Legislature(2013 - 2014)BARNES 124

02/21/2014 03:15 PM LABOR & COMMERCE


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03:23:04 PM Start
03:23:20 PM Presentation: Alaska Lng Project - Memorandum of Understanding - Heads of Agreement
03:47:27 PM HB230
04:15:33 PM HB300
04:22:43 PM HCR15
04:37:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation (If More Time Needed): TELECONFERENCED
Alaska LNG Project - Memorandum of Understanding
- Heads of Agreement
*+ HB 230 AIDEA BONDS FOR PROCESSING FACILITIES TELECONFERENCED
Heard & Held
*+ HB 300 AIR AMBULANCE SERVICES TELECONFERENCED
Heard & Held
*+ HCR 15 TASK FORCE ON UNMANNED AIRCRAFT SYSTEMS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                       February 21, 2014                                                                                        
                           3:23 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Mike Chenault                                                                                                    
Representative Andy Josephson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bob Herron                                                                                                       
Representative Charisse Millett                                                                                                 
Representative Dan Saddler                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:   ALASKA LNG PROJECT -  MEMORANDUM OF UNDERSTANDING                                                               
- HEADS OF AGREEMENT                                                                                                            
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 230                                                                                                              
"An  Act allowing  the Alaska  Industrial Development  and Export                                                               
Authority to issue  bonds for an oil or  gas processing facility;                                                               
and  creating the  oil  and gas  infrastructure  fund to  finance                                                               
construction  or   improvement  of  an  oil   or  gas  processing                                                               
facility."                                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 300                                                                                                              
"An  Act  relating  to  air   ambulance  service  providers,  air                                                               
ambulance membership agreements, and  regulation of air ambulance                                                               
service providers and air ambulance  membership agreements by the                                                               
division of insurance; and providing for an effective date."                                                                    
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 15                                                                                              
Relating  to  the continuation  of  the  Task Force  on  Unmanned                                                               
Aircraft Systems.                                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 230                                                                                                                  
SHORT TITLE: AIDEA BONDS FOR PROCESSING FACILITIES                                                                              
SPONSOR(s): REPRESENTATIVE(s) SEATON                                                                                            
                                                                                                                                
01/21/14       (H)       PREFILE RELEASED 1/10/14                                                                               
01/21/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/14       (H)       L&C, FIN                                                                                               
02/21/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 300                                                                                                                  
SHORT TITLE: AIR AMBULANCE SERVICES                                                                                             
SPONSOR(s): REPRESENTATIVE(s) MUNOZ                                                                                             
                                                                                                                                
02/05/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/05/14       (H)       L&C                                                                                                    
02/21/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
BILL: HCR 15                                                                                                                  
SHORT TITLE: TASK FORCE ON UNMANNED AIRCRAFT SYSTEMS                                                                            
SPONSOR(s): REPRESENTATIVE(s) HUGHES                                                                                            
                                                                                                                                
01/21/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/14       (H)       L&C                                                                                                    
02/21/14       (H)       L&C AT 3:15 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ANGELA RODELL, Commissioner                                                                                                     
Department of Revenue (DOR)                                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented the overview of the LNG Project-                                                               
Memorandum of Understanding - Heads of Agreement.                                                                               
                                                                                                                                
REPRESENTATIVE PAUL SEATON                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as the prime sponsor of HB 230.                                                                
                                                                                                                                
TED LEONARD, Executive Director                                                                                                 
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions on HB 230.                                                              
                                                                                                                                
MATT FONDER, Director                                                                                                           
Anchorage Office                                                                                                                
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions on HB 230.                                                              
                                                                                                                                
REPRESENTATIVE CATHY MUNOZ                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 300 as prime sponsor.                                                                       
                                                                                                                                
GINGER BLAISDELL, Staff                                                                                                         
Representative Shelley Hughes                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Testified  on   HCR  15  on   behalf  of                                                             
Representative Hughes, sponsor.                                                                                                 
                                                                                                                                
STEVE COLLIGAN, Member                                                                                                          
Task Force on Unmanned Aircraft Systems                                                                                         
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified during the discussion of HCR 15.                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:23:04 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee  meeting  to  order  at   3:23  p.m.    Representatives                                                               
Chenault,  Reinbold, Josephson,  and  Olson were  present at  the                                                               
call to order.                                                                                                                  
                                                                                                                                
^Presentation:  Alaska LNG Project  - Memorandum of Understanding                                                               
- Heads of Agreement                                                                                                            
Presentation:  Alaska LNG Project - Memorandum of Understanding                                                             
                      - Heads of Agreement                                                                                  
                                                                                                                                
3:23:20 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
a  presentation:   LNG Project  - Memorandum  of Understanding  -                                                               
Heads of Agreement.                                                                                                             
                                                                                                                                
3:23:29 PM                                                                                                                    
                                                                                                                                
ANGELA RODELL, Commissioner, Department  of Revenue (DOR), stated                                                               
she   would  continue   the   presentation   using  the   handout                                                               
distributed at the last hearing.   At that hearing the department                                                               
reviewed the  Heads of Agreement  (HOA), noting the  HOA provides                                                               
the  framework and  lays  out  the expectations  of  each of  the                                                               
parties.    In  Article  5  of  that  agreement,  the  department                                                               
outlined  the state's  participation.   Article 5.3  specifically                                                               
expresses the  desire to have  the state's participation  in each                                                               
component of  the project consistent  with the state's  gas share                                                               
of  approximately 20  to  25  percent.   She  indicated that  the                                                               
state's  participation would  require  significant financial  and                                                               
human resources.                                                                                                                
                                                                                                                                
