Legislature(2011 - 2012)BARNES 124
03/05/2012 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB358 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 358 | TELECONFERENCED | |
| += | HB 266 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 5, 2012
3:18 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Craig Johnson, Vice Chair
Representative Mike Chenault
Representative Dan Saddler
Representative Steve Thompson
Representative Lindsey Holmes
Representative Bob Miller
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 358
"An Act relating to an advertising campaign in support of
opening the Arctic National Wildlife Refuge for development."
- MOVED HB 358 OUT OF COMMITTEE
HOUSE BILL NO. 266
"An Act relating to the practice of naturopathy; and providing
for an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 358
SHORT TITLE: ANWR ADVERTISING CONTRACT
SPONSOR(s): REPRESENTATIVE(s) PRUITT
02/22/12 (H) READ THE FIRST TIME - REFERRALS
02/22/12 (H) L&C, FIN
03/05/12 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE LANCE PRUITT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HB 358.
DIRK CRAFT, Staff
Representative Lance Pruitt
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis of HB 358,
on behalf of the sponsor, Representative Lance Pruitt.
WANETTA AYERS, Director
Anchorage Office, Economic Development Section
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 358.
ACTION NARRATIVE
3:18:08 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:18 p.m. Representatives Saddler,
Thompson, Miller, and Olson were present at the call to order.
Representatives Holmes, Johnson, and Chenault arrived as the
meeting was in progress.
HB 358-ANWR ADVERTISING CONTRACT
3:18:24 PM
CHAIR OLSON announced that the only order of business would be
HOUSE BILL NO. 358, "An Act relating to an advertising campaign
in support of opening the Arctic National Wildlife Refuge for
development."
3:19:30 PM
REPRESENTATIVE LANCE PRUITT, Alaska State Legislature, stated
that HB 358 is an advertising campaign in support of the opening
the Arctic National Wildlife Refuge (ANWR). The bill would
direct the state to contract with a qualified trade association
to advertise and support opening the coastal plain of ANWR for
oil and gas exploration and development. In 1980, the Alaska
National Interest Lands Conservation Act (ANILCA) prohibited the
leasing and any other development that would lead to the
production of oil and gas on the ANWR. However, today the
domestic demand for oil is going up while domestic production is
going down. Thus the U.S. must import more from sources outside
the U.S. He related that new technology developed in Alaska has
reduced the environmental impact for development on the North
Slope. He remarked that if Prudhoe Bay was developed today the
footprint would be as small as 1,526 acres. He applauded the
ability of industry to develop the technology to this point.
Additionally, oil and gas development has proven it can
successfully coexist in Alaska's Arctic. The Central caribou
herd has grown from 3,000-5,000 at the time of development to
66,000 now. He acknowledged that several caribou herds exist,
but they have all grown since development started. While the
Alaska legislature understands these impacts, people in the
Lower 48 don't necessarily know these facts. He shared
statistics that indicate Lower 48 residents think about 15
percent of Alaskans want ANWR to be developed even though about
78 percent of Alaskans want to see ANWR developed. He explained
that many Lower 48 residents think by lobbying the Congress
against ANWR development they are protecting Alaskans. Further,
with respect to the environmental impact on caribou herds -
about 15 percent of people believe the caribou have increased,
but the rest of Lower 48 residents think caribou herds have
decreased. He emphasized the importance of providing accurate
information to residents in the Lower 48, which will help
Alaska's Congressional delegation whose colleagues should not be
misinformed by their constituents. Alaska's state revenues are
dependent on resource development so it makes sense for us to
promote responsible development for the maximum benefit to
Alaskans.
3:23:32 PM
DIRK CRAFT, Staff, Representative Lance Pruitt, Alaska State
Legislature, on behalf of the sponsor, Representative Lance
Pruitt, stated that this bill is modeled after the state's
tourism marketing contracts under AS 44.33.125. He referred to
Section 1, subsection (a), would require the Department of
Commerce, Community & Economic Development (DCCED) to contract
with a single qualified trade organization for an advertising
campaign advocating resource development in the 10-02 area of
ANWR. The bill requires a qualified trade association to
provide matching funds for the campaign and for the campaign to
be approved by the department. Subsection (b) would require the
contract to include essential provisions required by the
department, and subsection (c) would allow additional
appropriated funds to be added to contract and the department
may require the association to match the additional funds.
