Legislature(2001 - 2002)

04/18/2001 05:09 PM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                                                           
                         April 18, 2001                                                                                         
                           5:09 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Scott Ogan, Chair (via teleconference)                                                                           
Representative Hugh Fate, Vice Chair                                                                                            
Representative Fred Dyson                                                                                                       
Representative Mike Chenault                                                                                                    
Representative Vic Kohring                                                                                                      
Representative Gretchen Guess                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Reggie Joule                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 121(RES)                                                                                                 
"An Act adding,  for purposes of the  Alaska Right-of-Way Leasing                                                               
Act,  a  definition of  'substantial  change'  as applied  to  an                                                               
amended  right-of-way lease  application;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED CSSB 121(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
CS FOR SENATE BILL NO. 158(RES) am                                                                                              
"An  Act  directing the  commissioner  of  revenue to  prepare  a                                                               
report to  the legislature relating to  the state's participation                                                               
in owning or financing a  gas pipeline project; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     - MOVED HCS CSSB 158(O&G) OUT OF COMMITTEE                                                                                 
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SB 121                                                                                                                  
SHORT TITLE:RIGHT-OF-WAY LEASING ACT                                                                                            
SPONSOR(S): SENATOR(S) LEMAN                                                                                                    
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/27/01     0520       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/27/01     0521       (S)        RES, FIN                                                                                     
03/16/01                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
03/16/01                (S)        Heard & Held                                                                                 
                                   MINUTE(RES)                                                                                  
03/30/01                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
                                   Meeting Canceled                                                                             
04/02/01                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
04/02/01                (S)        Moved CS(RES) Out of                                                                         
                                   Committee                                                                                    
                                   MINUTE(RES)                                                                                  
04/03/01     0920       (S)        RES RPT CS 4DP SAME TITLE                                                                    
04/03/01     0920       (S)        DP: TORGERSON, TAYLOR,                                                                       
                                   PEARCE, KELLY                                                                                
04/03/01     0920       (S)        FN1: ZERO(DNR)                                                                               
04/09/01     1032       (S)        FIN REFERRAL WAIVED REFERRED                                                                 
                                   TO RULES                                                                                     
04/09/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/09/01                (S)        Scheduled But Not Heard                                                                      
04/10/01     1047       (S)        RULES TO CALENDAR 4/10/01                                                                    
04/10/01     1049       (S)        READ THE SECOND TIME                                                                         
04/10/01     1049       (S)        RES CS ADOPTED UNAN CONSENT                                                                  
04/10/01     1049       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
04/10/01     1049       (S)        READ THE THIRD TIME CSSB
                                   121(RES)                                                                                     
04/10/01     1049       (S)        PASSED Y17 N3                                                                                
04/10/01     1050       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
04/10/01     1053       (S)        TRANSMITTED TO (H)                                                                           
04/10/01     1053       (S)        VERSION: CSSB 121(RES)                                                                       
04/10/01                (S)        RLS AT 10:45 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/11/01     0949       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/11/01     0949       (H)        O&G, RES                                                                                     
04/18/01                (H)        O&G AT 5:00 PM CAPITOL 124                                                                   
                                                                                                                                