COMMISSIONER  RODELL  said  the   department  believes  the  path                                                               
forward  is to  take advantage  of the  partnership in  existence                                                               
[slide  16].   The  state's partnership  with TransCanada  Alaska                                                               
Development   Inc.  (TransCanada)   under   the  Alaska   Gasline                                                               
Inducement Act's  (AGIA) framework  and investments made  by both                                                               
the state and TransCanada makes  TransCanada a natural partner to                                                               
assist the  state in  moving this project  forward.   She offered                                                               
her belief that  the state needs a partner in  this project since                                                               
"at  the end  of  the day"  the  state is  a  government with  an                                                               
obligation to Alaskans to continue  to provide a safe, prosperous                                                               
environment in  which to  live.   The DOR  will need  to continue                                                               
collecting taxes,  auditing taxpayers, processing  permanent fund                                                               
dividend    payments,    and   administering    child    support.                                                               
Additionally,  a partner  will bring  expertise the  state lacks.                                                               
She related  that TransCanada is an  independent pipeline company                                                               
with  proven experience  in getting  pipelines built.   Not  only                                                               
that, but  TransCanada has  spent the  last six  years developing                                                               
and  understanding  the  environment  and  challenges  unique  to                                                               
Alaska.   As  commissioner of  DOR she  has, in  conjunction with                                                               
Commissioner  Joe   Balash,  Department  of   Natural  Resources,                                                               
determined it is in the best  interest of the state to enter into                                                               
a Memorandum of Understanding (MOU) with TransCanada.                                                                           
                                                                                                                                
3:25:45 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL reviewed  the  definition of  an MOU,  which                                                               
read [slide 16]:                                                                                                                
                                                                                                                                
     A legal document outlining the  terms and details of an                                                                    
     agreement  between  parties,  including  each  parties'                                                                    
     requirements and  responsibilities.   The MOU  is often                                                                    
     the first stage in the  formation of a formal contract.                                                                    
     An  MOU is  far more  formal  than a  handshake and  is                                                                    
     given weight  in a court  of law should one  party fail                                                                    
     to meet the obligations of the memorandum.                                                                                 
                                                                                                                                
COMMISSIONER  RODELL   stated  that  the  MOU   with  TransCanada                                                               
outlines the state's  expectations of TransCanada's participation                                                               
in  the  midstream,  but  it   will  not  be  binding  until  the                                                               
legislature enacts enabling legislation.                                                                                        
                                                                                                                                
3:26:22 PM                                                                                                                    
                                                                                                                                
COMMISSIONER RODELL  discussed key terms  of the MOU  [slide 17].                                                               
She  explained  that  Exhibit  C  is  the  Alaska  LNG  Midstream                                                               
Services  Agreement, which  sets out  the commercial  terms under                                                               
which  TransCanada   shall  operate  and  expand   the  midstream                                                               
components of  the Alaska  LNG project.   She described  the five                                                               
key terms  of Exhibit  C.   First, the  MOU provides  a favorable                                                               
debt-to-equity ratio of 75/25 for  ratemaking purposes which will                                                               
reduce the state's tariff.  A  lower tariff not only improves the                                                               
state's overall cash  flow but allows the state  to provide lower                                                               
cost  gas  to  Alaskans.    Second,  the  cash  contributions  by                                                               
TransCanada, as  the project developer,  will reduce  the state's                                                               
exposure to cash  calls and obligations until the  pipeline is in                                                               
service.   Third,  improved value  to the  treasury happens  when                                                               
considering  the  opportunity  cost   of  utilizing  the  state's                                                               
capital, which  not only earns  six percent in the  treasury, but                                                               
preserves the state's  flexibility going forward in  terms of how                                                               
the cash is used and what it is  used for.  Thus, the net present                                                               
value  (NPV)  is  improved  overall.   Fourth,  with  respect  to                                                               
expansions,  TransCanada  today  committed  to  a  70/30  capital                                                               
structure.  Fifth,  with respect to gas  to Alaskans, TransCanada                                                               
committed  to   at  least  five  offtake   points  with  distance                                                               
sensitive rates with three zones for delivery.                                                                                  
                                                                                                                                
3:27:46 PM                                                                                                                    
                                                                                                                                
COMMISSIONER RODELL  highlighted where the state  is today [slide                                                               
18].  First the state has  the settlement at Point Thomson, which                                                               
has  led  to  a  workforce   of  almost  1,200  workers  and  the                                                               
development  of   core  infrastructure   to  move  oil   and  gas                                                               
resources.  The state knows  it has access to significant volumes                                                               
of  gas needed  that  when  combined with  the  gas resources  in                                                               
Prudhoe  Bay  allows the  state  to  enter into  long-term  sales                                                               
contracts.  In 2011, the  governor called for the various parties                                                               
to shift their focus to LNG  and determine if they could align on                                                               
a  project together.   Work  done by  TransCanada and  ExxonMobil                                                               
Alaska  Production,  Inc.  under Alaska  Gasline  Inducement  Act                                                               
(AGIA)   and  the   Alaska  Pipeline   project,  along   with  BP                                                               
Exploration  Alaska and  ConocoPhillips  Alaska,  Inc. under  the                                                               
Denali project  provided a foundation  of the  concept selection.                                                               
She identified  concept selection  as the process  of undertaking                                                               
the research  to determine  if there  is a  project and  what the                                                               
project  would  look  like.     This  past  October,  that  phase                                                               
concluded with the  determination that an LNG project  with a gas                                                               
treatment facility on the North  Slope, 800 miles of pipeline and                                                               
an LNG  plant and  related marine  facilities located  in Nikiski                                                               
would be  that project.   This demonstrates above all  else, that                                                               
when everyone combines forces, a project can be advanced.                                                                       
                                                                                                                                
3:29:20 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  referred  to  the   70/30  split  and  asked  which                                                               
TransCanada  entity committed  to  the terms.    He recalled  two                                                               
entities  were  involved in  the  project,  including the  parent                                                               
corporation and the new one.                                                                                                    
                                                                                                                                
COMMISSIONER   RODELL   answered    that   the   parent   company                                                               
[TransCanada Alaska Development, Inc.] signed the MOU.                                                                          
                                                                                                                                
3:30:03 PM                                                                                                                    
                                                                                                                                
COMMISSIONER RODELL  related that the state's  investment of $330                                                               
million under Alaska Gasline Inducement  Act (AGIA), $130 million                                                               
by   TransCanada  Alaska   Development  Inc.   (TransCanada)  and                                                               
ExxonMobil  Alaska  Production,  Inc.  as  partners  under  AGIA.                                                               
Under  the  Denali  project, BP  Exploration  (Alaska)  Inc.  and                                                               
ConocoPhillips  Alaska, Inc.  spent  approximately $200  million.                                                               
At  the end  of April  14,  if enabling  legislation passes,  the                                                               
project  will move  into  preliminary  Front-End Engineering  and                                                               
Design  (Pre-FEED)  phase.   Under  this  process, all  AGIA  and                                                               
Denali work will  be contributed to the Alaska LNG  project.  The                                                               
state  and TransCanada  mutually agree  to abandon  AGIA at  that                                                               
point.  In  the event the state decides not  to move forward with                                                               
a partnership  with TransCanada,  the state  will need  to decide                                                               
whether  it  will  want  to  buy  balance  of  data  produced  by                                                               
TransCanada and ExxonMobil Alaska  Production, Inc. in connection                                                               
with AGIA.                                                                                                                      
                                                                                                                                