3:24:37 PM
MR. CRAFT reported subsection (d) identifies that materials
produced under a contract are the joint property of the
association and the department and may only be used under the
contract terms. The sponsor initially questioned the need for
this section, but discovered these provisions are modeled after
the ones used in tourism marketing contracts to protect their
advertising strategy from detractors and other competitors, as
well as protecting the company's proprietary knowledge. He
related a scenario in which the company may have a marketing
blueprint that works well in South Carolina or another state.
This language would protect the company from competitors using
their blueprint. Subsection (e) would restrict money
appropriated for a contract, which may not be used to lobby a
municipality or the state, to raise funds for that purpose, or
be used for administrative or overhead costs which support this
specific type of effort.
3:25:44 PM
MR. CRAFT referred to subsection (f), which indicates the
contract is not subject to the state procurement code.
Additionally, a qualified trade association who is awarded a
contract may also award a subcontract on a competitive bid
basis. He stated that subsection (g) defines terms used in the
bill.
3:25:55 PM
REPRESENTATIVE HOLMES referred to page 2, line 15, which
identifies that any materials produced are not public records.
She questioned the reason for this provision. She assumed the
amount of money expended in the contract would be a public
record.
MR. CRAFT answered she is correct.
REPRESENTATIVE HOLMES said she needed to consider this a little
more.
MR. CRAFT said this bill is modeled after state's tourism
marketing statute.
3:26:58 PM
REPRESENTATIVE HOLMES asked what entity would be likely to
receive the contract, noting that at times vendors are known,
and while a contract is not limited to a specific vendor it is
assumed certain vendors will apply. She inquired as to whether
one entity is likely or if more than one entity is expected to
bid on this contract.
REPRESENTATIVE PRUITT answered that there is not one particular
entity anticipated to apply. He pointed out a letter of support
from the Alliance in members' packets. He also suggested that
the Alaska Oil and Gas Association (AOGA), and Resource
Development Council for Alaska, Inc. (RDC) might also apply. He
reiterated that this bill was not geared for any particular
organization.
3:28:08 PM
REPRESENTATIVE HOLMES related her understanding that this bill
simply sets up a mechanism. Thus it has a zero fiscal note or
rather an indeterminate fiscal note. She asked about the amount
of money that would likely be requested to fund this program.
REPRESENTATIVE PRUITT answered that it would depend on the trade
organization. He surmised that if the Alliance were to be
awarded the contract, he estimated it might be about $500,000,
but AOGA may have an opportunity for a larger amount. He said
did not expect $1 million would cover the whole nation, but the
funds may help with a targeted campaign, which could be
developed by working with Alaska's Congressional delegation to
identify specific members who may be misinformed about ANWR.
3:29:39 PM
REPRESENTATIVE HOLMES asked how this effort would overlap with
the efforts taken by Arctic Power, which the legislature funds
each year. She further asked how this mandate would mesh with
Arctic Power's mandate.
REPRESENTATIVE PRUITT pointed out that none of this funding
could be used for lobbying the Congress; however, Arctic Power
is the mechanism used to lobby members. This contract would be
geared to educate the public and would communicate with
constituents of members that Arctic Power will lobby.
3:30:54 PM
REPRESENTATIVE SADDLER asked him to distinguish between lobbying
and educating the public.
REPRESENTATIVE PRUITT offered his belief that lobbying would be
actual communicating with an elected body, whereas, the
marketing and education efforts would be directed at the general
public, either in a specific state or throughout the nation. He
viewed the targeted group as the constituents of the Congress.
REPRESENTATIVE SADDLER agreed. He reiterated that this bill is
modeled after the tourism marketing statutes. He related his
understanding that the goal is to communicate a message and
bridge misinformation on ANWR and clarify any concerns people
may have.
3:33:07 PM
REPRESENTATIVE SADDLER questioned the three-year timeline.
REPRESENTATIVE PRUITT responded that the timeframe would give
the legislature an opportunity to consider the effectiveness.
He acknowledged the value of sunset legislation since it gives
legislature an opportunity review and determine whether the
contract or program is necessary and delete the statutes if the
program is not being used.
3:33:48 PM
REPRESENTATIVE SADDLER asked for clarification on the scope of
the advertising campaign and if the advertising would include
radio or television advertising.