BILL: SB 158                                                                                                                  
SHORT TITLE:REPORT:STATE PARTICIPATE IN NAT GAS PIPE.                                                                           
SPONSOR(S): RESOURCES                                                                                                           
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
03/23/01     0785       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/23/01     0785       (S)        RES, FIN                                                                                     
03/28/01                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
03/28/01                (S)        Moved CS(RES) Out of                                                                         
                                   Committee                                                                                    
                                   MINUTE(RES)                                                                                  
03/29/01     0855       (S)        RES RPT CS 6DP 1NR SAME TITLE                                                                
03/29/01     0856       (S)        DP: TORGERSON, TAYLOR,                                                                       
                                   HALFORD, PEARCE,                                                                             
03/29/01     0856       (S)        KELLY, ELTON; NR: LINCOLN                                                                    
03/29/01     0856       (S)        FN1: (REV)                                                                                   
04/06/01     0974       (S)        FIN RPT CS(RES) 6DP 3NR                                                                      
04/06/01     0974       (S)        DP: DONLEY, KELLY, AUSTERMAN,                                                                
                                   OLSON,                                                                                       
04/06/01     0974       (S)        LEMAN, WILKEN; NR: GREEN,                                                                    
                                   HOFFMAN,                                                                                     
04/06/01     0974       (S)        WARD                                                                                         
04/06/01     0974       (S)        FN1: (REV)                                                                                   
04/06/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/06/01                (S)        Moved Out of Committee                                                                       
                                   MINUTE(FIN)                                                                                  
04/09/01     1013       (S)        RULES TO CALENDAR 4/9/01                                                                     
04/09/01     1017       (S)        READ THE SECOND TIME                                                                         
04/09/01     1017       (S)        RES CS ADOPTED UNAN CONSENT                                                                  
04/09/01     1018       (S)        AM NO 1 OFFERED BY WARD                                                                      
04/09/01     1018       (S)        AM TO AM 1 UNANIMOUS CONSENT                                                                 
04/09/01     1018       (S)        AM NO 1 AS AMENDED ADOPTED                                                                   
                                   Y12 N8                                                                                       
04/09/01     1019       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
04/09/01     1019       (S)        READ THE THIRD TIME CSSB
                                   158(RES) AM                                                                                  
04/09/01     1019       (S)        PASSED Y20 N-                                                                                
04/09/01     1019       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
04/09/01     1032       (S)        TRANSMITTED TO (H)                                                                           
04/09/01     1032       (S)        VERSION: CSSB 158(RES) AM                                                                    
04/09/01                (S)        RLS AT 10:45 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/10/01     0917       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/10/01     0917       (H)        O&G, RES, FIN                                                                                
04/18/01                (H)        O&G AT 5:00 PM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ANNETTE KREITZER, Staff                                                                                                         
to Senator Loren Leman                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 516                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Presented SB 121 on behalf of the sponsor.                                                                 
                                                                                                                                
JAMES E. EASON, Lobbyist                                                                                                        
for Foothills Pipe Lines Ltd.                                                                                                   
8611 Leeper Circle                                                                                                              
Anchorage, Alaska  99504                                                                                                        
POSITION STATEMENT:  Testified in support  of SB 121 on behalf of                                                               
Foothills Pipe Lines Ltd.                                                                                                       
                                                                                                                                
SENATOR JOHN TORGERSON                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 427                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION  STATEMENT:    As  chairman   of  the  Senate  Resources                                                               
Standing Committee, sponsor, presented SB 158.                                                                                  
                                                                                                                                
LARRY PERSILY, Deputy Commissioner                                                                                              
Department of Revenue                                                                                                           
P.O. Box 110405                                                                                                                 
Juneau, Alaska  99811-0405                                                                                                      
POSITION STATEMENT:  Clarified that  Amendment 2 to CSSB 158(RES)                                                               
would return the fiscal note  to $215 [thousand]; stated personal                                                               
support for the amendment.                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 01-29, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
VICE  CHAIR HUGH  FATE, chairing  the meeting,  called the  House                                                               
Special Committee  on Oil and Gas  meeting to order at  5:09 p.m.                                                               
Members present at  the call to order  were Representatives Fate,                                                               
Ogan (via  teleconference), Dyson, and Kohring.   Representatives                                                               
Chenault and Guess arrived as the meeting was in progress.                                                                      
                                                                                                                                
SB 121 - RIGHT-OF-WAY LEASING ACT                                                                                             
                                                                                                                                
Number 0090                                                                                                                     
                                                                                                                                
VICE  CHAIR FATE  announced the  first item  of business,  CS FOR                                                               
SENATE BILL  NO. 121(RES),  "An Act adding,  for purposes  of the                                                               
Alaska  Right-of-Way Leasing  Act, a  definition of  'substantial                                                               
change' as applied to an  amended right-of-way lease application;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
Number 0129                                                                                                                     
                                                                                                                                