3:31:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON asked  for  clarification  on the  $130                                                               
million for the  balance of the AGIA funds.   He was unsure about                                                               
the "divorce" since  it suggests that TransCanada  would agree to                                                               
mutual  abandonment of  AGIA even  if the  state doesn't  partner                                                               
with TransCanada on the Alaska LNG  line.  He said he didn't hear                                                               
TransCanada testify to that aspect.                                                                                             
                                                                                                                                
COMMISSIONER   RODELL   said   the   department   has   not   had                                                               
conversations  in the  event that  enabling  legislature did  not                                                               
pass or  if the bill precludes  TransCanada's participation going                                                               
forward.  She said that TransCanada  is prepared to work with the                                                               
state on unwinding TransCanada.   They recognize that the FY 2015                                                               
budget does not contain any funding  request and there will be no                                                               
further funding for  the AGIA license going forward.   It will be                                                               
a process  of how the state  evidences the end of  AGIA; however,                                                               
the department  has not had  those conversations since  the state                                                               
has been proceeding with the MOU.                                                                                               
                                                                                                                                
3:33:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  discussed the  provisions of  AGIA with                                                               
respect to the penalties and  said he was not presently concerned                                                               
about staying  in a  30-year relationship  with TransCanada.   He                                                               
pointed out that the legislative  legal drafter's advice was that                                                               
the project  is uneconomical because  it's really designed  to go                                                               
to  Alberta, which  is uneconomical.    However, he  said he  was                                                               
unsure that TransCanada will just "let  us off the hook if we cut                                                               
them $130 million."  In other  words, "We better be married."  He                                                               
asked for further clarification.                                                                                                
                                                                                                                                
COMMISSIONER   RODELL  answered   that   she  doesn't   represent                                                               
TransCanada  so she  cannot preclude  any actions  TransCanada or                                                               
the state are entitled to take.                                                                                                 
                                                                                                                                
3:34:19 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  remarked that the  route to Alberta failed  on three                                                               
different occasions so  it is not a factor at  this point in time                                                               
since it didn't "pencil out."                                                                                                   
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  recalled  testimony before  the  House                                                               
Resources Committee  in which Mr.  Bullock said  that technically                                                               
AGIA  is  about  Alberta  and  an  "abandonment  question"  would                                                               
concern Alberta.   He hoped  some of these questions  just become                                                               
academic questions.                                                                                                             
                                                                                                                                
3:34:58 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL  understood  tremendous nuances  exist  with                                                               
respect to AGIA,  and the Department of Law will  ensure that the                                                               
administration walks  this very  carefully and follow  what needs                                                               
to happen.                                                                                                                      
                                                                                                                                
REPRESENTATIVE CHENAULT  remarked that he has  concerns about the                                                               
proposed Alaska LNG structure, but  some of his concerns are also                                                               
about the  AGIA structure.   He said that the  legislature cannot                                                               
get a determination from the  DOL on what treble damages actually                                                               
means.    As the  legislature  moves  through this  process  some                                                               
pointed  questions need  to be  asked to  avoid the  current AGIA                                                               
situation: not knowing  the final costs to exit the  process.  He                                                               
acknowledged  that he  hasn't  seen where  anyone  has said  that                                                               
TransCanada is willing  to "just sign off on the  dotted line and                                                               
then let's move forward."   He considers the Alaska LNG proposal,                                                               
[the  HOA and  MOU], as  a  partnership that  has been  developed                                                               
between the  legislature, the administration, and  TransCanada to                                                               
move forward,  and if  the state moves  forward as  proposed, the                                                               
state  won't  incur  treble  damages  or  the  threat  of  treble                                                               
damages.   He  acknowledged that  as this  moves forward  lots of                                                               
concerns exist.                                                                                                                 
                                                                                                                                
3:36:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT  referred to slide 18  entitled "Where We                                                               
Are Today?"  to the  participation, with  Alaska putting  in $130                                                               
million,   TransCanada  putting   in   $130,   and  Denali's   BP                                                               
Exploration Alaska  and ConocoPhillips Alaska, Inc.  "are looking                                                               
at $200 million."  He said in  the next phase the state will fund                                                               
$70  million.    He  asked  what  funding  the  "big  three"  and                                                               
TransCanada will be making.                                                                                                     
                                                                                                                                
COMMISSIONER RODELL  answered that  takes her  to the  next slide                                                               
[slide 19]  entitled "What  Happens if  HB 277  Passes?"   If the                                                               
process moves  forward, the  producers will  put in  between $348                                                               
and $327 million, depending on  whether the state participates at                                                               
20 percent  or 25  percent level.   The  estimated cost  for Pre-                                                               
Front End Engineering & Design (Pre-FEED)  over the next 12 to 18                                                               
months  will  be  approximately  $435  million.    If  the  state                                                               
participates  at 20  percent,  the producers  will  pick up  $348                                                               
million, which  will be  reduced to $327  million if  the state's                                                               
share  is 25  percent.    The state's  share  of liquefaction  is                                                               
between  $35 and  $43 million.   TransCanada's  portion would  be                                                               
from $53 to $67 million for the midstream components.                                                                           
                                                                                                                                
3:38:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CHENAULT reiterated  the participation figures for                                                               
the state  being between $327 and  $348 million.  He  offered his                                                               
belief that the governor has asked for about $70 million.                                                                       
                                                                                                                                
COMMISSIONER RODELL answered yes.   She related her understanding                                                               
that  the  Alaska  Gasline Development  Corporation  (AGDC)  made                                                               
assumptions, which includes  a contingency over cost  of about 40                                                               
percent,   including   money   for   administrative   staff   and                                                               
consultants.   She explained that  as the process  continues, the                                                               
fiscal note will also be refined.                                                                                               
                                                                                                                                
