to restrict  the board  to only  one non  Alaskan                                                               
resident.                                                                                                                       
                                                                                                                                
MS.  CUTLER  indicated  that the  administration  has  that  same                                                               
concern -  the administration  wants the  flexibility to  get the                                                               
best people.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON concurred,  and acknowledged  that perhaps                                                               
her amendment to  Amendment 4 might still be too  limiting.  [Her                                                               
amendment to Amendment 4 was treated as withdrawn.]                                                                             
                                                                                                                                
REPRESENTATIVE KOTT suggested using  the phrase, "majority of the                                                               
board".                                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG expressed acceptance of that language.                                                                 
                                                                                                                                
CHAIR  McGUIRE offered  her understanding  that the  Senate "went                                                               
with three Alaska residents."                                                                                                   
                                                                                                                                
REPRESENTATIVE KOTT reiterated his suggestion.                                                                                  
                                                                                                                                
MS. CUTLER  indicated that using  the phrase, "a majority  of the                                                               
board" would be fine.                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG concurred.                                                                                             
                                                                                                                                
4:29:27 PM                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE  ascertained that  the  amendment  to Amendment  4                                                               
would  specify that  a majority  of  the board  members shall  be                                                               
Alaskan residents.                                                                                                              
                                                                                                                                
REPRESENTATIVE COGHILL  objected for  the purpose  of discussion,                                                               
and questioned how "resident" would be defined.                                                                                 
                                                                                                                                
REPRESENTATIVE KOTT  asked whether there is  a difference between                                                               
a "resident" and a "citizen".                                                                                                   
                                                                                                                                
REPRESENTATIVE GRUENBERG  indicated that he wouldn't  be limiting                                                               
the term, "resident".                                                                                                           
                                                                                                                                
CHAIR   McGUIRE   observed   that    this   point   could   raise                                                               
constitutional issues.                                                                                                          
                                                                                                                                
REPRESENTATIVE COGHILL removed his objection.                                                                                   
                                                                                                                                
CHAIR McGUIRE  indicated that  the amendment  to Amendment  4 was                                                               
adopted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE COGHILL [made  a motion to amend]  Amendment 4, as                                                               
amended,  such that  it applied  to page  5 rather  than page  4.                                                               
There  being no  objection, Amendment  4, as  amended, was  again                                                               
amended.                                                                                                                        
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 4, as amended [twice].   There being none, Amendment 4,                                                               
as amended, was adopted.                                                                                                        
                                                                                                                                
REPRESENTATIVE KOTT  made a  motion to  adopt Amendment  5, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Pg 5 line 4                                                                                                                
                                                                                                                                
       delete:  except as a member of the armed forces of                                                                       
     either the United States or this state                                                                                     
                                                                                                                                
     renumber accordingly                                                                                                       
                                                                                                                                
REPRESENTATIVE KOTT  opined that such individuals  should also be                                                               
precluded from  serving on the  ANGPC board, since they  could be                                                               
deployed, thus leaving the board short of members.                                                                              
                                                                                                                                
REPRESENTATIVE ANDERSON objected.                                                                                               
                                                                                                                                
MS. CUTLER  indicated that the  sponsor doesn't have  any problem                                                               
with  Amendment  5.    She  asked  whether  there  might  be  any                                                               
constitutional issues raised by it.                                                                                             
                                                                                                                                
MS. COOK said not that she is aware of.                                                                                         
                                                                                                                                
REPRESENTATIVE ANDERSON removed his objection.                                                                                  
                                                                                                                                
CHAIR McGUIRE asked whether there  were any further objections to                                                               
Amendment 5.  There being none, Amendment 5 was adopted.                                                                        
                                                                                                                                
4:33:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  made a  motion to  adopt Amendment  6, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Page 5                                                                                                                     
                                                                                                                                
     delete lines 6 and 7                                                                                                       
                                                                                                                                
       replace with:  have extensive experience in one or                                                                       
     more of the following                                                                                                      
                                                                                                                                
     renumber accordingly                                                                                                       
                                                                                                                                
REPRESENTATIVE  KOTT explained  that  Amendment  6 would  rewrite                                                               
proposed AS  41.42.020((a)(3)(B).  He  said he has  some concerns                                                               
over  how the  current  language of,  "recognized competence  and                                                               
wide experience"  would be defined.   He opined that if  a person                                                               
has  extensive experience,  then he/she  is, in  fact, competent,                                                               
and  that they  oughtn't leave  room  for someone  to argue  over                                                               
whether that person is "recognized."                                                                                            
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Amendment 6.  There being none, Amendment 6 was adopted.                                                                        
                                                                                                                                
[Members  briefly mentioned  a language  change that  had already                                                               
been adopted as Amendment 1.]                                                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  whether the  board of  the ANGPC                                                               
should be confirmed by the legislature.                                                                                         
                                                                                                                                
MS. CUTLER offered her understanding  that Ms. Cook has issued an                                                               
opinion that doing so would not be constitutional.                                                                              
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he  would withdraw  that [concept]                                                               
for the moment.                                                                                                                 
                                                                                                                                
4:35:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  [made   a  motion   to  adopt   Conceptual                                                               
Amendment 7], that  no [public] member  [of the ANGPC  board] may                                                               
have current employment, either directly  or on a contract basis,                                                               
with a  company affiliated with  one of the [other  Mainline LLC]                                                               
members  or with  a  company that  primarily  performs oil  field                                                               
service work.                                                                                                                   
                                                                                                                                
MS. CUTLER  sought verification that Representative  Gara did not                                                               
mean to exclude retirees of the aforementioned companies.                                                                       
                                                                                                                                
REPRESENTATIVE GARA said he would  like to exclude those that are                                                               
either currently  working for such  companies or have  worked for                                                               
them within the prior two years.                                                                                                
                                                                                                                                
MS. CUTLER relayed  that she would like to speak  with Mr. Porter                                                               
about this issue  before providing the committee  with a position                                                               
on [Conceptual Amendment 7].                                                                                                    
                                                                                                                                
CHAIR McGUIRE  noted that this  issue could also be  addressed in                                                               
the House Finance Committee.                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  expressed a preference for  addressing it in                                                               
the House Judiciary Standing Committee.                                                                                         
                                                                                                                                
MS. COOK relayed  that she could include a "prior  two year" test                                                               
in the wording of [Conceptual Amendment 7].                                                                                     
                                                                                                                                
REPRESENTATIVE   COGHILL  pointed   out   that  legislators   are                                                               
precluded from acting  as lobbyists for only one  year after they                                                               
are no longer legislators.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  opined that  there  should  also be  a                                                               
stipulation that  a former board  member can't begin  working for                                                               
such a company immediately after his/her service on the board.                                                                  
                                                                                                                                
REPRESENTATIVE  ANDERSON noted  that  for  legislators, the  year                                                               
begins when their term of office  expires, not just from the date                                                               
they leave office.                                                                                                              
                                                                                                                                
REPRESENTATIVE KOTT concurred that  certain opportunities are not                                                               
available to legislators  for at least a year  [after their terms                                                               
expire].                                                                                                                        
                                                                                                                                
REPRESENTATIVE GARA,  in response to comments,  acknowledged that                                                               
a one-year restriction makes more sense.                                                                                        
                                                                                                                                
CHAIR  McGUIRE announced  that Conceptual  Amendment  7 has  been                                                               
amended such  that prospective board  members cannot  have worked                                                               
for  the  aforementioned  companies  within  one  year  of  being                                                               
appointed to the board.                                                                                                         
                                                                                                                                
REPRESENTATIVE   WILSON  said   she  would   prefer  a   two-year                                                               
restriction.                                                                                                                    
                                                                                                                                
4:44:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT expressed  a preference  for not  having any                                                               
time  restriction; such  a restriction  could limit  the pool  of                                                               
available  qualified people.   Furthermore,  former employees  of                                                               
the  aforementioned  companies  would  have nothing  to  gain  by                                                               
becoming board members.  He  indicated that perhaps a restriction                                                               
on seeking  employment with such  companies after serving  on the                                                               
board   might  be   appropriate,  but   pointed  out   that  such                                                               
restriction might raise constitutional issues.                                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG asked whether  the executive director or                                                               
other  staff of  the ANGPC  board  would also  be included  under                                                               
Conceptual Amendment 7, as amended.                                                                                             
                                                                                                                                
REPRESENTATIVE GARA  agreed with  Representative Kott  that there                                                               
probably  doesn't  need  to  be a  "cooling  off"  period  before                                                               
serving on the  board.  He emphasized that he  doesn't want board                                                               
members  to  also  be  working  for  one  of  the  aforementioned                                                               
companies at the same time they are serving on the board.                                                                       
                                                                                                                                
MS. COOK, in  response to a question, indicated  that she doesn't                                                               
see   any  constitutional   problem   with   clarifying  that   a                                                               
prospective board  member can't be presently  employed by certain                                                               
companies.   She questioned whether  this restriction  would also                                                               
apply to perspective board members that are state employees.                                                                    
                                                                                                                                
REPRESENTATIVE GARA  said he means  to just  restrict prospective                                                               
board members from being employed  by one of the private Mainline                                                               
LLC partners,  and pointed  out that  the bill  already precludes                                                               
state employees from serving on the board.                                                                                      
                                                                                                                                
MS. COOK, on the issue of  instituting a "cooling off" period for                                                               
board  members after  they have  served on  the board,  asked how                                                               
such a restriction would be enforced and who would enforce it.                                                                  
                                                                                                                                
REPRESENTATIVE GRUENBERG noted that language  on page 8, lines 8-                                                               
9, stipulates that the ANGPC board  shall, in its bylaws or other                                                               
governing  document,  adopt  conflict   of  interest  policy  and                                                               
procedures.                                                                                                                     
                                                                                                                                
MS.  COOK  pointed out,  however,  that  any  such could  not  be                                                               
enforced once  one is no  longer on  the board because  the board                                                               
won't have any enforcement powers over former board members.                                                                    
                                                                                                                                
The committee took an at-ease from 4:49 p.m. to 4:52 p.m.                                                                       
                                                                                                                                
4:52:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  made a motion to  amend Conceptual Amendment                                                               
7, as  amended, such that it  will only stipulate that  one can't                                                               
serve on the  ANGPC board if one  is also working for  one of the                                                               
aforementioned companies.   [This second amendment  to Conceptual                                                               
Amendment 7, as amended, was treated as adopted.]                                                                               
                                                                                                                                
REPRESENTATIVE ANDERSON  objected [to Conceptual Amendment  7, as                                                               
amended].                                                                                                                       
                                                                                                                                
MS. CUTLER  said she  would prefer that  the committee  delay its                                                               
decision regarding Conceptual Amendment  7, as amended, until she                                                               
has  had a  chance  to  speak with  Mr.  Porter.   She  expressed                                                               
concern with  including vague language about  people [employed by                                                               
companies  that]  deal  with  the other  three  partners  in  the                                                               
Mainline LLC.   The  sponsor, she relayed,  wants to  ensure that                                                               
there are competent  people serving on the board,  and given that                                                               
there is now a restriction that  a majority of board members must                                                               
be Alaskan residents, there are only  so many people in the state                                                               
with the required expertise and  almost all of them are connected                                                               
with the oil/gas industry in some fashion.                                                                                      
                                                                                                                                