ANNETTE KREITZER, Staff to Senator  Loren Leman, presented SB 121                                                               
on  behalf  of  the  sponsor.    She  requested  that  Jim  Eason                                                               
[lobbyist on  behalf of  Foothills Pipe Lines  Ltd.] join  her at                                                               
the witness table.   She then explained that  Senator Leman wants                                                               
to remove real and potential  roadblocks to the commercialization                                                               
of  Alaska's North  Slope  gas.   Therefore,  SB  121 provides  a                                                               
definition  of  the  term  "substantial change"  as  used  in  AS                                                               
38.35.050(c), which reads:                                                                                                      
                                                                                                                                
          (c) Any amendment to an application filed under                                                                       
     this section which constitutes  a substantial change in                                                                    
     the application  is subject to  all provisions  of this                                                                    
     chapter applying to an original application.                                                                               
                                                                                                                                
MS. KREITZER pointed  out that currently whether  an amendment to                                                               
a pipeline  is or isn't  a substantial  change is decided  by the                                                               
Department of  Natural Resources  (DNR) on a  case-by-case basis.                                                               
The concern isn't that, but is  the challenge to that decision on                                                               
a case-by-case basis  in which the court would  make the decision                                                               
instead of its being a policy [decision] of the department.                                                                     
                                                                                                                                
MS. KREITZER  noted that the  following would be  consistent with                                                               
existing department policy,  and under SB 121  would constitute a                                                               
substantial  change  that  would require  restarting  the  entire                                                               
process:  a 10 percent net  increase in state acreage beyond what                                                               
was   in   the   original   application;   using   less-effective                                                               
environmental or safety-mitigation measures  than proposed in the                                                               
original application;  or proposing  a fundamental change  in the                                                               
route as proposed in the original application.                                                                                  
                                                                                                                                
Number 0284                                                                                                                     
                                                                                                                                
MS. KREITZER  drew attention  to page 2  of the  bill, suggesting                                                               
that  the language  about  the  acreage not  included  in the  10                                                               
percent net  increase may  be somewhat  confusing.   She reminded                                                               
members that if it is a  10 percent net increase in state acreage                                                               
beyond  what was  in  the  original application,  it  would be  a                                                               
"substantial  change" under  this  bill.   However, not  included                                                               
would  be  acreage attributed  to  an  amendment to  an  existing                                                               
right-of-way lease across federal  lands originally issued by the                                                               
federal government -  regardless of whether the  state or federal                                                               
government administers the land -  or land under a federal right-                                                               
of-way   grant   that   is   transferred   to   the   state   for                                                               
administration.                                                                                                                 
                                                                                                                                
MS. KREITZER  explained the reason for  the foregoing exceptions.                                                               
When  there  are right-of-way  leases  across  federal and  state                                                               
lands,  federal  rights-of-way are,  by  law,  50 feet  plus  the                                                               
amount  of  the  improvement  -  typically about  80  feet.    By                                                               
contrast, state  rights-of-way are 100  to 150 feet, and  most of                                                               
the  North Slope  rights-of-way  are 150  feet.   This  provision                                                               
allows for  alignment of those rights-of-way  without making them                                                               
subject to the 10 percent net increase.                                                                                         
                                                                                                                                
MS. KREITZER  concluded by  saying SB  121 provides  an increased                                                               
measure  of certainty  and will  minimize unnecessary  challenges                                                               
and  delays in  processing, approving,  and issuing  right-of-way                                                               
leases.                                                                                                                         
                                                                                                                                
Number 0432                                                                                                                     
                                                                                                                                
JAMES  E.   EASON,  Lobbyist  for  Foothills   Pipe  Lines  Ltd.,                                                               
testified in support of SB 121,  noting that [he and the company]                                                               
had worked  closely with  the sponsor  to draft  legislation that                                                               
would meet the  requirements of DNR's pipeline office  as well as                                                               
comport with  what they  believe to  be the  traditional criteria                                                               
that the department looks to  in determining whether an amendment                                                               
to an application is or is not considered substantial.                                                                          
                                                                                                                                
MR. EASON  agreed that the  concern is not with  the commissioner                                                               
or  the  pipeline  office;  instead,   lacking  a  definition  of                                                               
"substantial change" for the purposes  of the statute, the courts                                                               
ultimately will make that decision  on a case-by-case basis, if a                                                               
project has  a high enough  profile so that someone  challenges a                                                               
decision  by the  commissioner or  the pipeline  office regarding                                                               
whether a  change is  substantial.  Mr.  Eason suggested  that is                                                               
not in the best interest of  either the state or a company trying                                                               
to  commercialize gas  on behalf  of  the state.   He  encouraged                                                               
adoption of  the policy  suggested by  the bill,  as well  as the                                                               
definitions,  in  order  to  give  guidance  to  the  court,  the                                                               
commissioner,  and the  commissioner's  staff  in processing  and                                                               
adjudicating applications.                                                                                                      
                                                                                                                                