3:39:44 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL said  that at  the  end of  this period  the                                                               
administration expects  to have a  series of contracts  that will                                                               
be  approved  or  not  approved  by  the  legislature.    If  the                                                               
legislature moves forward with the  Alaska LNG project, the state                                                               
needs to  decide whether to  exercise the option  TransCanada has                                                               
offered, which  is to reimburse  40 percent of the  project costs                                                               
as the  project moves  to the  Pre-FEED stage.   She  offered her                                                               
belief that this  allows the state the flexibility  to not decide                                                               
if  it is  "all  in" or  not.   Instead,  the  pre-FEED work  can                                                               
advance  and the  state can  make the  decision later  on how  to                                                               
proceed.   If the state  wants to stop  TransCanada's involvement                                                               
and take  on 100  percent, the  state will  reimburse TransCanada                                                               
the development costs  it fronted on behalf of  the state through                                                               
the  12 to  18  month  [Pre-FEED] period,  plus  interest at  7.1                                                               
percent.                                                                                                                        
                                                                                                                                
3:41:08 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL turned  to slide  20 entitled  "What Happens                                                               
after FEED?"   This period consists of front  end engineering and                                                               
design estimated  to last two  to three years at  estimated total                                                               
cost of $1.8 billion dollars.   Of that, the producers would take                                                               
on 1.35  and 1.44 billion  dollars, the state  liquefaction share                                                               
would  range  from  $145  to $180  million.    Additionally,  the                                                               
state's  share  if  it  exercises the  "take  back"  option  will                                                               
increase  from $145  to $180  million to  $230 and  $290 million.                                                               
TransCanada's share will range from  $250 to $270 million, and if                                                               
the state  exercises its option,  TransCanada's share  will range                                                               
from  $130  to $160  million,  which  represents the  60  percent                                                               
differential.    At the  end  of  this  period, the  state  would                                                               
determine if it  has the approval of all parties  to move forward                                                               
and begin  construction.  If  yes, the state has  the opportunity                                                               
to pay TransCanada's development costs  and if the state comes in                                                               
at 40 percent  would pay $183 million  or if it could  be as much                                                               
as $337 million  if it takes on whole project  costs to date plus                                                               
7.1 percent interest.                                                                                                           
                                                                                                                                
3:43:07 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL  summarized that  the  HOA  and MOU  provide                                                               
guidance  on how  the  powers provided  in HB  277  will be  used                                                               
[slide 21].   At each stage in the project  there are "off-ramps"                                                               
and   decision  points   for  legislative   and  public   review.                                                               
Commitments by the state will  be made commensurate with progress                                                               
of the  project and  commensurate with the  other parties  in the                                                               
Alaska LNG project.                                                                                                             
                                                                                                                                
3:43:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  moved  beyond  the  Pre-FEED  to  FEED                                                               
period to approximately  three years from now.   He asked whether                                                               
the  project  will end  if  the  gas  contracts with  Asia  don't                                                               
materialize.                                                                                                                    
                                                                                                                                
COMMISSIONER RODELL answered yes.  At  the end of the FEED stage,                                                               
if the state  decides to move forward, it must  figure out how it                                                               
wants  to   finance  its   share,  regardless   of  TransCanada's                                                               
participation.   The  state  will have  to  invest a  significant                                                               
portion of financing to meet  the capital costs for construction.                                                               
For the  purpose of  simplicity, if  the construction  costs were                                                               
$10 billion and  the state's funding $4 billion,  the state would                                                               
need to decide how  to raise the money and adjust  for that.  She                                                               
said  that this  is why  the  administration is  taking steps  by                                                               
including TransCanada  in the partnership  so the state  does not                                                               
have  to raise  $10 billion  in  a time  period when  the DOR  is                                                               
forecasting  revenues today  that  cannot support  a $10  billion                                                               
investment.  Further,  the state is trying to do  other things to                                                               
provide capacity  within the state's  debt or  liability, whether                                                               
that means moving $3 billion  to the Public Employees' Retirement                                                               
System (PERS)  and Teachers' Retirement  System (TRS)  trust fund                                                               
to create relief  within the operating budget and  on the state's                                                               
liability to  demonstrate that the  state can take  on additional                                                               
debt 10 years down the road.                                                                                                    
                                                                                                                                
3:46:22 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 3:46 p.m. to 3:47 p.m.                                                                       
                                                                                                                                
          HB 230-AIDEA BONDS FOR PROCESSING FACILITIES                                                                      
                                                                                                                                
3:47:27 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE  BILL  NO. 230,  "An  Act  allowing the  Alaska  Industrial                                                               
Development and  Export Authority  to issue bonds  for an  oil or                                                               
gas   processing  facility;   and  creating   the  oil   and  gas                                                               
infrastructure fund to finance construction  or improvement of an                                                               
oil or gas processing facility."                                                                                                
                                                                                                                                
3:47:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PAUL SEATON,  Alaska  State  Legislature, as  the                                                               
prime sponsor, stated  that HB 230 moves forward  the strategy to                                                               
increase  oil  in the  Trans-Alaska  Pipeline  System (TAPS)  and                                                               
increase throughput.   An  impediment to  increasing oil  in TAPS                                                               
has  been  the  difficulty  in   access  to  existing  processing                                                               
facilities,  including  water  and   gas  constraint  within  the                                                               
handling facilities.   Also, companies want to  reserve space for                                                               
their own product.  This bill is to remove these impediments.                                                                   
                                                                                                                                
3:48:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to adopt  the proposed  committee                                                               
substitute,  (CS)   for  HB  230  labeled   28-LS1053\U,  Martin,                                                               
2/10/14, as the working document.                                                                                               
                                                                                                                                
REPRESENTATIVE JOSEPHSON objected for the purpose of discussion.                                                                
                                                                                                                                
3:49:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON explained  that  HB 230  would expand  the                                                               
Alaska Industrial  Development and Export Authority  (AIDEA).  It                                                               
are  limited to  $400 million  bonding authority  for all  of its                                                               
projects.   He said  that oil and  gas processing  facilities are                                                               
expensive,  and HB  230  will allow  AIDEA to  issue  up to  $200                                                               
million in bonds to fund  projects without additional legislative                                                               
authority.    He  said  this relieves  constraint  in  two  ways.                                                               
First,  it  isn't  clear  under   the  statutes  that  AIDEA  has                                                               
authority to finance oil and  gas processing facilities.  Second,                                                               
it removes the  monetary restraint.  If  the legislature approves                                                               
this bonding, it provides authority  on a timeline for commercial                                                               
operations  and accelerates  the production  of oil  from smaller                                                               
fields  into  the pipeline.    He  stated  that the  current  $10                                                               
million  limit, in  effect, means  AIDEA  must come  back to  the                                                               
legislature  for approval,  which means  sometimes waiting  until                                                               
the  legislature is  in session.    Thus, this  bill would  allow                                                               
AIDEA  to  issue  bonds  up  to $200  million  for  oil  and  gas                                                               
processing equipment and renovations.                                                                                           
                                                                                                                                