REPRESENTATIVE GARA clarified that  he simply doesn't want people                                                               
to hold a position  on the board at the same  time that they hold                                                               
a position with one of the other Mainline LLC partners.                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG surmised that  the public would not want                                                               
the  ANGPC's board  members to  also be  working for  one of  the                                                               
other  companies at  the  same time  - such  would  be a  serious                                                               
conflict of interest.   He indicated that  he supports Conceptual                                                               
Amendment 7, as amended.                                                                                                        
                                                                                                                                
REPRESENTATIVE  KOTT suggested  that at  some point  it might  be                                                               
necessary  to draw  prospective board  members from  the pool  of                                                               
people  who are  working  in the  industry,  though the  governor                                                               
probably  ought to  only consider  appointing  people who  aren't                                                               
also working in  the industry; furthermore, the  governor has the                                                               
ability  to remove  a board  member for  cause if  he/she doesn't                                                               
perform up  to the  standards set  [in the  bill].   He suggested                                                               
leaving the language of the bill as is.                                                                                         
                                                                                                                                
4:58:27 PM                                                                                                                    
                                                                                                                                
A roll  call vote  was taken.   Representatives  McGuire, Wilson,                                                               
Gruenberg, and Gara voted in  favor of Conceptual Amendment 7, as                                                               
amended.    Representatives  Anderson, Coghill,  and  Kott  voted                                                               
against it.   Therefore, Conceptual Amendment 7,  as amended, was                                                               
adopted by a vote of 4-3.                                                                                                       
                                                                                                                                
CHAIR McGUIRE,  in response to  a question regarding  proposed AS                                                               
41.42.070, offered  her understanding that the  attorney general,                                                               
as  legal counsel  for the  ANGPC, will  have the  right to  hire                                                               
independent counsel as necessary.                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG  opined that there should  be a "cooling                                                               
off" period of at least one  year between serving on the board of                                                               
the ANGPC  and going to work  for one of the  [other Mainline LLC                                                               
partners].                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment 8,  to include a  provision that states that  the board                                                               
members and  the executive  director must agree  not to  work for                                                               
the  industry  for  at  least  one  year  after  leaving  his/her                                                               
position with the ANGPC.                                                                                                        
                                                                                                                                
REPRESENTATIVE  COGHILL  pointed  out that  [such  an  agreement]                                                               
would be unenforceable.                                                                                                         
                                                                                                                                
REPRESENTATIVE KOTT concurred.                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA offered  his belief  that such  an agreement                                                               
could be  enforced via  the filing of  an injunction,  perhaps at                                                               
least in the case of the executive director.                                                                                    
                                                                                                                                
REPRESENTATIVE  KOTT pointed  out that  [Conceptual Amendment  8]                                                               
doesn't address the situation of someone working under contract.                                                                
                                                                                                                                
MS.  CUTLER again  reiterated that  the administration  wants the                                                               
flexibility to  find the most  qualified people, and  pointed out                                                               
that Conceptual  Amendment 8 wouldn't  just restrict  people from                                                               
going to  work for the  other partners  of the Mainline  LLC, but                                                               
rather the entire industry; such  a restriction could potentially                                                               
discourage  someone who  might otherwise  be  very interested  in                                                               
working on the project.                                                                                                         
                                                                                                                                
CHAIR McGUIRE said  she don't disagree, but pointed  out that the                                                               
policy  behind having  a  "cooling  off" period  is  so that  the                                                               
decisions being made  are not going to  financially benefit those                                                               
making the decisions.   So although such a  restriction in future                                                               
employment  could  be  difficult  to  enforce,  she  agrees  with                                                               
Representative  Gruenberg's  point  regarding the  appearance  of                                                               
impropriety.                                                                                                                    
                                                                                                                                
5:06:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT  opined that the bill  already addresses such                                                               
situations and thus any further restrictions are unnecessary.                                                                   
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  amend   Conceptual                                                               
Amendment 8 such  that the  restriction would  only apply  to the                                                               
other partners of the Mainline LLC.                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG  added:   "The partners,  their parents,                                                               
or their subsidiaries."   [Conceptual Amendment 8  was treated as                                                               
amended in this fashion.]                                                                                                       
                                                                                                                                
MS. CUTLER pointed  out that the ANGPC will  be adopting conflict                                                               
of interest  policies, that  "the ethics Act"  will apply  to the                                                               
board members,  and that there is  a requirement that one  not do                                                               
something during the  course of one's service  that will directly                                                               
[benefit oneself].                                                                                                              
                                                                                                                                
MS. COOK  concurred that  there are  some restrictions  about the                                                               
kinds  of things  one can  do when  involved in  making decisions                                                               
directly affecting a particular  issue, but noted that Conceptual                                                               
Amendment 8, as  amended, seeks to restrict  employment after one                                                               
is no longer involved in the decision-making process.                                                                           
                                                                                                                                
REPRESENTATIVE GARA  remarked that the ethics  Act provisions are                                                               
useful  but not  perfect; for  example,  under that  Act one  can                                                               
serve two  masters as long as  one is not trying  to benefit both                                                               
of them.   "We just don't want you even  serving two masters," he                                                               
added.                                                                                                                          
                                                                                                                                
5:10:57 PM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted   in  favor   of  Conceptual   Amendment  8,   as  amended.                                                               
Representatives  Coghill,  Wilson,  Kott, McGuire,  and  Anderson                                                               
voted against it.  Therefore,  Conceptual Amendment 8, as amended                                                               
failed by a vote of 2-5.                                                                                                        
                                                                                                                                
REPRESENTATIVE WILSON  made a motion  to rescind  the committee's                                                               
action in  adopting Conceptual  Amendment 7,  as amended.   There                                                               
being no objection,  the question of whether  to adopt Conceptual                                                               
Amendment 7, as amended, was again before the committee.                                                                        
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara, McGuire, and                                                               
Gruenberg voted in  favor of Conceptual Amendment  7, as amended.                                                               
Representatives  Wilson,   Kott,  Anderson,  and   Coghill  voted                                                               
against  it.    Therefore,  Conceptual Amendment  7,  as  amended                                                               
failed by a vote of 3-4.                                                                                                        
                                                                                                                                
5:13:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COGHILL made a motion  to adopt Amendment 9, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
Pg. 6 line 29                                                                                                                   
     Delete "promptly"                                                                                                          
                                                                                                                                
Pg. 6 line 30 following "board"                                                                                                 
     Insert "within 30 days after the seat becomes vacant                                                                       
                                                                                                                                
REPRESENTATIVE  COGHILL remarked  that  a  similar amendment  was                                                               
being  considered  by  the  Senate,  and  opined  that  having  a                                                               
specific [timeframe] would be appropriate.                                                                                      
                                                                                                                                
REPRESENTATIVE KOTT  objected for  the purpose of  discussion; he                                                               
asked whether 30  days would be sufficient to  search out someone                                                               
with the necessary expertise.                                                                                                   
                                                                                                                                
MS.  CUTLER opined  that  it  would be  better  to  use the  term                                                               
"promptly".                                                                                                                     
                                                                                                                                
REPRESENTATIVE COGHILL characterized that term as subjective.                                                                   
                                                                                                                                
5:15:00 PM                                                                                                                    
                                                                                                                                
DENNIS DeWITT,  Special Staff  Assistant, Capitol  Office, Office                                                               
of the Governor,  said he appreciates the intent  of Amendment 9,                                                               
and   that  while   [the  administration]   doesn't  have   great                                                               
objections  to it,  as a  practical  matter, the  kind of  person                                                               
being  sought for  appointment  to  the ANGPC  board  is not  the                                                               
easiest   person  in   Alaska   to  find   given  the   expertise                                                               
requirements.   He questioned  what the  consequence would  be if                                                               
the governor  was not able  to fill  a vacancy within  the 30-day                                                               
timeframe.   "The  spirit is  willing, I  don't know  whether the                                                               
body can make it work," he remarked.                                                                                            
                                                                                                                                
REPRESENTATIVE KOTT indicated that that was also his concern.                                                                   
                                                                                                                                
REPRESENTATIVE COGHILL withdrew Amendment 9.                                                                                    
                                                                                                                                
5:17:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to proposed AS  41.42.080(b) -                                                               
specifically  the  language  which stipulates  that  the  ANGPC's                                                               
staff,  executive director,  and board  members must  immediately                                                               
disclose, in writing, any [financial]  interest in an entity with                                                               
an interest  in or doing  business with  the project or  an owner                                                               
entity of the  project - and pointed that a  person might have no                                                               
way  of knowing  whether  his/her  investment portfolio  includes                                                               
such an interest.                                                                                                               
                                                                                                                                
REPRESENTATIVE  GRUENBERG  made  a  motion  to  adopt  Conceptual                                                               
Amendment  10, to  add  [to  the end  of  the  first sentence  in                                                               
proposed  AS 41.42.080(b)]  the phrase,  "as soon  as it  becomes                                                               
known to the person".                                                                                                           
                                                                                                                                
MS. CUTLER offered  her belief that the sponsor  would not object                                                               
to such a change.                                                                                                               
                                                                                                                                
REPRESENTATIVE  GARA opined  that Conceptual  Amendment 10  would                                                               
not  solve the  problem, and  made a  motion to  amend Conceptual                                                               
Amendment 10  to say that  a mutual  fund does not  constitute an                                                               
interest that must be disclosed.                                                                                                
                                                                                                                                
REPRESENTATIVE GRUENBERG  agreed to  the amendment  to Conceptual                                                               
Amendment  10.   [The amendment  to Conceptual  Amendment 10  was                                                               
treated as adopted.]                                                                                                            
                                                                                                                                
REPRESENTATIVE COGHILL questioned the placement of the language.                                                                
                                                                                                                                
CHAIR  McGUIRE  acknowledged  that Conceptual  Amendment  10,  as                                                               
amended,  might  be better  placed  elsewhere  and so  should  be                                                               
considered conceptual in that regard.                                                                                           
                                                                                                                                
CHAIR  McGUIRE  asked  whether   there  were  any  objections  to                                                               
Conceptual  Amendment   10,  as  amended.     There  being  none,                                                               
Conceptual Amendment 10, as amended, was adopted.                                                                               
                                                                                                                                
[Following  was a  brief discussion  regarding how  the committee                                                               
would be proceeding.]                                                                                                           
                                                                                                                                
The committee took an at-ease from 5:21 p.m. to 5:24 p.m.                                                                       
                                                                                                                                
CHAIR  McGUIRE  announced that  the  committee  would recess  for                                                               
dinner.                                                                                                                         
                                                                                                                                
6:44:15 PM                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE  called  the House  Judiciary  Standing  Committee                                                               
meeting  back  to  order.     Representatives  McGuire,  Coghill,                                                               
Wilson, Anderson,  Kott, and Gara  were present at the  call back                                                               
to  order.   Representative Gruenberg  arrived as  the reconvened                                                               
meeting   was  in   progress.     Senator  Seekins   and,  again,                                                               
Representative Seaton were also in attendance.                                                                                  
                                                                                                                                
REPRESENTATIVE GARA  referred to  Conceptual Amendment  11, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Delete Findings                                                                                                            
                                                                                                                                