Number 0555                                                                                                                     
                                                                                                                                
VICE  CHAIR FATE  asked whether  anyone else  wished to  testify;                                                               
there was no response.                                                                                                          
                                                                                                                                
REPRESENTATIVE OGAN remarked  that the bill has some  of the most                                                               
common-sense, unambiguous language he has  seen.  He suggested it                                                               
is timely and that it should be moved from committee.                                                                           
                                                                                                                                
Number 0641                                                                                                                     
                                                                                                                                
REPRESENTATIVE DYSON  made a  motion to  move CSSB  121(RES) from                                                               
committee  with individual  recommendations and  the zero  fiscal                                                               
note.  There  being no objection, CSSB 121(RES) was  moved out of                                                               
the House Special Committee on Oil and Gas.                                                                                     
                                                                                                                                
SB 158 - REPORT:STATE PARTICIPATE IN NAT GAS PIPE.                                                                            
                                                                                                                                
VICE  CHAIR FATE  announced the  final item  of business,  CS FOR                                                               
SENATE BILL NO.  158(RES) am, "An Act  directing the commissioner                                                               
of revenue  to prepare  a report to  the legislature  relating to                                                               
the state's participation  in owning or financing  a gas pipeline                                                               
project; and providing for an effective date."                                                                                  
                                                                                                                                
Number 0802                                                                                                                     
                                                                                                                                
SENATOR JOHN  TORGERSON, Alaska  State Legislature,  came forward                                                               
as  the  chairman of  the  Senate  Resources Standing  Committee,                                                               
sponsor of SB 158.  He  explained that he'd had SB 158 introduced                                                               
in order  to have a  study on whether  the state should  have any                                                               
sort  of equity  ownership  in a  pipeline, if  and  when one  is                                                               
built.   The "meat" of  the bill, on  page 2, stipulates  some of                                                               
the  desired reporting,  then  goes  on to  look  at the  state's                                                               
financial  position  and  whether this  creates  additional  risk                                                               
regarding the state's creditworthiness, for example.                                                                            
                                                                                                                                
SENATOR TORGERSON  pointed out that  on page 3, the  bill directs                                                               
the commissioner of  [the Department of] Revenue to  enter into a                                                               
contract  with a  qualified  person or  firm;  on [lines]  11-13,                                                               
because the contract is to  be done immediately, it excludes that                                                               
from the competitive sealed-bid  process.  In addition, paragraph                                                               
(b)(2) directs  the commissioner to  report to the chairs  of the                                                               
standing  committees  [that  have legislative  jurisdiction  over                                                               
natural resources  ... or  their designees]  to provide  the data                                                               
available to make the report.                                                                                                   
                                                                                                                                
SENATOR TORGERSON  also alluded to paragraphs  (b)(3) and (b)(4),                                                               
which  stated  that  the   commissioner  shall  provide  progress                                                               
reports to the chairs of  the standing committees at intervals of                                                               
no  more  than   60  days,  and  shall  prepare   and  deliver  a                                                               
comprehensive report  with final recommendations.   He noted that                                                               
the report is to be done by January 31, 2002.                                                                                   
                                                                                                                                
Number 1002                                                                                                                     
                                                                                                                                
REPRESENTATIVE OGAN thanked Senator  Torgerson for presenting the                                                               
bill.   He explained that his  own thinking has changed  over the                                                               
years about state  ownership of a gas  pipeline, through becoming                                                               
more familiar with  the constitution and the fact  that the state                                                               
owns the subsurface rights to  the resources of the state, making                                                               
the resources  basically publicly owned.   He mentioned ambiguity                                                               
surrounding the  oil pipeline and  said he is more  interested in                                                               
at least exploring  the opportunity on the  gas pipeline project.                                                               
He asked Senator Torgerson to comment.                                                                                          
                                                                                                                                