3:51:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON explained  that  HB 230  also creates  the                                                               
[Oil and Gas  Infrastructure Fund to assist in  financing oil and                                                               
gas processing facilities  on the North Slope].   The legislature                                                               
may  decide  to  appropriate  funds rather  than  use  a  bonding                                                               
authority.   Historically,  the state  has negotiated  with AIDEA                                                               
between 10  to 12 percent on  bonds so the state  will make money                                                               
on these  loans and the  new fund will  be the repository  of the                                                               
earnings,  which will  be used  for oil  and gas  projects.   The                                                               
current  AIDEA fund  can be  used for  any economic  development.                                                               
Thus,  if the  legislature  wishes to  target  the extra  bonding                                                               
authority, it can do so.                                                                                                        
                                                                                                                                
REPRESENTATIVE SEATON  stated that the  bill defines oil  and gas                                                               
processing as taking gas molecules  out of oil.  Additionally, it                                                               
allows gas to  liquid (GTL) by chemical conversion  as opposed to                                                               
phase conversion under  liquefied natural gas (LNG).   This would                                                               
make  GTL available,  necessary  due to  emission control  areas.                                                               
Currently the state must import  ultra-low sulphur diesel, but it                                                               
can be  made in Alaska.   He pointed out one  provision was added                                                               
to SB 21 by the House  Resources committee last year; however, it                                                               
would  have required  a  title change.    Additionally, the  bill                                                               
duplicates  the  oil and  gas  [processing  facility] tax  credit                                                               
section  for  construction  or  improvement  of  modules.    This                                                               
language was included  in SB 21 and the tax  credit duplicated in                                                               
HB 230 to  be sure the greatest opportunity  for building modules                                                               
is in  the state.   Thus, if  modules are manufactured  in Alaska                                                               
the  tax credit  will apply.   He  offered to  provide additional                                                               
information on the service industry tax credit.                                                                                 
                                                                                                                                
3:54:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked whether  the sponsor  agreed with                                                               
the addition of the tax credit language.                                                                                        
                                                                                                                                
REPRESENTATIVE SEATON answered yes.   He indicated that a portion                                                               
targets Alaska  jobs and provides  an incentive for  building the                                                               
modules  in Alaska.   He  pointed out  that one  smaller operator                                                               
could have  resulted in more  oil in  the pipeline if  they could                                                               
have  obtained  financing  at commercially  reasonable  terms  to                                                               
build the  facilities in the  Matanuska-Susitna valley  and truck                                                               
them.   He acknowledged a number  of smaller outfits would  be in                                                               
line to put oil in the  pipeline.  He pointed out that processing                                                               
facilities don't make money if  the company is processing its own                                                               
oil.  Thus, it's  not a profit center so it  is more difficult on                                                               
a business  relationship to build  processing facilities  than it                                                               
is for companies to undergo exploration.                                                                                        
                                                                                                                                
3:56:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  suggested  that   the  tax  credit  is                                                               
designated  for smaller  independents.   He asked  whether larger                                                               
companies can use the credits.                                                                                                  
                                                                                                                                
REPRESENTATIVE  SEATON  answered  that  nothing  limits  the  tax                                                               
credits  to  smaller companies.    He  explained that  these  tax                                                               
credits are  not designed  for projects the  size of  LNG plants.                                                               
However,  if there  was  the necessity  for  larger companies  to                                                               
renovate facilities  they could  approach AIDEA.   Typically, the                                                               
large  producers generally  have  better access  to capital  than                                                               
smaller outfits  and AIDEA performs  due diligence.   He deferred                                                               
to AIDEA with respect to due diligence.                                                                                         
                                                                                                                                
3:58:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  related  his  understanding  that  the                                                               
conventional  wisdom   is  that  access  problems   for  existing                                                               
processing facilities  are access problems for  independents.  It                                                               
seems fairly  circular.  He  said the controversy is  whether the                                                               
"big three" are allowing access so  to allow them to benefit from                                                               
the credit seems to exacerbate it.                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON clarified  that this tax credit  is not for                                                               
production;  instead  it is  a  "qualified  oil and  gas  service                                                               
industry expenditure  credit."   The tax  credits would  apply if                                                               
molecules are built  in Alaska instead of Japan.   This credit is                                                               
exactly the same  as the credit approved in SB  21 to incentivize                                                               
building  facilities  in Alaska,  creating  jobs  in Alaska,  and                                                               
driving Alaska's  economy.  He  said that the  combination cannot                                                               
exceed  $10  million a  year.    Thus,  this provision  does  not                                                               
provide  an additional  credit.    In the  event  that  SB 21  is                                                               
repealed, it  would still  allow stimulation  of Alaska  hire and                                                               
building modules in Alaska, he said.                                                                                            
                                                                                                                                
4:00:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON withdrew his  objection.  There being no                                                               
further objection, Version U was before the committee.                                                                          
                                                                                                                                
REPRESENTATIVE CHENAULT  commented that Representative  Seaton is                                                               
a man  of many  hats.  He  explained that in  terms of  access to                                                               
facilities a  limitation exists.   He described the  oil process,                                                               
such  that  when a  field  is  developed  the initial  oil  wells                                                               
produces significant oil, a little gas,  and water.  As time goes                                                               
on, the  percentages change, and  sometimes wells can  produce up                                                               
to 95  percent water.  He  pointed out that sometimes  even major                                                               
oil companies are limited by  the capacity of the facility itself                                                               
and by  composition changes as the  wells age.  He  said that the                                                               
facilities are  expensive to  build and  operate and  agreed that                                                               
this bill is not a "bad" bill.                                                                                                  
                                                                                                                                
CHAIR OLSON acknowledged many people would agree with him.                                                                      
                                                                                                                                
4:02:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked about the maximum tax credits.                                                                   
                                                                                                                                