CHAIR  McGUIRE indicated  that she  was  objecting to  Conceptual                                                               
Amendment 11 for the purpose of discussion.                                                                                     
                                                                                                                                
MS. CUTLER, in response to a question, said:                                                                                    
                                                                                                                                
     We  would prefer  to have  the findings.   We  do think                                                                    
     that  it  would  be  helpful to  have  the  legislature                                                                    
     articulate the ... findings for  why the legislation is                                                                    
     necessary.   We ... recognize  that that is a  call for                                                                    
     you guys  to make, but  we do  think that they  do have                                                                    
     some value.   There was a question that  was asked with                                                                    
     respect  to  ...  how  does  a  court  really  look  at                                                                    
     findings.    I   think  it  sort  of   depends  on  the                                                                    
     circumstances of the  case and what's at  issue.  Often                                                                    
     what  you  find at  issue  in  that  kind of  case  is,                                                                    
     somebody tries to argue that  the findings either do or                                                                    
     don't provide some  sort of a power,  or whatever, that                                                                    
     isn't   explicitly  authorized   in  the   legislation.                                                                    
     Hopefully the  legislation does provide for  the powers                                                                    
     and the other  things that ... [the ANGPC]  is going to                                                                    
     need  to go  forward.   I guess  to sum  it all  up, we                                                                    
     would prefer to  have them, but we  recognize that it's                                                                    
     your  choice as  to whether  or not  they should  be in                                                                    
     there ....                                                                                                                 
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 11.    He pointed  out  that  nothing in  the  findings                                                               
specifically tells the  court how the legislature  would like the                                                               
court to  interpret the proposed  legislation; instead,  they are                                                               
all  statements  of   "hopes"  for  the  future   of  the  state.                                                               
Representative  Gara   opined  that  Representative   Stoltze  is                                                               
sometimes correct when  he's stated that findings  are often used                                                               
as a  form of  press release about  a bill.   He opined  that the                                                               
finding which  begins on page  2, line 28, is  inaccurate because                                                               
he  believes  that taking  royalty  in-kind  (RIK) will  actually                                                               
minimize the  benefits to Alaskans  by causing the state  to lose                                                               
money.    The  finding  that  says  acquiring  ownership  in  the                                                               
pipeline is  in the best interest  of the state is  debatable, he                                                               
opined, adding his  belief that to pretend that  all the findings                                                               
are true when many legislators think that they are not is wrong.                                                                
                                                                                                                                
REPRESENTATIVE   COGHILL   said   he    tends   to   agree   with                                                               
Representative Gara's  points, and remarked that  he doesn't know                                                               
that adopting  Conceptual Amendment 11 will  change the structure                                                               
of the ANGPC.                                                                                                                   
                                                                                                                                
6:49:59 PM                                                                                                                    
                                                                                                                                
MS.  CUTLER expressed  her  hope  that in  voting  to remove  the                                                               
findings  the legislature  is not  saying it  disagrees with  the                                                               
findings.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  GARA relayed  that  he would  next be  explaining                                                               
several  amendments  while the  committee  awaits  the return  of                                                               
Representative Gruenberg,  at which time the  amendments can then                                                               
be voted on.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA withdrew  Conceptual Amendment 11, indicating                                                               
that he would re-offer it later.                                                                                                
                                                                                                                                
6:51:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  referred to Amendment 12,  which, along with                                                               
some handwritten changes, read [original punctuation provided]:                                                                 
                                                                                                                                
     The corporation  must require an  annual audit  for the                                                                    
     state of  the operation of the  LLC.  A version  of the                                                                    
     audit    containing     information    not    otherwise                                                                    
     confidential under this statute  shall be made publicly                                                                    
     available.                                                                                                                 
                                                                                                                                
     (page 20)                                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA, offering  his  belief that  Mr. Porter  has                                                               
stated that the  ANGPC will be requesting an annual  audit of the                                                               
Mainline  LLC, remarked  that the  question then  becomes whether                                                               
any  of the  resulting information  will be  seen by  the public.                                                               
Conceptual Amendment  12 specifically  states that an  audit must                                                               
be asked for  annually by the ANGPC and that  the ANGPC must then                                                               
provide the  public with the  points of  that audit that  are not                                                               
confidential under the various provisions of this legislation.                                                                  
                                                                                                                                
REPRESENTATIVE GARA  referred to  Conceptual Amendment  13, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
       The LLC shall be governed by the LLC rules of the                                                                        
     state of Alaska                                                                                                            
                                                                                                                                
REPRESENTATIVE GARA  and CHAIR McGUIRE  remarked, "As  opposed to                                                               
Delaware."                                                                                                                      
                                                                                                                                
REPRESENTATIVE  GARA  referred to  [what  later  became known  as                                                               
Conceptual Amendment 15] which,  along with a handwritten change,                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     The LLC cannot sell any portion of its interest in the                                                                     
     mainline entity without the approval of the Governor                                                                       
                                                                                                                                
          p. 16                                                                                                                 
                                                                                                                                
REPRESENTATIVE GARA  referred to  the language  on page  16, line                                                               
26,  which says  in part,  "This  section does  not prohibit  the                                                               
corporation  from selling  assets", and  offered his  belief that                                                               
this language would  allow the ANGPC to sell  Alaska's 20 percent                                                               
interest  in the  pipeline.   He said  he wants  the governor  to                                                               
approve any  sale by  the ANGPC  of any  interest in  the state's                                                               
portion of the Mainline LLC.                                                                                                    
                                                                                                                                
MS.  CUTLER, in  response to  questions, relayed  that it  is the                                                               
plan for the "mainline entity" to be the Mainline LLC.                                                                          
                                                                                                                                
REPRESENTATIVE  GARA [again  made a  motion to  adopt] Conceptual                                                               
Amendment 11 [text provided previously].                                                                                        
                                                                                                                                
A roll  call vote  was taken.   Representatives  Gruenberg, Gara,                                                               
and  Coghill   voted  in  favor   of  Conceptual   Amendment  11.                                                               
Representatives  Kott,   Wilson,  McGuire,  and   Anderson  voted                                                               
against it.  Therefore, Conceptual  Amendment 11 failed by a vote                                                               
of 3-4.                                                                                                                         
                                                                                                                                
6:58:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  made a motion to  adopt Conceptual Amendment                                                               
12 [text provided previously].                                                                                                  
                                                                                                                                
MS. CUTLER  asked whether the  intent -  through use of  the word                                                               
"operation" - is  for the audit to be a  performance audit rather                                                               
than a financial audit.                                                                                                         
                                                                                                                                
REPRESENTATIVE  GARA   said  he   just  thought  that   the  term                                                               
"operation"   was  all   encompassing.     He  asked   whether  a                                                               
performance audit reviews the operations.                                                                                       
                                                                                                                                
MS. CUTLER, after  suggesting that perhaps someone  else might be                                                               
better able to address that  question, noted that the Legislative                                                               
Budget and Audit Committee does two  kinds of audits, one being a                                                               
performance  audit  -  for  example, an  audit  of  a  particular                                                               
program - and  that she is not  sure what kind of  audit is being                                                               
referenced in  Conceptual Amendment  12, and  so would  prefer to                                                               
discuss this  issue with Mr. Porter  as well as see  the specific                                                               
language  before  taking a  position  on  it.   She  offered  her                                                               
understanding that  under the Mainline  LLC agreement,  the ANGPC                                                               
will have  the ability to ask  for what are more  along the lines                                                               
of financial  audits of the  operations of the Mainline  LLC, but                                                               
she does  not know how  the details  of those provisions  will be                                                               
put together  such that  she can  say whether  the administration                                                               
would  have  any objections  to  Conceptual  Amendment 12.    She                                                               
acknowledged, however, that she and  Mr. Porter have said that it                                                               
would  be the  intent  of the  ANGPC to  audit  the Mainline  LLC                                                               
operations to ensure  that there weren't problems  and then share                                                               
whatever information could be made public.                                                                                      
                                                                                                                                
REPRESENTATIVE COGHILL noted  that language on page  20, lines 9-                                                               
14, says in part:                                                                                                               
                                                                                                                                
     The corporation shall  provide annual audited financial                                                                    
     statements to  the governor and the  Legislative Budget                                                                    
     and Audit  Committee on or  before the 150th  day after                                                                    
     the end  of each fiscal  year.  The  Legislative Budget                                                                    
     and Audit  Committee may provide for  an internal audit                                                                    
     of the corporation's books,  records, and accounts, and                                                                    
     for annual  operational and performance  evaluations of                                                                    
     the corporation's operations and budget."                                                                                  
                                                                                                                                
REPRESENTATIVE   COGHILL    surmised,   therefore,    that   [the                                                               
legislature] is already  getting an inside look, and  so he isn't                                                               
sure  that anything  beyond that  is  [practical].   Furthermore,                                                               
according to proposed  AS 41.42.510, a report  of the corporation                                                               
will be made available by September 30 of each year.                                                                            
                                                                                                                                
REPRESENTATIVE  GARA pointed  out, however,  that the  audits and                                                               
report in the  aforementioned language are of  the ANGPC, whereas                                                               
he  wants the  ANGPC  to conduct  an audit  of  the Mainline  LLC                                                               
because the  public is going  to want  to know that  the Mainline                                                               
LLC is  operating properly;  thus he  used the  term "operation".                                                               
And although  Mr. Porter  said that  as a  20 percent  owner, the                                                               
ANGPC  will  of  course  ask  for audits  of  the  Mainline  LLC,                                                               
currently  nothing  in  the  bill  requires  the  ANGPC  to  make                                                               
information   from  those   audits  available   to  the   public.                                                               
Conceptual Amendment  12 says that  the state  - via the  ANGPC -                                                               
shall ask  for annual audits  of the  Mainline LLC and  that non-                                                               
confidential information gleaned from  those audits shall be made                                                               
available to  the public.   Without Conceptual Amendment  12, the                                                               
state won't  receive information  regarding whether  the Mainline                                                               
LLC  is efficient,  or whether  it's  charging too  much for  the                                                               
price of gas,  or whether it's deterring entry  of producers' gas                                                               
into the pipeline, or whether there is waste.                                                                                   
                                                                                                                                
REPRESENTATIVE  GARA,  in  response to  comments  and  questions,                                                               
again  explained that  he is  proposing that  the ANGPC,  not the                                                               
Legislative  Budget  and  Audit Committee,  annually  request  an                                                               
independent audit of  the Mainline LLC, and  that the information                                                               
from those  audits that  is not confidential  be provided  to the                                                               
public.                                                                                                                         
                                                                                                                                
7:08:21 PM                                                                                                                    
                                                                                                                                
MS. CUTLER, in  response to a question and  comment, offered that                                                               
although  the  Legislative Budget  and  Audit  Committee has  the                                                               
right to  audit the ANGPC,  Representative Gara is speaking  of a                                                               
different audit power, that being that  the ANGPC, as a member of                                                               
the Mainline LLC, will have the  right to audit the operations of                                                               
the Mainline  LLC.  She  again noted  that Mr. Porter  has stated                                                               
that it  is the intent for  the ANGPC -  as a means of  doing its                                                               
duty to ensure that the Mainline  LLC is performing properly - to                                                               
ask for  that kind  of audit  on the  operations of  the Mainline                                                               
LLC, perhaps  annually, perhaps  more often.   The idea  that any                                                               
non-confidential information  that comes out of  that audit could                                                               
be made  public is  not a problem,  she remarked,  surmising that                                                               
that  information could  be made  public through  the Legislative                                                               
Budget  and Audit  Committee audit  of the  ANGPC or  through the                                                               
annual report  provided for in  proposed AS 41.42.510  or through                                                               
some  other method.   Her  concern, she  reiterated, is  that she                                                               
doesn't know the exact wording that  will be put in place via the                                                               
adoption  of   Conceptual  Amendment   12,  though,   again,  the                                                               
administration's intent is to make  sure that the Mainline LLC is                                                               
operating properly.                                                                                                             
                                                                                                                                