SENATOR  TORGERSON said  he agrees,  but won't  be sure  until he                                                               
sees  the  report  whether  the   state  should  take  an  equity                                                               
interest.   At the time of  the oil pipeline, he  said few people                                                               
thought state  ownership was a  good idea.   However, there  is a                                                               
lot of discussion today that the  state should at least be at the                                                               
table  for  its  12.5  percent  royalty  interest;  he  suggested                                                               
perhaps  12.5  percent  is  what  the state  should  own  in  the                                                               
pipeline,  in order  to  be at  the bargaining  table  and to  be                                                               
informed   regarding  tariffs,   for  example,   which  now   are                                                               
confidential.  He expressed hope  that the report generated by SB
158 will answer  all the questions about whether it  is a good or                                                               
bad idea.                                                                                                                       
                                                                                                                                
SENATOR TORGERSON noted that there  was a similar report in 1982;                                                               
it was  a $27-billion  project, and  the recommendation  was that                                                               
the state not  get involved, "but that maybe we  would issue what                                                               
they called  'senior debt'  or maybe a  guaranteed debt,  in case                                                               
there [were] overruns  on the pipeline and other  things."  Times                                                               
have  changed, however,  and he  said people  are looking  at the                                                               
history  of  TAPS  [Trans-Alaska Pipeline  System]  and  thinking                                                               
perhaps [the  state] should have been  part of that.   He pointed                                                               
out that there are many  more possibilities for in-state usage of                                                               
natural gas  than for  oil, so  it opens  a lot  of avenues.   He                                                               
emphasized  the need  for the  report in  order to  make some  of                                                               
those determinations.                                                                                                           
                                                                                                                                
Number 1235                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGAN  asked  Senator  Torgerson  whether  he  had                                                               
thought  about  modifying  the   bill  to  study  possible  state                                                               
ownership  up  to a  point,  like  for  the "hub"  concept  being                                                               
considered  currently.   He said  it  appears to  be drafted  for                                                               
ownership of  the entire pipeline;  he asked whether that  is how                                                               
Senator Torgerson  envisions this being studied  or whether there                                                               
would be  enough latitude for the  chairs to ask that  the report                                                               
be broken  out more than  one way, such  as ownership to  a point                                                               
"where  everybody  connects,"  from   which  the  pipeline  would                                                               
continue,                                                                                                                       
                                                                                                                                
SENATOR TORGERSON replied:                                                                                                      
                                                                                                                                
     First of all,  I believe that any  ownership would only                                                                    
     go to our  borders; so it wouldn't be  the entire line,                                                                    
     but it could be everything  within the borders, if that                                                                    
     was determined ... that that's what we wanted to do.                                                                       
                                                                                                                                
     In my thinking,  we should be able to  take the report,                                                                    
     and the  components that are generated  by that report,                                                                    
     and  either back  in or  extend it  to any  degree we'd                                                                    
     like to, such  as if ... the hub's in  Fairbanks or Big                                                                    
     Delta, and  that's as far  as we  want to own  it, that                                                                    
     could   very   well   be  something   that   we   could                                                                    
     mathematically back  into, once we take  the components                                                                    
     that are generated by the report.                                                                                          
                                                                                                                                
     I believe that  for a lot of in-state  usage and excess                                                                    
     capacity  in the  line, we  may have  to pay  for that.                                                                    
     And ...  that may be dead  space for a while,  until we                                                                    
     find some  in-state usage.   But, again, we  don't know                                                                    
     until  ... we  have  all this  taken care  of.   But  I                                                                    
     didn't really put  "hub" in here for  that reason, that                                                                    
     "owning all or a portion  of the project" [page 2, line                                                                    
     5] pretty  well covers,  I think,  the latitude  that I                                                                    
     want the department to have.                                                                                               
                                                                                                                                
SENATOR TORGERSON,  in further response,  surmised that  once the                                                               
state finally decides  to be a part-owner, there  will be further                                                               
studies,   at  least   through  the   administration  and   other                                                               
economists, "to grind  out numbers" before signing  on the dotted                                                               
line;  he said  he himself  would need  that.   It would  require                                                               
another bill, he suggested, which  would entail a lot of research                                                               
in order to create authority  or ownership, as well as agreements                                                               
with the producers.  This is just the first step, he concluded.                                                                 
                                                                                                                                