TED  LEONARD, Executive  Director, Alaska  Industrial Development                                                               
and Export  Authority (AIDEA), deferred  to the expertise  of the                                                               
Department of Revenue (DOR) to respond the question.                                                                            
                                                                                                                                
4:03:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked  whether  it  would  be  at  the                                                               
discretion of AIDEA's board on whether to issue bonds.                                                                          
                                                                                                                                
MR. LEONARD  misunderstood the question,  noting he  thought that                                                               
he was asking about tax credits.                                                                                                
                                                                                                                                
4:04:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  wondered  whether  the  financing  was                                                               
statutorily  mandated or  if the  board meets.   He  acknowledged                                                               
that  the  LNG  trucking  was  mandated, but  he  was  trying  to                                                               
understand  whether  this  bill  would operate  under  the  AIDEA                                                               
board's discretion.                                                                                                             
                                                                                                                                
MR. LEONARD responded that under  AIDEA's current statutes, AIDEA                                                               
invests in projects through direct  financing or owning a portion                                                               
of a project.   The board goes through a  due diligence phase and                                                               
during  the  review process  on  projects  decides what  type  of                                                               
capital structure  will work  and if  it will  issue bonds  for a                                                               
project.  Under  the current statue anything over  $10 million is                                                               
subject  to  legislative  approval  prior to  the  board  issuing                                                               
bonds.   He explained  that the authority  by the  legislature is                                                               
not a  mandate, but  rather the  legislature grants  authority to                                                               
issue  bonds.   The AIDEA  still  goes through  its complete  due                                                               
diligence  phase.   Before  AIDEA would  issue  bonds, the  AIDEA                                                               
board will first  approve the project and per  statute identify a                                                               
finance plan  to repay  the bonds.   In  reality this  bill would                                                               
increase  the authority  to issue  up to  $200 million  in bonds,                                                               
which  avoids   the  necessity  for  AIDEA   to  request  bonding                                                               
authorization  from the  legislature every  time the  board might                                                               
consider investing in a facility.                                                                                               
                                                                                                                                
4:06:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON said  he was  curious how  generous the                                                               
credits could become; however, he certainly liked the policy.                                                                   
                                                                                                                                
4:07:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  asked how  much the state  would forego                                                               
in  taxing  authority  if  the potential  for  tax  credits  were                                                               
issued.                                                                                                                         
                                                                                                                                
MATT   FONDER,   Director,   Anchorage  Office,   Tax   Division,                                                               
Department of Revenue (DOR), admitted  he has just seen Version U                                                               
containing  the  tax credits  this  afternoon.   He  offered  his                                                               
belief  that  bonding  and  tax   credits  are  separate  issues.                                                               
Proposed Sec. 2  and AS 43.20, the corporate  income tax section,                                                               
set forth  a new  credit for oil  and gas  processing facilities.                                                               
He viewed the bonding and the tax credit as separate issues.                                                                    
                                                                                                                                
4:08:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  asked if  he  could  predict how  many                                                               
people could take advantage of these credits.                                                                                   
                                                                                                                                
MR. FONDER  answered that "at  first blush" the way  the language                                                               
appears  it  could  include  any  company with  an  oil  and  gas                                                               
processing facility  on the North  Slope, any company  that would                                                               
like to  build one,  and any  company working on  an oil  and gas                                                               
processing facility.   Thus, it could be an oil  and gas producer                                                               
or service provider on any of those facilities.                                                                                 
                                                                                                                                
REPRESENTATIVE JOSEPHSON said  he didn't know what  the answer is                                                               
but he thanked Mr. Fonder.                                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON  explained the tax credit  mirrors existing                                                               
law.  He stated that SB  21 passed the legislature last year with                                                               
this language -  10 percent of the qualified oil  and gas service                                                               
industry  expenditures  during  the  tax  year  or  $10  million,                                                               
whichever  is  less.    This bill  includes  language  that  this                                                               
existing tax credit  can't be combined.  He  reiterated that this                                                               
is not  a new  tax credit; he  just wanted to  make sure  that no                                                               
matter what  the outcome  of the  [upcoming] referendum  is, that                                                               
the tax  credit to stimulate  production of facilities  in Alaska                                                               
will remain the same and will remain in place.                                                                                  
                                                                                                                                
4:10:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOSEPHSON  said  that Representative  Seaton  was                                                               
clear.  He related his  understanding that the projections by the                                                               
Office of Management & Budget and  DOR projects under SB 21 would                                                               
continue regardless of the outcome of the August referendum.                                                                    
                                                                                                                                
REPRESENTATIVE SEATON answered yes.                                                                                             
                                                                                                                                
4:11:36 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON said he would keep public testimony open.                                                                           
[HB 230 was held over.]                                                                                                         
                                                                                                                                
4:12:05 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease from 4:12 p.m. to 4:15 p.m.                                                                  
                                                                                                                                
                 HB 300-AIR AMBULANCE SERVICES                                                                              
                                                                                                                                
4:15:33 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  next order of business  would be                                                               
HOUSE BILL  NO. 300,  "An  Act relating to air  ambulance service                                                               
providers,  air ambulance  membership agreements,  and regulation                                                               
of air  ambulance service providers and  air ambulance membership                                                               
agreements by  the division  of insurance;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
4:15:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CATHY  MUNOZ, Alaska  State Legislature,  as prime                                                               
sponsor of HB  300, explained that this bill  would allow popular                                                               
air  ambulance membership  programs to  continue serving  Alaskan                                                               
residents.   She related  a personal scenario  in which  her late                                                               
father was medevaced  from Juneau two years ago and  it saved his                                                               
life.   These  emergency transports  are very  expensive and  can                                                               
cost  $50,000 to  $100,000 per  flight.   The membership  program                                                               
allowed Alaskans to buy a  membership, which served as the copay.                                                               
If a person  was medevaced and used primary  insurance, the copay                                                               
was waived if a person had a membership.                                                                                        
                                                                                                                                
4:17:00 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked  whether the membership would  cover the entire                                                               
amount if the person did not have insurance.                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ answered that  the person would need primary                                                               
insurance coverage in order purchase a membership.                                                                              
                                                                                                                                