A roll call  vote was taken.  Representatives  Gruenberg and Gara                                                               
voted  in  favor of  Conceptual  Amendment  12.   Representatives                                                               
McGuire, Wilson,  Anderson, Coghill,  and Kott voted  against it.                                                               
Therefore, Conceptual Amendment 12 failed by a vote of 2-5.                                                                     
                                                                                                                                
7:11:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 13 [text provided previously].                                                                                        
                                                                                                                                
REPRESENTATIVE COGHILL objected for the purpose of discussion.                                                                  
                                                                                                                                
REPRESENTATIVE GARA  - offering his understanding  that those who                                                               
are  negotiating  the  Mainline  LLC  agreement  intend  for  the                                                               
Mainline LLC  to be  governed by  the LLC  laws of  Delaware, and                                                               
that  the  legislature's  consultants  have  indicated  that  the                                                               
state, as  a minority interest  holder, will get  less protection                                                               
and  have fewer  rights under  Delaware law  than it  would under                                                               
Alaska law - opined that  it will compromise Alaska's sovereignty                                                               
to say that  Alaska's laws don't apply to the  biggest project in                                                               
the  history of  the  state.   He  offered  his  belief that  the                                                               
legislature should require  that the LLC laws of  Alaska apply to                                                               
the Mainline LLC.                                                                                                               
                                                                                                                                
MS. CUTLER said:                                                                                                                
                                                                                                                                
     I stated several  reasons for why, as  a minority owner                                                                    
     in  the [Mainline  LLC],  the  state strongly  believes                                                                    
     that Delaware  law will favor  it and  strongly opposes                                                                    
     this kind of  an amendment. ...  I heard  Mr. Gildan to                                                                    
     say,  when he  responded to  what I  said, that  he was                                                                    
     sort  of  positing  the theoretical  construct  of  the                                                                    
     opposite  side,  which  was that  the  majority  owners                                                                    
     could also act  in their self interest as  well, and of                                                                    
     course that's  true, but ...  he also said that  he was                                                                    
     not familiar  with what was  going on in  the [Mainline                                                                    
     LLC] negotiations  and that he  recognized that  it was                                                                    
     just  a  theoretical  point   as  opposed  to  actually                                                                    
     dealing   with  the   facts  of   the  [Mainline   LLC]                                                                    
     negotiations themselves.                                                                                                   
                                                                                                                                
     And  furthermore I  ...  would just  point  out that  I                                                                    
     think that  with respect to the  minority interest that                                                                    
     we're going  to have,  that's probably  ... potentially                                                                    
     what's  important  to  the  state,  more  so  than  the                                                                    
     majority interest  of the parties. ...  As I understand                                                                    
     it, ...  I think this is  the kind of thing  that would                                                                    
     ...  - if  it were  to remain  as part  of the  overall                                                                    
     legislative  practice -  ...  have  a very  detrimental                                                                    
     impact on  the possibility  of this  particular project                                                                    
     coming together.                                                                                                           
                                                                                                                                
REPRESENTATIVE COGHILL characterized  the sovereignty question as                                                               
a  legitimate one.   He  said he  is envisioning  the state  as a                                                               
[minority interest holder] and having  an issue with the basis of                                                               
LLC law, having  to go to court in Delaware,  as a state, amongst                                                               
aggrieved  partners; it  strikes him  as  odd in  that the  state                                                               
could be subject  to the laws [of another state],  and this is of                                                               
concern to  him.  He  acknowledged, though, that if  the Mainline                                                               
LLC is  organized under  Alaska law, then  the state,  which will                                                               
have the negotiating power, could change those laws.                                                                            
                                                                                                                                
7:16:30 PM                                                                                                                    
                                                                                                                                
MS. CUTLER  characterized that concern  as valid, and  noted that                                                               
one  of  her  first  questions  when  getting  involved  in  this                                                               
legislation  was,  why is  the  Mainline  LLC being  incorporated                                                               
under Delaware law  when Alaska already has an LLC  statute.  The                                                               
thinking of  the state on this  issue, she relayed, is  that as a                                                               
minority  interest  holder,  it  will  be  in  the  state's  best                                                               
interest for the  Mainline LLC to be  incorporated under Delaware                                                               
law.  She offered her belief that  it is not unusual [for a state                                                               
to]  to allow  the  laws  of another  state  to  apply; [case  in                                                               
point,]  the 150,000  LLCs  incorporated under  the  LLC laws  of                                                               
Delaware  are not  all operating  within the  state of  Delaware.                                                               
Whether to incorporate  under Delaware law is a  policy call, she                                                               
remarked, and  she does not  view it, necessarily, as  a question                                                               
of giving  up the state's sovereignty  so much as allowing  for a                                                               
known set of rules to govern  the Mainline LLC agreement.  Again,                                                               
it  is   the  administration's  view  that   incorporating  under                                                               
Delaware  law  will  be  the  best way  to  protect  the  state's                                                               
minority interest.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GARA   argued,  however,  that  Mr.   Gildan  has                                                               
indicated  that Delaware  law will  favor  the majority  interest                                                               
owners - those who, together, will  own 80 percent of the project                                                               
- by providing weak  duties for them as well.   The LLC laws that                                                               
the Mainline  LLC are incorporated  under will determine  how the                                                               
members  will treat  each other  with  regard to  the sharing  of                                                               
information, the degree of fair  dealing and honesty that must be                                                               
accorded each other, and what  accounting and fair conduct duties                                                               
must be observed.   He opined that as a  minority interest owner,                                                               
the  state should  want  the  other owners  to  accord it  strong                                                               
duties  with   regard  to   fair  dealing,   forthrightness,  and                                                               
accountability.   Alaska  laws  will be  more  protective of  the                                                               
state, and he opined that  it's important to get that protection,                                                               
particularly since -  according to his understanding  - the state                                                               
won't  have  any veto  power  under  the Mainline  LLC  agreement                                                               
because  everything will  be decided  by a  majority vote  and so                                                               
Alaska will lose all the votes.                                                                                                 
                                                                                                                                
REPRESENTATIVE  COGHILL, on  the  latter point,  said, "We  don't                                                               
know that."                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  concurred, but  argued that that's  what has                                                               
been represented to him.                                                                                                        
                                                                                                                                
7:21:17 PM                                                                                                                    
                                                                                                                                
MS.  CUTLER  asked  that  the state's  chief  negotiator  of  the                                                               
Mainline LLC  agreement be  allowed to  provide comments  on this                                                               
issue.                                                                                                                          
                                                                                                                                
The committee took an at-ease from 7:22 p.m. to 7:23 p.m.                                                                       
                                                                                                                                
NICHOLAS  J. SPILIOTES,  Attorney  at Law,  Morrison &  Foerster,                                                               
LLP,  relayed  that he  has  been  working  on the  Mainline  LLC                                                               
agreement on behalf of the State of Alaska for about 18 months.                                                                 
                                                                                                                                
CHAIR  McGUIRE   recounted  for  him  the   discussion  thus  far                                                               
regarding Conceptual Amendment 13.                                                                                              
                                                                                                                                
MR. SPILIOTES said  he can see why  on its face it  would seem to                                                               
make sense  to have Alaska law  govern the Mainline LLC  and have                                                               
that entity be  an Alaskan LLC, and  surmised that Representative                                                               
Gara is  concerned about the duty  of care with regard  to things                                                               
like loyalty and fiduciary duties in an LLC.                                                                                    
                                                                                                                                
REPRESENTATIVE GARA concurred.                                                                                                  
                                                                                                                                
MR. SPILIOTES explained:                                                                                                        
                                                                                                                                
     We all looked  at this issue on the  state's side, and,                                                                    
     setting  aside  all  the other  stuff  you've  probably                                                                    
     heard - which  is that most oil and  gas joint ventures                                                                    
     are  ...  Delaware  LLC,  and   Delaware  has  a  fully                                                                    
     developed corporate  law, and all  that stuff -  one of                                                                    
     the  real key  issues that  has evolved  for the  state                                                                    
     with  the negotiations  over the  past ...  year and  a                                                                    
     half  has  been  the  need   for  the  state  to  have,                                                                    
     essentially,  ...  the  unfettered right  to  make  its                                                                    
     decisions   within  the   context  of   the  management                                                                    
     committee in  whatever way it deems  appropriate in its                                                                    
     own interests.                                                                                                             
                                                                                                                                
     And the  reason why this is  particularly important and                                                                    
     a little different than it  is for ... the producers is                                                                    
     that the state  - [the ANGPC] - is going  to have as an                                                                    
     affiliate the State of Alaska,  and the State of Alaska                                                                    
     will  have, I  think, a  broader set  of interests  and                                                                    
     concerns with respect to this  project.  And when I say                                                                    
     project, I don't mean just  the pipeline but I mean the                                                                    
     total project  - ...  the gas  marketing side,  the gas                                                                    
     sales side,  regulation of the  pipeline, environmental                                                                    
     issues,  tax [issues]  - I  mean the  whole panoply  of                                                                    
     state interests,  and [the ANGPC], although  it will be                                                                    
     a public corporation  and the idea is  it's supposed to                                                                    
     be  as commercial  as possible,  it  is in  fact not  a                                                                    
     commercial   entity  and   it's  part   of  the   state                                                                    
     government.                                                                                                                
                                                                                                                                
     So  one of  our concerns  was  that we  don't want  the                                                                    
     producers to be able to  sue us for breach of fiduciary                                                                    
     [duty]  or duties  such as  duty of  care [or]  duty of                                                                    
     loyalty.    If the  state  has  a  blocking vote  on  a                                                                    
     particular  item -  and  we  haven't finalized  exactly                                                                    
     where  there  are going  to  blocking  votes and  where                                                                    
     there won't be, but the  state will have blocking votes                                                                    
     on a  very ... significant  number of items -  [and] if                                                                    
     the  state  decides  to  block  and  it's  not  in  the                                                                    
     interest  of the  other  members and  it's  not in  the                                                                    
     interest of the [Mainline LLC]  itself, that could be a                                                                    
     real problem.                                                                                                              
                                                                                                                                
     The  producers have  a similar  concern  but for  other                                                                    
     reasons:  ... they actually,  in all of their deals ...                                                                    
     that we know  about ..., fight with each  other all the                                                                    
     time,  and ...  any of  the three  don't want  to have,                                                                    
     vis-a-vis  themselves, any  obligations, any  fiduciary                                                                    
     duties, so  that they can't  vote or ... [so]  they can                                                                    
     be  challenged  if  they  vote   solely  in  their  own                                                                    
     interest and make  a decision for any  reason under the                                                                    
     sun  including ...  [simply  that  the producers  don't                                                                    
     like each other]. ...                                                                                                      
                                                                                                                                