Number 1462                                                                                                                     
                                                                                                                                
REPRESENTATIVE DYSON drew attention  to Amendment 1, submitted by                                                               
Representative Ogan, which read [punctuation added]:                                                                            
                                                                                                                                
     Page 3, line 17:                                                                                                           
          Delete "standing"                                                                                                     
                                                                                                                                
     Page 3, line 22:                                                                                                           
          Delete "standing"                                                                                                     
                                                                                                                                
[There  were  two  versions;  the  corrected  version  added  the                                                               
handwritten portion relating to page 3, line 22.]                                                                               
                                                                                                                                
REPRESENTATIVE DYSON asked Senator  Torgerson whether he intended                                                               
to preclude the  participation of the House  Special Committee on                                                               
Oil and Gas in the process.                                                                                                     
                                                                                                                                
Number 1564                                                                                                                     
                                                                                                                                
SENATOR TORGERSON noted that the  bill [page 3, lines 18-19] says                                                               
"standing committees  ... or  their designees".   He  stated, "It                                                               
was not to preclude anything  else."  Senator Torgerson specified                                                               
that he had  seen the proposed amendment and had  no objection to                                                               
it,  but  added  that  "or designees"  is  wide-open  to  anybody                                                               
appointed to do it.                                                                                                             
                                                                                                                                
REPRESENTATIVE DYSON  suggested that  if Representative  Ogan, as                                                               
chairman  of the  House Special  Committee  on Oil  and Gas,  was                                                               
comfortable with  it, the leadership  would add the  committee to                                                               
prevent the  bill from  having to go  to a  conference committee,                                                               
for example.                                                                                                                    
                                                                                                                                
REPRESENTATIVE DYSON then  referred to page 2,  beginning at line                                                               
8, and  asked Senator Torgerson  whether he intended  to preclude                                                               
the  investigation  of  using  the permanent  fund  corpus  as  a                                                               
financing vehicle.                                                                                                              
                                                                                                                                
Number 1564                                                                                                                     
                                                                                                                                
SENATOR  TORGERSON answered,  "No, I  just didn't  list it."   He                                                               
referred to [page 2, lines 10-12],  which says "issue debt ... in                                                               
[another]  appropriate form".   He  stated, "The  recommendations                                                               
could be anything."   He added that he  wouldn't recommend paying                                                               
cash for it upfront.                                                                                                            
                                                                                                                                
REPRESENTATIVE DYSON  indicated investing  in this  project might                                                               
be a better investment [for  the permanent fund than investing in                                                               
stocks, which had declined in value recently].                                                                                  
                                                                                                                                
SENATOR TORGERSON responded:                                                                                                    
                                                                                                                                
     I didn't think  it necessary for us to do  that.  If we                                                                    
     want to pay cash for  it, that's a legislative decision                                                                    
     down the  road a ways,  and certainly ...  the governor                                                                    
     would have  the right to  veto that.   But ...  I don't                                                                    
     think you'll  see a recommendation  to just  throw cash                                                                    
     on the table.                                                                                                              
                                                                                                                                
     Now, it  may be  that a  GO [general  obligation] bond,                                                                    
     you're actually  pledging the assets  of the  state, so                                                                    
     any  GO bond,  we're  actually  pledging the  permanent                                                                    
     fund because it is an asset  of the state. ... And that                                                                    
     is going to  give us ... probably a  higher bond rating                                                                    
     because we  do have that;  of course, we have  no debt,                                                                    
     either ....                                                                                                                
                                                                                                                                
REPRESENTATIVE  DYSON mentioned  another  option,  forming a  new                                                               
corporation and  having the permanent  fund owning some or  a lot                                                               
of the stock.  He then asked,  "So, on the record, this bill does                                                               
not preclude exploring that option?"                                                                                            
                                                                                                                                
SENATOR TORGERSON replied, "No."                                                                                                
                                                                                                                                
Number 1741                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGAN made  a motion  to adopt  Amendment 1  [text                                                               
provided previously].                                                                                                           
                                                                                                                                