4:17:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ said  she heard  from 1,300  Juneauites who                                                               
were  participants  of Airlift  Northwest.    She indicated  that                                                               
about three to  four months ago, the Division  of Insurance (DOI)                                                               
ruled that  Airlift Northwest could  not provide  the [insurance]                                                               
service  any  longer  since Airlift  Northwest  has  specifically                                                               
reorganized  its company  under  the  University of  Washington's                                                               
umbrella organization.   In doing  so, the program was  no longer                                                               
eligible under the DOI's licensing  requirements.  Again, she has                                                               
heard from many  constituents, of whom many  are retirees worried                                                               
about  losing  the  membership  plan.     This  bill  will  allow                                                               
membership  to continue.   Passage  of  HB 300  would help  1,300                                                               
Juneauites, 460  individuals from  Sitka, 450 from  Wrangell, 330                                                               
from  Ketchikan,  and  200  in Petersburg.    She  explained  the                                                               
figures are from  one company that provides  medvac services, but                                                               
there are other  companies that can provide the  service as well.                                                               
She noted letters of support  in members' packets from the Alaska                                                               
Commission on  Aging, the Southeast Alaska  Fishermen's Alliance,                                                               
and residents of Skagway, Juneau, Ketchikan, and Sitka.                                                                         
                                                                                                                                
4:20:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ stated that she  has worked with the sponsor                                                               
in the Senate on a companion bill.                                                                                              
                                                                                                                                
[HB 300 was held over.]                                                                                                         
                                                                                                                                
4:21:40 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 4:21 p.m. to 4:22 p.m.                                                                       
                                                                                                                                
         HCR 15-TASK FORCE ON UNMANNED AIRCRAFT SYSTEMS                                                                     
                                                                                                                                
4:22:43 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the final order of  business would be                                                               
HOUSE CONCURRENT RESOLUTION NO.  15, Relating to the continuation                                                               
of the Task Force on Unmanned Aircraft Systems.                                                                                 
                                                                                                                                
4:23:07 PM                                                                                                                    
                                                                                                                                
GINGER  BLAISDELL, Staff,  Representative Shelley  Hughes, Alaska                                                               
State  Legislature,  on   behalf  of  the  sponsor   of  HCR  15,                                                               
Representative Shelley Hughes, explained  that a legislative Task                                                               
Force on Unmanned Aircraft Systems  [task force] was formed under                                                               
HCR  6  last  legislative  session   to  review  regulations  and                                                               
guidance  regarding  unmanned  aircraft   systems  [UAS]  and  to                                                               
provide  recommendations for  a comprehensive  state policy  that                                                               
protects privacy  and allows for  public and  private operations.                                                               
She said that  most people are intrigued  with unmanned aircraft,                                                               
but most  are concerned  with privacy.   The concept  of unmanned                                                               
aircraft is  new and  interesting, and each  time the  task force                                                               
met, a  new development  occurred.   Every instance  and scenario                                                               
was explored from the standpoint of  how the use would happen and                                                               
if the  public was well protected.   The task force  decided that                                                               
the   instances   were   covered  by   statutes   plus   Alaska's                                                               
Constitution  has  strong  personal protection  provisions.    It                                                               
isn't possible  to determine how  fast this industry  is changing                                                               
and growing.   For  example, the  initial questions  covered such                                                               
items as search  and rescue or wildlife management.   She related                                                               
that she  receives unmanned aircraft  system news.   The military                                                               
unmanned  aircraft used  for surveillance  is approximately  four                                                               
feet wide, called  a razor, and costs $76,000.   Today, a company                                                               
printed a  razor in  one day  using a 3-D  printer and  loaded it                                                               
with android, and  using free applications (apps), it  can do the                                                               
same business and  costs $2,000.  The industry  is changing fast,                                                               
she said.                                                                                                                       
                                                                                                                                
4:26:23 PM                                                                                                                    
                                                                                                                                
MS. BLAISDELL stated that Dubai's  [Mohammed Al Gargawi, Minister                                                               
of  Cabinet  Affairs,  at  the  Government  Summit  in  Dubai  in                                                               
February 2014,]  has offered  a $1 million  award for  anyone who                                                               
can  devise  a  use  for   unmanned  aerial  systems  to  improve                                                               
government services.   A sample  video on the  government website                                                               
showed  a lady  in  her  home ordering  her  driver's license  by                                                               
computer  and  an  unmanned  aircraft  flies  to  her  home.    A                                                               
fingerprint  scan  opens  the  door,  she  removes  her  driver's                                                               
license, and the unmanned aircraft flies away.                                                                                  
                                                                                                                                
4:27:09 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL stated  that the  University  of Alaska  Fairbanks                                                               
(UAF) engineering  department created  an unmanned  aircraft that                                                               
fits into  the palm of hand.   These unmanned aircraft  can be as                                                               
large as  a 747 aircraft.   She recently learned that  two Global                                                               
Hawks  fly in  the  South Pacific  to  monitor weather  patterns.                                                               
Japan's  [Defense Ministry  reported  that two  American-operated                                                               
Global Hawks  will be deployed  from May  to October to  the U.S.                                                               
military facility at  Misawa Air Base.  The drones  are used as a                                                               
high-altitude,  long-endurance  platform   for  surveillance  and                                                               
security.  They  were used  before  in  monitoring the  Fukushima                                                               
nuclear plants after the leakage in  March 2011].  She noted that                                                               
the Global  Hawks are  the size  of 747s  and the  pilots operate                                                               
them from  California, and the  drones are flown around  Guam and                                                               
Japan without the necessity of obtaining passports.                                                                             
                                                                                                                                
4:28:13 PM                                                                                                                    
                                                                                                                                
MS.  BLAISDELL  said the  task  force  was sensitive  to  privacy                                                               
concerns especially surrounding law  enforcement activities.  She                                                               
reported  that HB  255 is  currently before  the House  Judiciary                                                               
Standing Committee  and deals  with law  enforcement issues.   It                                                               
provides procedures,  data retention, and  community involvement.                                                               
The task force has a limited  scope, and this resolution, HCR 15,                                                               
would extend the task force for  three years until June 30, 2017,                                                               
which also coincides with the UAF  test site.  Thus, when the UAF                                                               
test site  finishes its  mission the task  force will  finish its                                                               
work, as well.                                                                                                                  
                                                                                                                                