     So it  works for them as  well as for us,  but that's a                                                                    
     key  element, and  I think,  again, initially  it might                                                                    
     not appear to  be favorable for the state,  but I think                                                                    
     ... we  concluded that ...  having the kind  of minimal                                                                    
     duties  to  each other  -  because  the state  is  very                                                                    
     different  than the  producers  ... -  makes  a lot  of                                                                    
     sense. ...                                                                                                                 
                                                                                                                                
7:30:29 PM                                                                                                                    
                                                                                                                                
MS. CUTLER asked  Mr. Spiliotes to discuss the  issue of blocking                                                               
votes  and   veto  powers,  and   the  issue  of   whether  being                                                               
incorporated under  Delaware law would improperly  interfere with                                                               
the state's sovereignty.                                                                                                        
                                                                                                                                
MR.  SPILIOTES, on  the  issue of  blocking  votes, relayed  that                                                               
there are going to be about 50  or 60 different votes made in the                                                               
Mainline  LLC  by the  management  committee,  and a  significant                                                               
number of  them will be majority  votes wherein any three  of the                                                               
four members  can approve  something, but  there will  be another                                                               
category of super majority votes  requiring three out of four [to                                                               
agree], as well as another  category of votes requiring unanimous                                                               
or near  unanimous agreement.  For  the latter type of  votes, if                                                               
the state  votes "no", than it's  a block and whatever  was being                                                               
voted on  doesn't happen,  and the state  is still  negotiating a                                                               
significant  number of  those key  votes.   With regard  to those                                                               
blocking  votes, one  of the  concerns is  that if  a member  has                                                               
fiduciary duties to  other the members or the  Mainline LLC, then                                                               
a vote by  the state to block something the  other members are in                                                               
favor of could  result in them suing the state  for breaching its                                                               
fiduciary duties.                                                                                                               
                                                                                                                                
MR. SPILIOTES said, for example,  that in a situation wherein the                                                               
Mainline LLC  is involved in  litigation with another  entity and                                                               
the other  members want to  settle, the state, after  taking into                                                               
account  all its  sovereign and  state-regulatory interests  with                                                               
respect to the  project, ought to be able to  vote against such a                                                               
settlement  - if  it  feels that  doing  so is  not  in the  best                                                               
interest of  the state - without  being sued for breach  of duty.                                                               
The Delaware LLC  statutes permit the parties  to structure their                                                               
obligations to each other in just  about any way the parties want                                                               
to,  and  what   the  state  is  seeking  in   the  Mainline  LLC                                                               
negotiations is  the total  freedom, via  Delaware LLC  laws, for                                                               
the  ANGPC  to vote  and  block  and  do  whatever it  wants  for                                                               
whatever  reason -  even  a  reason unrelated  to  the project  -                                                               
without being challenged.                                                                                                       
                                                                                                                                
7:34:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA acknowledged  that  the legislature  doesn't                                                               
want the state  to be sued for standing up  for its own interest,                                                               
but  offered his  understanding that  an LLC  member will  always                                                               
have  the right  to vote  to promote  its own  financial interest                                                               
regardless of  whether it is  incorporated under Delaware  law or                                                               
Alaska law.                                                                                                                     
                                                                                                                                
MR. SPILIOTES pointed  out, though, that at  least under Delaware                                                               
law, the only  duty that can't be contracted away  is the duty to                                                               
act in  good faith,  so as  long as  a member  is acting  in good                                                               
faith,  it can  decide why  it  will vote  and how  it will  vote                                                               
without being  challenged.  The  concern regarding  stepping away                                                               
from just that  bare minimum duty of good faith  and fair dealing                                                               
and then  layering on  fiduciary obligations,  duty of  care, and                                                               
duty of  loyalty is  that it  allows a  member to  potentially be                                                               
challenged  for a  vote  that  was not  necessarily  in the  best                                                               
interest  of  the   entity  as  a  whole.     "From  the  state's                                                               
perspective,  we want  to have  unfettered freedom  and not  have                                                               
imputed obligations  under common  law or  under a  statute [that                                                               
would]  essentially muck  up the  waters for  the state,  and the                                                               
producers  want  the  same  thing  for  their  own  reasons,"  he                                                               
remarked.                                                                                                                       
                                                                                                                                
MR. SPILIOTES added:                                                                                                            
                                                                                                                                
     For example, ...  if you have a board  of directors ...                                                                    
     in   a  corporation,   [and]  if   a   director  is   a                                                                    
     shareholder, he can't  act just in the  interest of his                                                                    
     one ...  [share]; he  has to  think more  broadly about                                                                    
     the whole  corporation, and the board  of directors has                                                                    
     fiduciary duties to all shareholders.   What we want in                                                                    
     the [Mainline  LLC] is for  [the] state to have  a duty                                                                    
     only to  itself, and so long  as it acts in  good faith                                                                    
     and deals  fairly with the  other members, it  can't be                                                                    
     challenged.                                                                                                                
                                                                                                                                
7:38:02 PM                                                                                                                    
                                                                                                                                
MR. SPILIOTES, in response to a comment, he said:                                                                               
                                                                                                                                
     There   are   different  crosscutting   alliances   and                                                                    
     interests that  ... have already formed,  and that will                                                                    
     form, among  the parties to  the pipeline.  One  of the                                                                    
     three producers  - and ...  it hasn't been  decided yet                                                                    
     [which one] - ... is going  to be the operator, and the                                                                    
     operator will  ... play the  lead role in  the project.                                                                    
     The  other two  producers -  their pipeline  entities -                                                                    
     will  be non-operators  along with  the  state.   There                                                                    
     actually  is a  fair  amount of  alignment of  interest                                                                    
     among  the three  non-operators to  make sure  that the                                                                    
     operator  is   doing  the  right  thing,   ...  broadly                                                                    
     defined, in terms of entering  into contracts, in terms                                                                    
     of  committing the  [Mainline LLC],  [and] in  terms of                                                                    
     engaging the right advisors. ...                                                                                           
                                                                                                                                
     So there's  a situation where  you really don't  have a                                                                    
     majority oppressing a minority.   One of the [dominant]                                                                    
     crosscutting cleavages  in this  entity is going  to be                                                                    
     operator  versus   non-operator.  ...  We   don't  know                                                                    
     exactly  what  the  percentage interest  of  the  three                                                                    
     producers is  going to be,  but there's going to  be no                                                                    
     one  that's  going  to  have   a  majority.    So  it's                                                                    
         conceivable that you have an operator with 30-                                                                         
     something  percent,  and  then   you  have  three  non-                                                                    
     operators who have  a majority.  So I  think I wouldn't                                                                    
     necessarily always look  at it as if  the state's going                                                                    
     to  be in  the  minority; there  is  no majority  owner                                                                    
     here.                                                                                                                      
                                                                                                                                
     Although there  are three  pipeline companies  and they                                                                    
     do  have aligned  interests on  many things,  they will                                                                    
     not always be  aligned, and, in fact,  ... an important                                                                    
     fundamental aspect  of the [Mainline  LLC] is  going to                                                                    
     be  [that  it will  be]  one  producer company  against                                                                    
     three non-operators,  and the  state's going to  have a                                                                    
         very close set of interests with the other non-                                                                        
     operators.   The state, as  a 20 percent owner,  ... is                                                                    
     negotiating this  set of  rights it  feels it  needs in                                                                    
     order  to  participate as  a  full  ... member  in  the                                                                    
     project, and  I think  that having  protections imputed                                                                    
     in  from   the  common  law  into   the  [Mainline  LLC                                                                    
     agreement] - when, in fact,  what we're doing is really                                                                    
     putting everything ...  the state wants to  have in the                                                                    
     [Mainline LLC agreement] -  isn't really something that                                                                    
     is an unalloyed benefit. ...                                                                                               
                                                                                                                                
     The state's  not necessarily ... always  in a minority,                                                                    
     there's  no  one with  a  majority,  and we  can't  ...                                                                    
     assume  that the  three producers  will  be aligned  in                                                                    
     their interests.                                                                                                           
                                                                                                                                
7:41:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA asked whether the  state will have veto power                                                               
to  stop the  majority members  from  seeking from  the FERC  the                                                               
ability to charge what the state  might consider to be too high a                                                               
price for transportation.                                                                                                       
                                                                                                                                
MR.  SPILIOTES relayed  that  the "FERC  votes"  are still  under                                                               
discussion in  the negotiations, and  that he would  be deferring                                                               
to  Robert  H.  Loeffler,  his  firm's  "FERC  expert,"  on  such                                                               
matters.   With regard to  the ANGPC  having a blocking  vote, if                                                               
duties  additional  to the  ones  provided  by Delaware  law  are                                                               
imposed, then the other members  - the oil companies, which don't                                                               
need  any protection  -  will  have the  right  to challenge  the                                                               
state's blocking  vote on the  basis that the state  breached its                                                               
additional duties.                                                                                                              
                                                                                                                                
MS. CUTLER  offered her belief  that generally the FERC  will set                                                               
tariffs based on what's fair  and reasonable, rather than on what                                                               
the parties propose.                                                                                                            
                                                                                                                                
MR.  SPILIOTES  concurred;  the  FERC   will  do  what  it  wants                                                               
regardless of what the members  propose and regardless of whether                                                               
the state has the ability to block a particular proposal.                                                                       
                                                                                                                                
REPRESENTATIVE GARA  pointed out, though,  that the rates  set by                                                               
the FERC  will be influenced greatly  by what is being  sought by                                                               
the members of the Mainline LLC.   He asked Mr. Spiliotes whether                                                               
he is aware of any provision  in Alaska's LLC statutes that would                                                               
prevent the  state from voting  in a  way that protected  its own                                                               
financial interest.                                                                                                             
                                                                                                                                
MR. SPILIOTES said he is  not aware of anything, but acknowledged                                                               
that he is not familiar with Alaska LLC law.                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  asked Mr. Spiliotes  whether he is  aware of                                                               
any other  state which has LLC  laws that would preclude  it from                                                               
voting in a way that protects its own financial interest.                                                                       
                                                                                                                                
MR.  SPILIOTES instead  reiterated that  under Delaware  LLC law,                                                               
there is  a freedom to  contract away all fiduciary  duties other                                                               
than the duty  of good faith and fair dealing,  and surmised that                                                               
this is one reason why  over 150,000 LLCs have incorporated under                                                               
Delaware law.                                                                                                                   
                                                                                                                                
7:48:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA   offered   his  understanding   that   the                                                               
legislature's  consultants  say  that  minority  rights  will  be                                                               
better  protected   under  Alaska's   LLC  laws  as   opposed  to                                                               
Delaware's LLC laws, and that  there is no evidence that Alaska's                                                               
LLC laws  will pose  a danger  to the  state as  a member  of the                                                               
Mainline  LLC.    Alaska  will  be  "a  minority  owner  on  very                                                               
important issues where we won't  have a veto power," he remarked,                                                               
adding  that  this   is  a  big  concern   of  the  legislature's                                                               
consultants.   Alaska's LLC  laws won't  preclude the  ANGPC from                                                               
voting in  the state's best  interest, but it will  impose duties                                                               
to  be honest  and  duties  not to  hide  things  from the  other                                                               
parties,  and he  wants those  duties to  be strong,  he relayed,                                                               
because Alaska, as a 20 percent  owner, will be at a disadvantage                                                               
in  the  Mainline LLC  agreement.    So  for  both the  issue  of                                                               
sovereignty and  the concerns that the  legislature's consultants                                                               
have expressed, it's  important that the state  have Alaska's LLC                                                               
laws apply, he opined.                                                                                                          
                                                                                                                                
