Legislature(1997 - 1998)
03/19/1998 10:10 AM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
March 19, 1998
10:10 a.m.
MEMBERS PRESENT
Representative Mark Hodgins, Chairman
Representative Scott Ogan
Representative Norman Rokeberg
Representative Joe Ryan
Representative Con Bunde
Representative Tom Brice
Representative J. Allen Kemplen
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 393
"An Act relating to contracts with the state establishing payments
in lieu of other taxes by a qualified sponsor or qualified sponsor
group for projects to develop stranded gas resources in the state;
providing for the inclusion in such contracts of terms making
certain adjustments regarding royalty value and the timing and
notice of the state's right to take royalty in kind or in value
from such projects; relating to the effect of such contracts on
municipal taxation; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 393
SHORT TITLE: DEVELOP STRANDED GAS RESOURCES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
2/11/98 2280 (H) READ THE FIRST TIME - REFERRAL(S)
2/11/98 2281 (H) OIL & GAS, FINANCE
2/11/98 2281 (H) 2 FISCAL NOTES (DNR, REV)
2/11/98 2281 (H) GOVERNOR'S TRANSMITTAL LETTER
2/19/98 (H) O&G AT 11:00 AM CAPITOL 124
2/19/98 (H) MINUTE(O&G)
2/24/98 (H) O&G AT 10:00 AM CAPITOL 124
2/24/98 (H) MINUTE(O&G)
2/26/98 (H) O&G AT 10:00 AM CAPITOL 124
2/26/98 (H) MINUTE(O&G)
3/03/98 (H) O&G AT 10:00 AM CAPITOL 124
3/03/98 (H) MINUTE(O&G)
3/05/98 (H) MINUTE(O&G)
3/09/98 2578 (H) RES REFERRAL ADDED
3/10/98 (H) O&G AT 10:00 AM CAPITOL 124
3/10/98 (H) MINUTE(O&G)
3/12/98 (H) O&G AT 10:00 AM CAPITOL 124
3/12/98 (H) MINUTE (O&G)
3/19/98 (H) O&G AT 10:00 AM CAPITOL 124
WITNESS REGISTER
PATRICK CARTER, Legislative Assistant
to Representative Hodgins
Alaska State Legislature
Capitol Building, Room 110
Juneau, Alaska 99801
Telephone: (907) 465-2283
POSITION STATEMENT: Testified on CSHB 393(O&G).
WILSON CONDON, Commissioner
Department of Revenue
P.O. Box 110400
Juneau, Alaska 99811
Telephone: (907) 465-2300
POSITION STATEMENT: Testified on CSHB 393(O&G).
ACTION NARRATIVE
TAPE 98-25, SIDE A
Number 0001
CHAIRMAN MARK HODGINS called the House Special Committee on Oil and
Gas meeting to order at 10:10 a.m. Members present at the call to
order were Representatives Hodgins, Ryan, Bunde and Kemplen.
Representatives Rokeberg, Ogan and Brice arrived at 10:15, 10:19
and 10:20 a.m., respectively.
HB 393 - DEVELOP STRANDED GAS RESOURCES
Number 0068
CHAIRMAN HODGINS announced the committee would hear HB 393, "An Act
relating to contracts with the state establishing payments in lieu
of other taxes by a qualified sponsor or qualified sponsor group
for projects to develop stranded gas resources in the state;
providing for the inclusion in such contracts of terms making
certain adjustments regarding royalty value and the timing and
notice of the state's right to take royalty in kind or in value
from such projects; relating to the effect of such contracts on
municipal taxation; and providing for an effective date." He
stated that the meeting will be short due to a floor session. He
stated that the committee has previously adopted CSHB 393(O&G),
version B and stated that there are several amendments. He asked
Patrick Carter to present the committee's amendments.
Number 0168
PATRICK CARTER, Legislative Assistant to Representative Hodgins,
stated that Amendment 1, that the committee is addressing is 0-
GH2006\B.6, Glover, 3/19/98. He stated that most of the changes
are more word smithing. He stated that he would point out some of
the substantive changes. Throughout the bill the term "enter into"
is changed to "develop" because the executive branch is not
entering into the contract, the legislature is authorizing them to
develop the contract. He referred to page 10, line 20, delete
"enters into a contract" and insert "submits a contract to the
governor". He stated that on page 16, line 31, insert a new
subsection to read: "(b) A contract developed under this chapter
may provide for the assignment to or withdrawal of a qualified
sponsor or member of a qualified sponsor group." He stated that on
page 18, line 26, following "disclosure" insert "or is not in the
long-term fiscal interests of the state".
Number 0519
REPRESENTATIVE JOE RYAN asked what would be kept confidential that
is not in the long-term fiscal interests of the state. He stated
the legislature is conducting the public's business and he asked
how would a public body keep things other than proprietary
information confidential.
MR. CARTER replied that there would be numerous aspects of the
contract that would need to be kept confidential. He referred the
question to Commissioner Condon.
Number 0652
WILSON CONDON, Commissioner, Department of Revenue, replied that is
a policy call that the legislature can make. It would permit the
state to kept sensitive information to itself. He stated that
there may be situations that the legislature will not want to
disclose regarding the deal.
Number 0732
MR. CARTER referred to page 20, lines 21-23, delete all material
and insert "submit the contract to the governor." Page 21, lines
4-8, delete all material and insert "previously submitted a
proposed contract to the governor, the". He stated that on page
21, line 9, delete "existing" and insert "currently proposed". He
stated that on page 23, lines 2-3, delete "The commissioner may not
execute a contract developed under this chapter and a" and insert
"The governor may transmit a contract developed under this chapter
to the legislature together with a request for authorization to
execute the contract. A".