REPRESENTATIVE  DYSON objected  in  order  to ask  Representative                                                               
Ogan  whether he'd  heard Senator  Torgerson  indicate he  didn't                                                               
believe  Amendment  1 was  necessary  because  there could  be  a                                                               
designee of the standing committee.                                                                                             
                                                                                                                                
REPRESENTATIVE  OGAN  said  he  had  heard  that,  and  expressed                                                               
confidence that  the House Resources Standing  Committee wouldn't                                                               
have a  problem designating  the House  Special Committee  on Oil                                                               
and Gas.   However, this puts  the committee in the  loop without                                                               
having to  go through the designation  process.  He said  it just                                                               
means that  the committees being  reported to will be  the Senate                                                               
Resources  Standing  Committee,   the  House  Resources  Standing                                                               
Committee, and the House Special Committee on Oil and Gas.                                                                      
                                                                                                                                
REPRESENTATIVE DYSON removed his objection.                                                                                     
                                                                                                                                
Number 1795                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE asked whether  there was any  further objection.                                                               
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
Number 1805                                                                                                                     
                                                                                                                                
VICE CHAIR FATE brought attention  to Amendment 2, also submitted                                                               
by Representative Ogan, which read:                                                                                             
                                                                                                                                
     Page 3, lines 1 - 7:                                                                                                       
          Delete all material                                                                                                   
                                                                                                                                
The language being deleted by Amendment 2 read:                                                                                 
                                                                                                                                
          6)  consistent with the constitutional authority                                                                      
     that   requires   provision   for   "the   utilization,                                                                    
     development, and conservation  of all natural resources                                                                    
     belonging to  the state .  . . for the  maximum benefit                                                                    
     of its people," state  participation under (1), (2), or                                                                    
     (5)  of  this  subsection would  ensure  or  materially                                                                    
     contribute to natural  gas development and distribution                                                                    
     within   the  state   by  installation   of  additional                                                                    
     pipeline  facilities connecting  to population  centers                                                                    
     in  the  state,  thereby   supplying  the  energy  base                                                                    
     required   for    the   state's    long-term   economic                                                                    
     development.]                                                                                                              
                                                                                                                                
REPRESENTATIVE  OGAN brought  to the  committee's attention  that                                                               
the  above  language, inserted  by  an  amendment on  the  Senate                                                               
floor, had  resulted in  a substantial fiscal  note; he  said the                                                               
fiscal note  looks inflated.   He said  he doesn't  disagree with                                                               
the  language, but  "population centers"  is somewhat  ambiguous;                                                               
Bethel, for  example, is a population  center in its region.   He                                                               
said it is  a "no brainer" that  it would happen if  there were a                                                               
pipeline built down the southern route.                                                                                         
                                                                                                                                
VICE  CHAIR   FATE  announced  that  the   additional  amount  is                                                               
$375,000; the fiscal  note started at $215 [thousand]  and is now                                                               
up to $590 [thousand].                                                                                                          
                                                                                                                                
REPRESENTATIVE  OGAN, noting  that  Senator  Torgerson had  voted                                                               
against the Senate floor amendment,  asked, "What are we going to                                                               
get for 300,000 bucks?"                                                                                                         
                                                                                                                                
VICE CHAIR FATE  expressed his own concern that  it may legislate                                                               
the  distribution of  gas into  areas that  may not  be practical                                                               
now.   In addition,  it cuts out  private industry;  usually, the                                                               
market will  dictate where the  gas will  go, and people  who can                                                               
make a  profit will  take the gas  there.  He  noted that  on the                                                               
House  side,  a study  is  in  its  final  stages, and  it  looks                                                               
promising  that  some entrepreneur  in  the  private sector  will                                                               
undertake that project.   He said [the  section] isn't applicable                                                               
at every  point, especially in  rural Alaska; other than  the way                                                               
it is structured,  however, he had no problem with  it.  He added                                                               
that things  may be demanded of  the state, which perhaps  is the                                                               
reason for the escalation of the fiscal note.                                                                                   
                                                                                                                                