MR.  SPILIOTES opined  that Delaware  has a  "very well-developed                                                               
jurisprudence of corporate governance,"  and surmised that that's                                                               
why Delaware is the preferred venue for complex joint ventures.                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  pointed out that there  is a difference                                                               
between "preferred venue" and choice of law.                                                                                    
                                                                                                                                
MR.  SPILIOTES  clarified that  he  meant  that Delaware  is  the                                                               
preferred location for incorporating an LLC.                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  noted  that   even  in  his  field  of                                                               
practice the  issue of choice  of law comes up  not infrequently.                                                               
He surmised  that people/entities  from the  East Coast  are more                                                               
used to dealing with Delaware  law whereas Alaska courts are used                                                               
to dealing  with Alaska law  and are  very familiar with  it, and                                                               
presumably  any litigation  [occurring because  of this  project]                                                               
will  largely  take place  in  Alaska  courts.   Again,  Alaska's                                                               
lawyers, judges, and courts are  used to dealing with Alaska law,                                                               
not Delaware law.                                                                                                               
                                                                                                                                
MS.  CUTLER  reiterated  her  belief  that  Mr.  Gildan,  in  his                                                               
comments  regarding  Delaware law,  was  simply  speaking from  a                                                               
theoretical  standpoint  and  is   not  that  familiar  with  the                                                               
particular facts  and circumstances  at issue in  negotiating the                                                               
Mainline  LLC  agreement.    Mr.   Spiliotes,  however,  is  very                                                               
familiar  with  the  negotiations  and so  brings  to  the  table                                                               
knowledge of  what is specifically  at issue in the  Mainline LLC                                                               
agreement, Ms. Cutler remarked.                                                                                                 
                                                                                                                                
7:54:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA remarked:                                                                                                   
                                                                                                                                
     People come up from "Outside,"  they come up here, they                                                                    
     assume  that we're  not talented,  they assume  that we                                                                    
     don't  know  what  we're  doing,  and  it's  the  exact                                                                    
     opposite.    The reason  our  constitution  is so  much                                                                    
     better  than the  constitutions of  other states  is we                                                                    
     saw what  everybody did for  a long time and  we picked                                                                    
     the best things  and we came up  with our constitution.                                                                    
     ... We  also have  a later  LLC law  in this  state but                                                                    
     it's not like  we made it up -  this legislature looked                                                                    
     at  what  other  states  did,  and  they  picked  model                                                                    
     provisions from  the model  code, they  picked whatever                                                                    
     wrinkles worked out best in the other places.                                                                              
                                                                                                                                
     It's not  like we picked the  law out of thin  air, and                                                                    
     we  often  benefit from  seeing  what's  not worked  in                                                                    
     other places,  and we end  up with better things.   And                                                                    
     this  conjecture  that  our   law  maybe  is  newer  so                                                                    
     therefore  isn't somehow  enforceable or  interpretable                                                                    
     is  just  complete  conjecture;  ...  there's  been  no                                                                    
     example that anybody's pointed out  to where our law is                                                                    
     deficient.  So it's the  sovereignty issue and it's the                                                                    
     main point of  our consultants - we  know that Delaware                                                                    
     [law] protects  minorities in a lesser  way than Alaska                                                                    
     law does.                                                                                                                  
                                                                                                                                
7:55:26 PM                                                                                                                    
                                                                                                                                
CHAIR  McGUIRE noted,  though, that  she has  been approached  by                                                               
people  asking that  she introduce  legislation  that would  make                                                               
Alaska's LLC laws more like  Delaware's LLC laws.  Therefore, not                                                               
everyone agrees that  Alaska's LLC laws are  the most progressive                                                               
and  shouldn't be  changed; furthermore,  perhaps changes  to the                                                               
deficiencies in  Alaska's LLC laws might  encourage more business                                                               
incorporation  in the  state.   And although  Alaska will  hold a                                                               
minority interest  in the Mainline  LLC, the state is  looking at                                                               
going into business  via the ANGPC, and Delaware has  long been a                                                               
preferred place  to do business  for a  variety of reasons.   She                                                               
said she  would continue  to look  at the  issue of  how minority                                                               
interests are  treated, but  pointed out  that in  some instances                                                               
the Legislature's consultant's opinions  have turned around after                                                               
he'd had  a chance  to speak  with [Ms.  Cutler and  Mr. Porter].                                                               
She predicted  that a more  [in depth]  look might reveal  that a                                                               
lot   of  Alaska   companies   and   partnerships  actually   are                                                               
incorporated  in Delaware.    She remarked  that  a vote  against                                                               
Conceptual  Amendment  13  should  not be  construed  as  a  vote                                                               
against Alaska or  its laws or as a sign  that the legislature is                                                               
caving  into   the  oil  companies   and  shirking   the  state's                                                               
responsibility as a minority interest holder.                                                                                   
                                                                                                                                
7:59:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA, in response to  a question, relayed that the                                                               
bill itself doesn't stipulate that  Delaware law will apply; that                                                               
stipulation is part of the Mainline LLC agreement.                                                                              
                                                                                                                                
CHAIR  McGUIRE  suggested  that   Conceptual  Amendment  13  will                                                               
authorize  incorporation  under Alaska  law  as  a tenet  of  the                                                               
Mainline LLC agreement.                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG  offered his  belief that  generally the                                                               
law that applies will be the  law of the states where the parties                                                               
reside - and  in this situation, one of the  parties is the State                                                               
of  Alaska -  or where  the contract  is to  be performed.   This                                                               
contract is to be performed, at  least for the Alaska portion, in                                                               
Alaska, and the  "center of gravity" for this  contract is Alaska                                                               
-  the contract  is  with the  State  of Alaska  and  it's to  be                                                               
largely performed in Alaska.  He elaborated:                                                                                    
                                                                                                                                
     Under  choice  of law,  the  parties  can contract  for                                                                    
     another jurisdiction's  law to apply, and  that is done                                                                    
     sometimes in these  cases, but if nothing  is said, the                                                                    
     default rule would be the  center of gravity rule here,                                                                    
     where the  parties reside  in the  state of  Alaska and                                                                    
     where the contract's to be  performed.  So we are doing                                                                    
     something that's at least a  little unusual:  (indisc.)                                                                    
     the  law  of  a  state based  on  that  state's  public                                                                    
     policy, and we're favoring that  over the policy of our                                                                    
     own state.   And I want  you to be aware  [that] if you                                                                    
     reject this amendment, that  that's setting a precedent                                                                    
     that  in  other major  contracts  this  state may  well                                                                    
     adopt  the law  of another  state  over its  own.   And                                                                    
     that's  something   that  I   think  has   some  policy                                                                    
     implications  that  we  ought to  really  be  concerned                                                                    
     about.                                                                                                                     
                                                                                                                                
CHAIR McGUIRE remarked that a  different type of analysis must be                                                               
done when  entering into a venture  as a business.   She said she                                                               
doesn't believe that the Alaskans  that have been negotiating the                                                               
ASGF  Contract  have  simply  decided  to  adopt  Delaware's  law                                                               
regardless  that   Alaska's  laws  really  are   better  for  the                                                               
interests of Alaska.                                                                                                            
                                                                                                                                
8:03:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  posited that the laws  of Delaware have                                                               
been  chosen  simply  because  some of  people  involved  in  the                                                               
negotiations [on  behalf of  Alaska] live on  the East  Coast and                                                               
are  therefore  more familiar  with  the  laws of  Delaware,  and                                                               
offered  his  belief  that  any   ensuing  court  cases  will  be                                                               
litigated  in an  Alaskan court,  not  a Delaware  court, and  so                                                               
those involved will be more familiar with Alaska law.                                                                           
                                                                                                                                
MS. CUTLER  offered her belief  that the attorneys at  Morrison &                                                               
Foerster,  LLP,  who  have  been involved  in  the  Mainline  LLC                                                               
negotiations have  a duty of loyalty  to the State of  Alaska and                                                               
have  the best  interests of  the ANGPC  and the  state at  heart                                                               
regardless  of  where they  reside;  these  attorneys are  making                                                               
their recommendation  to incorporate  under Delaware  law because                                                               
they  fully  believe  it  is  the right  thing  to  do,  and  the                                                               
administration agrees.                                                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG  reiterated his  belief that  the judges                                                               
involved in any ensuing court cases will be Alaskan judges.                                                                     
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     The duty of the lawyers  who represent us in this, they                                                                    
     do not  represent this broad spectrum  of the interests                                                                    
     of  the  people  of  the state  -  they  represent  the                                                                    
     governor's office.  ... The  governor is  their client,                                                                    
     the governor  has a position,  and they have a  duty to                                                                    
     uphold it.                                                                                                                 
                                                                                                                                
MR. SPILIOTES clarified that his  firm's client is the Department                                                               
of   Law  (DOL)   and  has   been  so   through  many   different                                                               
administrations.                                                                                                                
                                                                                                                                
REPRESENTATIVE  GARA asked,  then, "Is  your duty  of loyalty  to                                                               
represent the interests of the Department of Law?"                                                                              
                                                                                                                                
MR. SPILIOTES  replied, "I  don't have  the engagement  here, but                                                               
our duty  is to represent the  interests of the State  of Alaska,                                                               
the State of  Alaska is our client, and the  Department of Law is                                                               
our immediate  ... --  we are engaged  through the  Department of                                                               
Law."                                                                                                                           
                                                                                                                                
8:06:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  surmised, "Their duty  is to the  person who                                                               
hires them:  that's the governor,  it's the Department of Law who                                                               
works for the  governor."  On the issue of  why so many companies                                                               
choose  to  incorporate  under   Delaware  law,  he  opined  that                                                               
"companies  register in  Delaware  because  Delaware imposes  the                                                               
lowest level  of duties  on corporations to  the people  who they                                                               
might harm  or be  sued for  harming."   "That's the  exact point                                                               
that  we need  to protect  ourselves from,"  he added,  remarking                                                               
also, "That's  why we have  to be  cautious - we're  the minority                                                               
owner - and  the reason you go to Delaware  [is] because Delaware                                                               
has the laws that most adequately protect the majority."                                                                        
                                                                                                                                
MR. SPILIOTES again  opined that there will be  no majority owner                                                               
because "this  group of producers" does  not see eye to  eye on a                                                               
lot of issues.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA  said  he   does  not  anticipate  that  the                                                               
producers will start siding with the State that much.                                                                           
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted  in  favor of  Conceptual  Amendment  13.   Representatives                                                               
Coghill, Wilson,  Kott, McGuire,  and Anderson voted  against it.                                                               
Therefore, Conceptual Amendment 13 failed by a vote of 2-5.                                                                     
                                                                                                                                
8:08:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 14, which read [original punctuation provided]:                                                                       
                                                                                                                                
       The Board members of the subsidiaries shall be the                                                                       
      same as the Board members of the Corporation, except                                                                      
     when required by the law of another jurisdiction.                                                                          
                                                                                                                                