Number 0864
REPRESENTATIVE RYAN asked why are we giving the governor the
discretion on page 23, line 21-23.
MR. CARTER replied that he believed it was in regards to a previous
separation of power discussion. The governor submits the contract
to the legislation for ratification but is not required by law to
do so.
REPRESENTATIVE RYAN stated that in Alaska there is a public trust
and the legislature is the trustee of the resources that belong to
the people. He stated that the primary duty of the trustee is to
ensure the maximum benefit to the beneficiaries. He stated that to
allow the Governor and the commissioner to enter into a contract
without having the legislature's final approval on it, negates the
legislative authority and power. It would allow the governor to
dispose of the resource without the legislature's approval. He
stated that he does not want to be a part of that.
Number 0954
COMMISSIONER CONDON replied that if the result of this proposed
amendment where to lead to that result he would agree. What the
amendment does is it gives the Governor the discretion to not send
the contract to the legislature "but it can not become effective
unless the legislature -- the legislature retains the yes or no, no
matter what -- this simply would authorize the governor, at the
conclusion of this whole process to decide to stop but it would not
result in a binding contract. No way the contract would be binding
unless the Governor exercises his discretion and sends it to the
legislature and the legislature authorizes the signing."
REPRESENTATIVE RYAN stated that is now part of the public record
and he would take his word for it.
Number 1035
MR. CARTER stated that on page 24, line 22, delete "each of the
affected municipalities" and insert "municipality". He stated that
on page 26, lines 18-20, delete all material and insert "expects
will be restricted from imposing a tax, or a portion of a tax, as
a result of implementation of a contract developed under this
chapter". He stated that the definition of economic proximity has
been revised. He stated that page 27, line 11, delete "uneconomic
or uncompetitive to develop" and insert "not being marketed due to
prevailing cost or price conditions". He stated that on page 27,
line 23, delete "with the commissioner of revenue under AS
43.82.010" and insert "approved by the legislature as a result of
submission of a proposed contract developed under AS 43.82", this
was duplicated through out the bill.
Number 1222
REPRESENTATIVE CON BUNDE made a motion to adopt Amendment 1, 0-
GH2006\B.6, Glover, 3/19/98.
CHAIRMAN HODGINS asked if there was an objection. Hearing none
Amendment 1 0-GH2006\B.6, Glover, 3/19/98 was adopted.
Number 1299
REPRESENTATIVE RYAN stated that he had some amendments starting on
Page 2, line 1 insert "alleged".
CHAIRMAN HODGINS asked if he was going to follow his amendment
list.
REPRESENTATIVE RYAN stated that there is a problem as there are
numerous committee substitutes that had been drafted and it is kind
of confusing as there is a lack coordination.
REPRESENTATIVE ROKEBERG asked if the amendment was to version B of
the bill.
REPRESENTATIVE RYAN replied that is correct.
REPRESENTATIVE ROKEBERG stated that he is looking at Representative
Ryan's cover page B.1 through B.5 and he can't find the amendment
that Representative Ryan was speaking to. He stated that he
objected to this as it is not in the proper format and he can not
follow along. He stated that he can't track the amendments.
REPRESENTATIVE RYAN stated that he could instead introduce his
committee substitute and then explain it.
REPRESENTATIVE ROKEBERG stated that he did not want to be
argumentative but it is not in the proper form of an amendment and
he can not debate the issues.
Number 1638
CHAIRMAN HODGINS stated that time is running out and he asked if
maybe, Representative Ryan could give a concept of the amendments.
REPRESENTATIVE RYAN stated that he would have legal put it in the
form of amendment and then they would proceed from there.
CHAIRMAN HODGINS asked Representative Rokeberg if he wanted to
present his amendments.
Number 1674
REPRESENTATIVE ROKEBERG asked the committee to consider the
memorandum from Legal Services regarding "periodic payments in lieu
of taxes". He stated that his amendment is 0-GH2006\B.1. He
stated that on page 24, line 17 of CSHB 393(O&G) he would insert a
new section entitled "Sec. 43.82.505. Payments to economically
affected municipalities." He stated that the concept is to create
by definition two forms of municipalities; those that tax bases are
affected and those that have other economic impacts as a result of
the construction of the pipeline.
Number 1809
CHAIRMAN HODGINS stated that it might be suggested that this would
affect all communities.
REPRESENTATIVE ROKEBERG referred to his proposed amendment on page
27, following line 2, of the committee substitute which would
insert a new paragraph to read: "(6) "economically affected
municipality" means a municipality the commissioner of revenue
determines will be reasonably required to provide additional public
services under the terms proposed in an application approved under
AS 43.82. 140(a); the commissioner may consider historical data
from construction of the trans-Alaska Pipeline System, and
information submitted by a municipality in making the
determination;"
Number 1862
REPRESENTATIVE ROKEBERG stated that he would call his changes
Amendment 2 and made a motion to adopt Amendment 2.
Number 1871
REPRESENTATIVE TOM BRICE objected.
Number 1882
CHAIRMAN HODGINS stated that he would leave that pending and hold
CSHB 393(O&G) as the committee has run out of time.
ADJOURNMENT
Number 1884
CHAIRMAN HODGINS adjourned the House Special Committee on Oil and
Gas meeting at 10:45 a.m.
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