Number 2016                                                                                                                     
                                                                                                                                
SENATOR   TORGERSON  said   everyone   wants  gas   in  all   the                                                               
communities, but it just doesn't fit  in the bill; that is why he                                                               
opposed it on the floor.  He told members:                                                                                      
                                                                                                                                
     This is a  bill that looks at financing  and whether or                                                                    
     not the  state should take participation  in financing,                                                                    
     not  a bill  on routes,  and not  a bill  on additional                                                                    
     pipelines to  try to supply  routes somewhere.   That's                                                                    
     an engineering question and a  financing question.  And                                                                    
     that's why the fiscal note is so high.                                                                                     
                                                                                                                                
SENATOR TORGERSON indicated the  Department of Revenue would have                                                               
to hire  an engineer to  determine what will be  built, including                                                               
details, and  then have  to come  up with  a number  to determine                                                               
whether the state  should be part of that, as  far as building it                                                               
or owning  it.  He  said it is a  great piece of  legislation for                                                               
another  bill,  "once  you  get things  figured  out,"  but  just                                                               
doesn't fit into this bill.                                                                                                     
                                                                                                                                
Number 2053                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON expressed  concern about  the time  left in                                                               
this session.   He asked  whether, if this committee  deleted the                                                               
section, that would cause problems on the Senate floor.                                                                         
                                                                                                                                
SENATOR TORGERSON  said he  didn't know.   He reiterated  that it                                                               
didn't  belong in  the bill  to  begin with,  then suggested  the                                                               
language perhaps could  be fixed by making it  a financing study,                                                               
which would  be germane to  the bill, rather than  an engineering                                                               
study.  "You  can't use population center,"  he added, concurring                                                               
with Representative Ogan.                                                                                                       
                                                                                                                                
REPRESENTATIVE DYSON replied  that if Amendment 2  were moved, he                                                               
would support it.                                                                                                               
                                                                                                                                
REPRESENTATIVE  OGAN suggested  that amending  the language  back                                                               
out of the bill at least would draw  attention to it.  He said it                                                               
is important legislation and emphasized  the need to pass it this                                                               
session.   He then said he  wanted the record to  clearly reflect                                                               
that  [Amendment 2]  is in  no way  discouraging the  development                                                               
[and distribution] of gas to these areas.                                                                                       
                                                                                                                                
Number 2236                                                                                                                     
                                                                                                                                
REPRESENTATIVE  OGAN made  a motion  to adopt  Amendment 2  [text                                                               
provided previously].  There being  no objection, Amendment 2 was                                                               
adopted.                                                                                                                        
                                                                                                                                
Number 2269                                                                                                                     
                                                                                                                                
LARRY  PERSILY,  Deputy   Commissioner,  Department  of  Revenue,                                                               
testified  briefly via  teleconference.   He sought  confirmation                                                               
that Amendment 2 would take  out the Senate floor amendment, then                                                               
agreed that the  fiscal note would return to  the original amount                                                               
of $215  [thousand].  He  commented, "That's  fine.  We  were not                                                               
excited about  becoming engineers."   In  response to  a question                                                               
regarding   whether   it   could    be   interpreted   that   the                                                               
administration supports  the amendment, Mr. Persily  stated, "You                                                               
[can] interpret that I support the amendment."                                                                                  
                                                                                                                                
Number 2340                                                                                                                     
                                                                                                                                
REPRESENTATIVE DYSON made  a motion to move CSSB  158(RES) am, as                                                               
amended, out  of committee with individual  recommendations and a                                                               
fiscal note of $215 [thousand].                                                                                                 
                                                                                                                                
VICE  CHAIR FATE  thanked the  sponsor, then  announced that  the                                                               
bill was moved from the committee.                                                                                              
                                                                                                                                
REPRESENTATIVE  KOHRING pointed  out  that he  hadn't heard  Vice                                                               
Chair Fate  ask whether there  was any  objection.  He  said he'd                                                               
been going to  object, but instead would address it  on the House                                                               
floor.                                                                                                                          
                                                                                                                                
[There being  no objection,  HCS CSSB 158(O&G)  was moved  out of                                                               
the House Special Committee on Oil and Gas.]                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business  before the committee, the  House                                                               
Special Committee  on Oil and  Gas meeting was adjourned  at 5:45                                                               
p.m.                                                                                                                            

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