REPRESENTATIVE COGHILL objected.                                                                                                
                                                                                                                                
REPRESENTATIVE GARA said that  Conceptual Amendment 14 implements                                                               
[Mr. Gildan's]  recommendation that the ANGPC's  board members be                                                               
the board  members of the  Ancillary LLCs except  where prevented                                                               
by the laws of another jurisdiction.                                                                                            
                                                                                                                                
MS. CUTLER  said she has still  not had a chance  to discuss this                                                               
issue   with  Canadian   counsel  and   therefore  doesn't   feel                                                               
comfortable  saying   that  Conceptual  Amendment  14   would  be                                                               
acceptable; however, from a conceptual  basis the amendment seems                                                               
like it might be acceptable to Canadian counsel.                                                                                
                                                                                                                                
MR. SPILIOTES acknowledged that  Canada does have different rules                                                               
regarding [LLCs  and their board  members], but ventured  that as                                                               
long as the exception language  is included, Conceptual Amendment                                                               
14 seems reasonable.                                                                                                            
                                                                                                                                
REPRESENTATIVE COGHILL removed his objection.                                                                                   
                                                                                                                                
CHAIR McGUIRE asked whether there  were any further objections to                                                               
Conceptual   Amendment  14.     There   being  none,   Conceptual                                                               
Amendment 14 was adopted.                                                                                                       
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 15 [text provided previously].                                                                                        
                                                                                                                                
REPRESENTATIVE COGHILL objected.                                                                                                
                                                                                                                                
REPRESENTATIVE GARA referred  to page 16, line 26 -  the start of                                                               
proposed AS 41.42.330(b) - and  reiterated his understanding that                                                               
the  language, "This  section does  not prohibit  the corporation                                                               
from selling assets" could be  interpreted to mean that the ANGPC                                                               
could sell  part or all  of Alaska's  20 percent interest  in the                                                               
pipeline.   This interest would  involve so much money  and would                                                               
be  of such  value  to the  state, he  opined,  that the  state's                                                               
elected officials  should be allowed to  chime in on the  sale of                                                               
any such  interest, and although he  would prefer that it  be the                                                               
legislature that oversees such a  sale, it would probably be more                                                               
streamlined to have the governor do it.                                                                                         
                                                                                                                                
CHAIR  McGUIRE questioned  whether such  language would  have any                                                               
negative  impact   on  the  bond  agreements   that  proposed  AS                                                               
41.42.330(b) deals with.                                                                                                        
                                                                                                                                
8:13:46 PM                                                                                                                    
                                                                                                                                
MS. CUTLER  opined that it would  make more sense to  include the                                                               
proposed new  language on page 9,  under power (8) -  proposed AS                                                               
41.42.210(8) -  because that provision  goes specifically  to the                                                               
ANGPC's  ability to  sell, lease,  exchange,  donate, convey,  or                                                               
encumber property including ownership  interest in the project or                                                               
in a subsidiary entity.  The  pledge language on page 16, line 26                                                               
-  proposed  AS 41.42330(b)  -  pertains  specifically to  bonded                                                               
indebtedness,  and  so  including   the  language  of  Conceptual                                                               
Amendment 15 in that location  could potentially cause unintended                                                               
problems.   She  also pointed  out that  Conceptual Amendment  16                                                               
currently says  that the Mainline  LLC may not sell  its interest                                                               
in the Mainline LLC, rather than  that the ANGPC may not sell its                                                               
interest.                                                                                                                       
                                                                                                                                
MS.   CUTLER   said   that  another   problem   with   Conceptual                                                               
Amendment 15  is that  it uses  the phrase,  "any portion  of its                                                               
interest in  the mainline  entity", and  it is  her understanding                                                               
that the sponsor  wants the flexibility to sell a  portion of the                                                               
state's interest in the pipeline at  certain points in time.  She                                                               
said that she was under the  impression that the concept they had                                                               
discussed earlier was what would  happen should the ANGPC want to                                                               
sell its entire  interest in the pipeline, and  she'd agreed that                                                               
such  a sale  ought  to be  subject to  some  sort of  additional                                                               
consent.      Therefore,   as   currently   written,   Conceptual                                                               
Amendment 15 could be problematic.                                                                                              
                                                                                                                                
MR.  SPILIOTES said  that  the goal  of having  the  ANGPC be  as                                                               
commercial as possible  is to have it be  independent and staffed                                                               
with pipeline  experts, and  one if the  issues discussed  in the                                                               
negotiations is  the ability  of the state  to sell  its interest                                                               
back to the  Mainline LLC or the other members  at various points                                                               
in  time  -  essentially  an   option  out.    So  the  preferred                                                               
arrangement would  be to have the  ANGPC make such a  decision on                                                               
its own, but  if it is necessary to have  some sort of additional                                                               
consent provision included, it would  make sense to have it apply                                                               
only in the  case of a total sale, particularly  given that there                                                               
may  be a  need  for  some readjusting  of  the state's  interest                                                               
percentage  over  time  and  a second  layer  of  approval  would                                                               
complicate the process.                                                                                                         
                                                                                                                                
MS. CUTLER  indicated that  [she and the  sponsor] would  need to                                                               
consider  whether  requiring  an  extra layer  of  consent  would                                                               
somehow  suggest  that the  ANGPC  isn't  really a  separate  and                                                               
independent entity for purposes  of liability protection, revenue                                                               
bonds, and not creating state debt.                                                                                             
                                                                                                                                
MR. SPILIOTES concurred.                                                                                                        
                                                                                                                                
8:18:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARA   made  a   motion  to   conceptually  amend                                                               
Conceptual  Amendment  15   such  that  it  says   in  part  "The                                                               
corporation cannot  sell" rather than  "The LLC cannot  sell" and                                                               
such that it shall be placed  in the most appropriate part of the                                                               
proposed  statute.   There  being  no  objection, the  conceptual                                                               
amendment to Conceptual Amendment 15 was adopted.                                                                               
                                                                                                                                
REPRESENTATIVE GARA, in closing, said:                                                                                          
                                                                                                                                
     This is  going to be  the biggest asset this  state has                                                                    
     ever owned ...  except for the permanent  fund, and god                                                                    
     forbid we let somebody  sell the permanent fund without                                                                    
     us having a say or the  governor having a say. ... That                                                                    
     would shock  people.  It  would also shock  people that                                                                    
     ... the  head of the  state has no  say in how  much we                                                                    
     sell  a  portion of  our  [$5  billion] or  $6  billion                                                                    
     interest in a pipeline for.   Whether it's a 50 percent                                                                    
     portion [or] a 25 percent  portion, if this major asset                                                                    
     is  going to  be sold,  or a  part of  it, I  think the                                                                    
     public would  want the head  of the state to  have some                                                                    
     say, not  a board and  an executive director  who could                                                                    
     be fired  after they  made the  decision ...;  that's a                                                                    
     big decision to leave to  somebody who's not an elected                                                                    
     official.                                                                                                                  
                                                                                                                                
CHAIR  McGUIRE said  she takes  some comfort  that the  permanent                                                               
fund is  managed by  a board of  individuals who  aren't elected,                                                               
because of the volatility of  the whole election process, and are                                                               
thus  able to  make the  best decisions  in managing  the state's                                                               
assets.   She mentioned that she  also takes some comfort  in the                                                               
fact that  the ANGPC is set  up in a similar  fashion, because it                                                               
may  not necessarily  be in  the best  financial interest  of the                                                               
state to have  the governor make certain  decisions regarding the                                                               
state's assets.                                                                                                                 
                                                                                                                                
8:22:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   WILSON  suggested   changing  the   language  of                                                               
Conceptual Amendment  15, as amended,  such that it would  say in                                                               
part, "any major portion of its interest".                                                                                      
                                                                                                                                
REPRESENTATIVE GARA  indicated that  using the phrase  "any major                                                               
portion"  would be  fine  with  him, but  pointed  out that  even                                                               
1 percent   of  the   project  could   amount  to   $50  million.                                                               
Therefore,  should they  stipulate that  anything over  1 percent                                                               
needs  the  governor's approval?    He  noted that  although  the                                                               
Alaska  Permanent  Fund Corporation  (APFC)  gets  to manage  the                                                               
permanent fund,  the APFC is  not allowed to spend  the permanent                                                               
fund without  approval, and he would  like to have the  ANGPC set                                                               
up in  a similar fashion such  that the ANGPC gets  to manage the                                                               
state's interest  in the  pipeline project  but isn't  allowed to                                                               
sell the state's biggest asset without the governor's approval.                                                                 
                                                                                                                                
8:23:33 PM                                                                                                                    
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Wilson,  Gara,                                                               
Gruenberg,  and Coghill  voted in  favor of  Conceptual Amendment                                                               
15,  as amended.   Representatives  Kott,  McGuire, and  Anderson                                                               
voted  against  it.    Therefore,  Conceptual  Amendment  15,  as                                                               
amended was adopted by a vote of 4-3.                                                                                           
                                                                                                                                
REPRESENTATIVE  GARA   said  the   only  concern  he   has  about                                                               
Conceptual Amendment 15, as amended, is  that it might get rid of                                                               
the tax exemption that the state might otherwise get without it.                                                                
                                                                                                                                
CHAIR McGUIRE remarked  also that more research might  need to be                                                               
done in the House Finance  Committee regarding what "any portion"                                                               
means and whether there is a threshold [that will trigger it].                                                                  
                                                                                                                                
8:25:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  - referring to  page 27  - made a  motion to                                                               
adopt  Conceptual Amendment  16 to  say  that "the  state or  the                                                               
corporation  shall not  provide indemnity  to  pay for  a tax  or                                                               
royalty that  is due  to the state  or a  political subdivision".                                                               
The   intention  is   to  correct   an  unintentional   potential                                                               
consequence of  the indemnification provisions, and  clarify that                                                               
"we don't want to allow and  require that the state indemnify the                                                               
companies for  when they pay  taxes or royalties, and  that's the                                                               
whole gas reserves [tax] issue," he added.                                                                                      
                                                                                                                                
MS. CUTLER  opined that Conceptual  Amendment 16 goes  way beyond                                                               
that;  it is  instead  a statement  that there  will  be no  such                                                               
indemnity, and that is entirely  contrary to the administration's                                                               
position  as put  forth in  the  ASGF Contract.   It  is not  the                                                               
intent of proposed AS 45.45.905 to  deal with "that issue," so to                                                               
then  go so  far as  to actually  add that  issue to  proposed AS                                                               
45.45.905  is  the  exact opposite  of  what  the  administration                                                               
intends in the  sense that that would be a  positive statement by                                                               
the  legislature that  it doesn't  support  what is  in the  ASGF                                                               
Contract.  Although  the question of whether  to adopt Conceptual                                                               
Amendment  16  is  a  policy  choice, she  remarked,  it  is  not                                                               
something that the administration would support.                                                                                
                                                                                                                                
REPRESENTATIVE  COGHILL,   remarking  that  this  issue   can  be                                                               
addressed in a different piece  of legislation due to come before                                                               
the  committee, indicated  that he  would be  opposing Conceptual                                                               
Amendment 16.                                                                                                                   
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted  in  favor of  Conceptual  Amendment  16.   Representatives                                                               
McGuire, Coghill,  Wilson, Anderson,  and Kott voted  against it.                                                               
Therefore, Conceptual Amendment 16 failed by a vote of 2-5.                                                                     
                                                                                                                                