REPRESENTATIVE PRUITT answered that DCCED would authorize the
contract and their experts will decide the best communication
methods to use.
3:34:23 PM
REPRESENTATIVE MILLER recalled some high level advertising
campaigns previously aired. He wondered if the participants
could be kept local, and whether some preference for an Alaska
advertising company or public relations firm could be included
in the bid criteria. He has often heard critiques of
advertising using Hollywood actors or photographs that depict
Alaska, but the ads were actually filmed in Canada. He said he
favored Alaskans telling and showing Alaska's story.
MR. CRAFT answered that the language is modeled after the
tourism marketing industry, which uses actors, but the
advertising is filmed in Alaska.
CHAIR OLSON referred to Wanetta Ayers to discuss local hire and
bidder preference provisions.
3:36:29 PM
REPRESENTATIVE MILLER further asked whether the approval or
recommendations for brainstorming would reside in the DCCED.
MR. CRAFT answered yes.
3:36:50 PM
REPRESENTATIVE HOLMES related her understanding that this
contract is exempt from procurement code so she was uncertain
whether an Alaska bidder's preference would apply.
REPRESENTATIVE PRUITT deferred to the DCCED.
3:37:25 PM
REPRESENTATIVE CHENAULT referred to page 2, line, 7, and related
that the DCCED may require the association to provide matching
funds in any amount for additional funds. He asked for
clarification on the source of any additional funds.
MR. CRAFT answered that this specific language gives the
department the ability to require additional participation from
the qualified trade association if the legislature were to
appropriate additional funds.
REPRESENTATIVE CHENAULT related his understanding that the
qualified trade association may or may not have to match any
additional funds appropriated after initial funds were awarded.
MR. CRAFT said that is correct.
3:38:39 PM
REPRESENTATIVE CHENAULT emphasized that this bill is needed. He
recently spent three days talking to approximately 25 different
Congressional offices. He said while this program would not be
used to directly lobby the Congress he discovered that people do
not have the facts about ANWR, which was evident from a member's
tone or the tone of his/her staff. He pointed out that ANWR has
not been an issue in the past seven or eight years in the
Congress. He further said that most did not know much about
ANWR, its location or what it encompasses, and many erroneously
believed most Alaskans did not support oil and gas develop in
ANWR. He cautioned members that a group opposing ANWR is a
vocal group.
3:39:56 PM
CHAIR OLSON remarked that the most compelling testimony he has
ever heard was testimony given by Congressman Don Young. He
related that Congressman Yong held up a piece of white paper and
said, "This is ANWR in winter." He went on to inform people
that ANWR does not have mountains or valleys, but is flat and
white.
3:40:20 PM
REPRESENTATIVE CHENAULT pointed out that advertising campaigns
are effective, depending on the campaign and the audience. He
remarked that the legislature cares about the facts.
3:40:40 PM
REPRESENTATIVE SADDLER referred to page 2, line 28, and asked
whether the amount of money that can be contracted out is
limited. He further asked whether it is possible for the
qualified trade association to pass-through funds to advertising
companies. He suggested a number of advertising companies would
likely be interested in this opportunity.
REPRESENTATIVE PRUITT deferred to the DCCED to better respond.
3:41:19 PM
REPRESENTATIVE SADDLER asked whether the bill requires the
advertising efforts be coordinated with those undertaken by
Arctic Power.
REPRESENTATIVE PRUITT answered that HB 358 does not specifically
address those aspects, but he anticipated a qualified trade
association would use Arctic Power's lobbyist to understand the
audience that should be targeted; however, this requirement is
not in the proposed bill.
3:42:14 PM
REPRESENTATIVE SADDLER asked whether the bill has any benchmarks
to determine the program's success.
REPRESENTATIVE PRUITT answered ultimately once an ice road is
built the efforts would be deemed successful.
3:42:58 PM
REPRESENTATIVE SADDLER said he likes the idea of this bill. He
agreed the truth and facts should be disseminated to the public
and should trump innuendos.
REPRESENTATIVE THOMPSON agreed with Representative Saddler's
remarks. He said that the state has viewed substantial anti-
ANWR advertising and it is time for people to get the truth
about ANWR.
REPRESENTATIVE MILLER said we need to move the Arctic plain, not
mountains. He said he was glad that Representative Pruitt has
brought this bill forward.