4:29:19 PM                                                                                                                    
                                                                                                                                
MS. BLAISDELL discussed the "whereas"  section of the resolution,                                                               
which  lists all  of the  positives of  using UAF.   The  UAF was                                                               
selected by  the Federal  Aviation Administration  as one  of six                                                               
test sites.   She anticipated that this will result  in a boom in                                                               
business and  industry growth as  well as being on  the forefront                                                               
of some policy decisions on how  unmanned aircraft can be used in                                                               
the U.S.   The  task force currently  consists of  seven members.                                                               
This resolution requests  the same seven members  be retained and                                                               
it adds two  additional seats.  The  Department of Transportation                                                               
& Public  Facilities (DOT&PF), the  Department of Law  (DOL), and                                                               
the Legislative  Affairs Agency Legal  Services thought  it would                                                               
be helpful, in particular, since  the federal point of contact is                                                               
with DOT&PF.   The ninth position would be a  public member since                                                               
all other task force members had affiliation with aircraft use.                                                                 
                                                                                                                                
4:30:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD asked  whether the  task force  has been                                                               
working with the Aerospace Board.                                                                                               
                                                                                                                                
MS.  BLAISDELL answered  no.   The  task force  originally had  a                                                               
board of 15-17  members, but it was  cut to seven since  it was a                                                               
more manageable  number, especially  given any  cost involvement.                                                               
This resolution  recognizes the  need for  a public  position and                                                               
DOT&PF position as the federal aviation connection.                                                                             
                                                                                                                                
4:31:53 PM                                                                                                                    
                                                                                                                                
CHAIR  OLSON asked  whether the  University  of Alaska  Fairbanks                                                               
competes with the private sector.                                                                                               
                                                                                                                                
MS.  BLAISDELL deferred  to the  director of  the test  site [UAF                                                               
Vice  Chancellor  Rosanne  "Ro"   Bailey,  a  retired  Air  Force                                                               
brigadier general] to address the relationship.                                                                                 
                                                                                                                                
REPRESENTATIVE REINBOLD  said Ms. Bailey is  highly knowledgeable                                                               
on this subject.                                                                                                                
                                                                                                                                
4:32:50 PM                                                                                                                    
                                                                                                                                
MS. BLAISDELL,  referring to page  3, lines 2-14, which  read, in                                                               
part:                                                                                                                           
                                                                                                                                
      (3) evaluating complaints and concerns expressed to                                                                       
     the task force;                                                                                                            
     (4) identifying potential privacy problems associated                                                                      
     with unmanned aircraft systems and determining whether                                                                     
     legislation is necessary to address them;                                                                                  
      (5) considering recommendations for public education                                                                      
     related to unmanned aircraft systems;                                                                                      
                                                                                                                                
MS. BLAISDELL  said that  the "resolved"  clauses add  new duties                                                               
and purposes of  the task force.  Resolve (3)  would add language                                                               
that allows  the public, businesses  and government an  avenue to                                                               
address their concerns.  Right  now there is nowhere for citizens                                                               
to  direct  their  concerns,  she explained.    The  UAF  doesn't                                                               
typically receive comments  that have little to do  with the test                                                               
site purpose,  so the task force  provides a central way  for all                                                               
citizens  to participate.    [Resolve (4)]  "is  to identify  any                                                               
potential  privacy problems,  and so  it give  the task  force an                                                               
opportunity to  evaluate the concerns ...  and see if we  do need                                                               
to  makes some  changes  in  statute."   Resolve  (5) relates  to                                                               
public  education to  help eliminate  the  fear, which  generally                                                               
develops with new  technology, she said.   Additionally, the task                                                               
force  can fulfill  one of  the duties  of the  UAF test  site by                                                               
conducting  public meetings  and receiving  public comments.   It                                                               
also includes  studying the issue  and making  recommendations to                                                               
the legislature [paragraphs (7)-(9)], she said.                                                                                 
                                                                                                                                
MS.  BLAISDELL   stated  that  these  clauses   provide  a  great                                                               
opportunity for legislator involvement  with professionals in the                                                               
business.  She asked members  to consider this resolution "with a                                                               
positive light."                                                                                                                
                                                                                                                                
4:35:29 PM                                                                                                                    
                                                                                                                                
STEVE COLLIGAN, Member, Task Force  on Unmanned Aircraft Systems,                                                               
stated that  he is in  the mapping  and technology business.   He                                                               
graduated from the UAF graduate program.                                                                                        
                                                                                                                                
4:36:42 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON remarked that it isn't possible to hear the                                                                         
testifier due to the poor audio.  He offered to place Mr.                                                                       
Colligan at the top of the list at the next hearing on HCR 15.                                                                  
                                                                                                                                
[HCR 15 was held over.]                                                                                                         
                                                                                                                                
4:37:11 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
4:37 p.m.                                                                                                                       

Document Name Date/Time Subjects
HB230 ver A.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Sponsor Statement.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Fiscal Note-DCCED-AIDEA-02-14-14.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Supporting Documents AIDEA Overview.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Supporting Documents DNR North Slope Oil and Gas Activity map.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Draft Proposed Blank CS ver U.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Summary of Changes ver A to ver U.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HB230 Sectional Analysis-Blank CS ver U.pdf HL&C 2/21/2014 3:15:00 PM
HB 230
HCR15 ver U.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HCR15 Sponsor Statement.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HCR15 Fiscal Note-LEG-COU-01-24-14.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HCR15 Supporting Documents-Task Force UAS Interim Report - Jan 15-2014.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HCR15 Supporting Documents-Letter Fbks Econ Dev Corp 01-27-2014.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HCR15 Supporting Documents-Letter Univ of Alaska 01-24-2014.pdf HL&C 2/21/2014 3:15:00 PM
HCR 15
HB300 ver O.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Sponsor Statement.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Sectional Analysis.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Fiscal Note-DCCED-DOI-02-10-14.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letters Div of Insurance 11-12-201313 and AG of Washington 11-18-2013 response.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter-Southeast Alaska Fishermen's Alliance 2-14-2014.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-News Articles.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Assorted Emails.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter Airlift Northwest 02-17-2014.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter Airlift Northwest 11-22-2013.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter Div of Insurance 08-26-2008.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter Marijo & Steve Brantner.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letters assorted.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Assorted News Stories.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Assorted Emails.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letters Skagway, Ketchikan, Wrangell 02-11-2014.pdf HL&C 2/21/2014 3:15:00 PM
HB 300
HB300 Supporting Documents-Letter Alaska Commission on Aging 02-18-2014.pdf HL&C 2/21/2014 3:15:00 PM
HB 300