8:28:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 17, to delete from page  21, lines 7-8, the words, "the                                                               
particulars of the business or affairs  of an owner entity of the                                                               
project, including, without limitation,".                                                                                       
                                                                                                                                
CHAIR McGUIRE objected for the purpose of discussion.                                                                           
                                                                                                                                
REPRESENTATIVE GARA,  acknowledging that  certain things  about a                                                               
business must  remain confidential, opined that  "the particulars                                                               
of  the business  or  affairs on  an owner  entity"  is simply  a                                                               
catchall   phrase  that   could  be   used  to   make  everything                                                               
confidential because everything  could be said to  pertain to the                                                               
particulars  of  a business.    In  response  to a  question,  he                                                               
clarified  that  under  Conceptual   Amendment  17,  proposed  AS                                                               
41.42.520(a)(1) would  simply read:  "(1)  information pertaining                                                               
to tax returns, financial statements, and business plans;".                                                                     
                                                                                                                                
MS.  CUTLER  asked whether  paragraph  (1)  would then  apply  to                                                               
anyone.                                                                                                                         
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  amend   Conceptual                                                               
Amendment 17  such that  paragraph  (1) would  then  read:   "(1)                                                               
information pertaining to tax  returns, financial statements, and                                                               
business plans of an owner  entity of the project;".  [Conceptual                                                               
Amendment 17 was treated as amended in this fashion.]                                                                           
                                                                                                                                
MS.  CUTLER  offered  her understanding  that  the  legislature's                                                               
consultant    indicated   that    as   currently    written,   AS                                                               
41.42.520(a)(1) is not of concern  and is standard language.  She                                                               
also   offered   her   belief  that   this   language   regarding                                                               
confidentiality  is  very  similar  to what's  contained  in  the                                                               
Freedom of  Information Act  (FOIA) and  the Alaska  Stranded Gas                                                               
Development Act,  and that a  similar concept is included  in the                                                               
statutes   pertaining  to   the  APFC,   the  Alaska   Industrial                                                               
Development  and  Export  Authority (AIDEA),  the  Alaska  Energy                                                               
Authority  (AEA),   and  the   Alaska  Natural   Gas  Development                                                               
Authority (ANGDA).   She said that the  language which Conceptual                                                               
Amendment 17, as amended, proposes  to delete adds to the meaning                                                               
of proposed  paragraph (1), and that  it is not the  intention to                                                               
have it  mean everything;  furthermore, Conceptual  Amendment 17,                                                               
as  amended, is  not something  the administration  would support                                                               
because it is too limiting.                                                                                                     
                                                                                                                                
8:34:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARA  opined that the language  currently included                                                               
in paragraph  (1) is  not at  all consistent  with what's  in the                                                               
FOIA.  He said he can't  think of a single example of information                                                               
that  should be  kept confidential  that couldn't  still be  kept                                                               
confidential under Conceptual Amendment 17, as amended.                                                                         
                                                                                                                                
MS.  CUTLER  suggested  that  tax   information  other  than  tax                                                               
returns,  as   well  as  other   information  that   governs  the                                                               
particulars of  a business or  affairs of an owner  entity, could                                                               
fall  into  the  category  of information  that  should  be  kept                                                               
confidential but  wouldn't be should Conceptual  Amendment 17, as                                                               
amended, be adopted.                                                                                                            
                                                                                                                                
REPRESENTATIVE GARA reiterated his  previous comment, adding that                                                               
he also doesn't want the other  members of the Mainline LLC to be                                                               
able to hold back evidence of illegal conduct.                                                                                  
                                                                                                                                
A roll call  vote was taken.  Representatives  Gara and Gruenberg                                                               
voted  in   favor  of  Conceptual   Amendment  17,   as  amended.                                                               
Representatives  Coghill,  Wilson,  Kott, McGuire,  and  Anderson                                                               
voted  against  it.    Therefore,  Conceptual  Amendment  17,  as                                                               
amended, failed by a vote of 2-5.                                                                                               
                                                                                                                                
8:36:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  made   a   motion   to  adopt   Conceptual                                                               
Amendment 18,  to  add  to  page  21, line  5,  after  the  word,                                                               
"project",  the words:   ",  to the  extent it  does not  involve                                                               
illegal  conduct,".   He explained  that Conceptual  Amendment 18                                                               
will   ensure    that   everything   listed   in    proposed   AS                                                               
41.42.520(a)(1)-(6)   shall   remain  confidential   except   for                                                               
documentation that involves evidence of illegal conduct.                                                                        
                                                                                                                                
MS.  CUTLER  expressed  disfavor with  Conceptual  Amendment  18,                                                               
suggesting  that documentation  of instances  of illegal  conduct                                                               
shouldn't  necessarily be  made available  to the  public because                                                               
doing so might  violate someone's rights, and  offered her belief                                                               
that  without  speaking  further  with  the  administration,  she                                                               
doesn't think that  she ought to support  Conceptual Amendment 18                                                               
as  it  is  currently  worded.   Perhaps  acceptable  alternative                                                               
language could  be drafted with  more time, though, since  no one                                                               
has the  desire to keep  information that could  provide evidence                                                               
of  fraud  confidential,  but  whether  that  information  should                                                               
become "public"  information, as opposed to  simply providing for                                                               
the ability  to tell the  proper authorities that fraud  could be                                                               
occurring, is a different issue.                                                                                                
                                                                                                                                
MS. CUTLER, in  response to a question, opined  that there should                                                               
be  an  ability  to  disclose   -  but  not  through  the  public                                                               
information  request process  -  to the  proper authorities  that                                                               
fraud  [or a  similar  crime] is  occurring,  and reiterated  her                                                               
belief that Conceptual Amendment  18 as currently written doesn't                                                               
accomplish that goal.                                                                                                           
                                                                                                                                
MR. SPILIOTES offered:                                                                                                          
                                                                                                                                
     Just  one   example  would  be   when  ...   there  are                                                                    
     disclosures to  the [Federal  Communications Commission                                                                    
     (FCC)] or to  the federal or state  prosecutors:  those                                                                    
     are  not  disclosed   publicly,  they're  disclosed  to                                                                    
     investigative  authorities,  and   ...  what  would  be                                                                    
     disclosed is a  set of facts that  potentially could be                                                                    
     indictable ...; [in other words]  a person could become                                                                    
     a defendant  and be indicted  and tried.  Having  it go                                                                    
     through  the public  ... information  process might  be                                                                    
     the wrong channel. ...                                                                                                     
                                                                                                                                
MR.  SPILIOTES indicated  that as  currently written,  Conceptual                                                               
Amendment 18 sounds quite broad.                                                                                                
                                                                                                                                
8:42:51 PM                                                                                                                    
                                                                                                                                
Mr.  DeWITT expressed  the concern  that Conceptual  Amendment 18                                                               
presumes that  the ANGPC would  be judge and jury  in determining                                                               
whether someone  has violated  the law;  allowing for  such would                                                               
certainly violate a person's due  process rights.  He opined that                                                               
there are other  ways, via other language, for  information to be                                                               
disclosed than what is proposed via Conceptual Amendment 18.                                                                    
                                                                                                                                
CHAIR  McGUIRE suggested  amending Conceptual  Amendment 18  such                                                               
that the release of information  was compelled by law enforcement                                                               
- something more specific than just an allegation of wrongdoing.                                                                
                                                                                                                                
REPRESENTATIVE COGHILL  questioned, though, whether there  is any                                                               
law currently that would stop a  court from issuing a subpoena to                                                               
investigate  wrongdoing.   If not,  then "we're  probably already                                                               
served well" by current law, he remarked.                                                                                       
                                                                                                                                
MS.  CUTLER relayed  that proposed  AS  41.42.520(c) also  covers                                                               
that issue  because it says  in part that  information considered                                                               
confidential may be disclosed for  the purpose of an official law                                                               
enforcement investigation  or when its production  is required by                                                               
an administrative or court order.                                                                                               
                                                                                                                                
CHAIR McGUIRE  indicated that  all members want  the ANGPC  to be                                                               
required to  disclose information [to the  proper authorities] in                                                               
order  to resolve  a criminal  issue.   She asked  Representative                                                               
Gara  for an  example  of something  that  isn't already  covered                                                               
[under the aforementioned language].                                                                                            
                                                                                                                                
8:46:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GARA  said   he   is  troubled   by  the   broad                                                               
confidentiality  provisions [of  proposed AS  41.42.520] and  the                                                               
limited public access to information  that will result, and wants                                                               
to ensure that documentation of illegal conduct is made public.                                                                 
                                                                                                                                
CHAIR  McGUIRE asked  what is  supposed to  trigger that  duty to                                                               
disclose - would a newspaper  article alleging illegal conduct be                                                               
sufficient?   Or  someone's opinion?   Or  an indictment?   Or  a                                                               
conviction?     And  who  determines  that   any  wrongdoing  has                                                               
occurred?                                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA said:                                                                                                       
                                                                                                                                
     We  would  like  to  know of  information  relating  to                                                                    
     illegal conduct that the  corporation knows about; "the                                                                    
     corporation" will be its  employees and its management.                                                                    
     So file  a public  information request; if,  in looking                                                                    
     at  the  request,  there is  somebody  who  knows  that                                                                    
     there's illegal information  pertaining to the request,                                                                    
     it's  got to  be released,  then the  knowledge of  the                                                                    
     employees  is  imputed  to the  agency.  ...  I'm  less                                                                    
     concerned  about   employee  crime  than  I   am  about                                                                    
     evidence  that maybe  the state  has been  shortchanged                                                                    
     through/for  fraudulent reasons  and things  like that.                                                                    
       ... It's improper conduct that I think we have the                                                                       
     right to know about.                                                                                                       
                                                                                                                                
MS. CUTLER  reiterated that even  when there is an  allegation of                                                               
wrongdoing,  questions  of  constitutional  privacy  rights  will                                                               
arise,  and that  releasing the  information to  the public  is a                                                               
different concept than making sure  that if the ANGPC thinks that                                                               
fraud  has potentially  taken place  that it  has the  ability to                                                               
inform  the   proper  law   enforcement  authorities,   and  that                                                               
Conceptual Amendment 18 might not accomplish that latter goal.                                                                  
                                                                                                                                
CHAIR  McGUIRE suggested  that  Representative  Gara continue  to                                                               
work in this issue further.                                                                                                     
                                                                                                                                
A roll call  vote was taken.  Representatives  Gruenberg and Gara                                                               
voted  in  favor of  Conceptual  Amendment  18.   Representatives                                                               
Kott, McGuire, Wilson, and Coghill  voted against it.  Therefore,                                                               
Conceptual Amendment 18 failed by a vote of 2-4.                                                                                
                                                                                                                                
8:51:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOTT moved  to report HB 2003, as  amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being no  objection,  CSHB 2003(JUD)  was                                                               
reported from the House Judiciary Standing Committee.                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The House Judiciary Standing Committee  was recessed at 8:53 p.m.                                                               
to a call of the chair.  [The meeting was never reconvened.]                                                                    

Document Name Date/Time Subjects