REPRESENTATIVE CHENAULT said, "We do need to move mountains,
back to where they were originally at in the film and not closer
to the 10-02. We need to move them back to where they were
originally [located]."
3:44:24 PM
WANETTA AYERS, Director, Anchorage Office, Economic Development
Section, Department of Commerce, Community & Economic
Development (DCCED) introduced herself.
3:44:51 PM
REPRESENTATIVE HOLMES questioned whether Alaskans would be
entitled to any bidder preferences. She further asked for
recommendations on language to add to the bill.
3:45:13 PM
MS. AYERS related that the DCCED has previously been quite
successful in placing work with Alaskan firms under the
qualified trade association (QTA) model. She offered her belief
that the DCCED follows the procurement code. She acknowledged
while she is not an expert she has been through the process a
number of times. She reported that the DCCED must consider all
offers. She recalled previously when the department has used
the procurement code and was able to extend an Alaska bidder
preference, particularly with respect to cost, that the
preference has helped Alaskan firms secure those contracts.
3:45:58 PM
REPRESENTATIVE HOLMES pointed out that this contract would be
exempt from the procurement code. She asked whether the
department has any flexibility to provide a preference given the
language in the bill.
MS. AYERS answered that she does not have any experience letting
a contract outside the procurement code. She offered to check
with procurement officers and report back to the committee.
3:46:35 PM
REPRESENTATIVE SADDLER asked for an estimate of costs for a
successful campaign of this type.
MS. AYERS offered that the scope of the public advocacy
advertising in targeted Congressional districts is akin to
effort taken on other public relations campaigns to deliver
targeted media messages about commercial development. She did
not recall any specific figures, but offered that the tourism
marketing programs have ranged from $11 million to $21 million
over the past 12-15 years. She said that obviously, the nature
of this campaign is somewhat more focused, so she imagined the
cost would be significantly less than that range. Additionally,
she agreed with Representative Pruitt that some of this will be
contingent on the capacity of the QTA to generate matching
dollars. She imagined the fiscal note would appropriate up to a
certain amount, which would be dependent on the matching funds.
She recalled that the match was sometimes difficult to meet. In
those instances the match was later adjusted for the QTA model
in the tourism industry. She offered that 50 percent match was
problematic for the tourism industry and had to be reduced over
time in order to make it more attainable.
3:49:24 PM
REPRESENTATIVE SADDLER recalled his earlier question on
provisions for the QTA to subcontract out the advertising. He
inquired as to whether the contractor could pass through funds
and if it would be advisable to do so.
MS. AYERS answered that typically there is some administrative
set aside or consideration for the QTA. She viewed that some of
these details could be made part of bid solicitation. She
surmised it is highly likely that the QTA will be most
interested in directing as much funding as possible to the
advertising campaign. She stated it is difficult to predict
without knowing the organization, but it does seem that given
the scope of the project most of the funds would be passed
through to a subcontractor advertising firm to maximize the
advocacy effort.
3:50:57 PM
REPRESENTATIVE SADDLER remarked if Alaskan subcontractors are
used that it would be nice if they would lower their markup in
the interests of helping Alaska's economy. He suggested they
may wish to limit their markup from 15-17 percent, or perhaps
even lower.
MS. AYERS said she thought that would be highly unlikely.
Further, she said she would not dictate any business model or
cost to the private sector.
3:51:51 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on HB 358. He commented that
no one contacted his office.
3:52:19 PM
REPRESENTATIVE JOHNSON moved to report HB 358 out of committee
with individual recommendations and the accompanying
indeterminate fiscal note. There being no objection, HB 358 was
reported from the House Labor and Commerce Standing Committee.
3:52:43 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
3:52 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB358 ver M.PDF |
HL&C 3/5/2012 3:15:00 PM |
HB 358 |
| HB358 Sponsor Statement.pdf |
HL&C 3/5/2012 3:15:00 PM |
HB 358 |
| HB358 Supporting Documents-Letter Alliance 3-2-12.pdf |
HL&C 3/5/2012 3:15:00 PM |
HB 358 |
| HB358 Supporting Documents-Arctic Power 49 ANWR bullet points.pdf |
HL&C 3/5/2012 3:15:00 PM |
HB 358 |