Legislature(2009 - 2010)BARNES 124
02/26/2010 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB369 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 369 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
February 26, 2010
1:06 p.m.
MEMBERS PRESENT
Representative Craig Johnson, Co-Chair
Representative Mark Neuman, Co-Chair
Representative Kurt Olson
Representative Paul Seaton
Representative Peggy Wilson
Representative David Guttenberg
MEMBERS ABSENT
Representative Bryce Edgmon
Representative Scott Kawasaki
Representative Chris Tuck
COMMITTEE CALENDAR
HOUSE BILL NO. 369
"An Act relating to an in-state natural gas pipeline, the office
of in-state gasline project manager, the Joint In-State Gasline
Development Team, and the In-State Gasline Steering Committee;
and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 369
SHORT TITLE: IN-STATE PIPELINE/ MANAGER/TEAM
SPONSOR(s): REPRESENTATIVE(s) CHENAULT
02/23/10 (H) READ THE FIRST TIME - REFERRALS
02/23/10 (H) RES, FIN
02/26/10 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE MIKE CHENAULT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as the sponsor of HB 369.
TOM WRIGHT, Staff,
Representative Mike Chenault
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a sectional analysis of HB 369 on
behalf of Representative Chenault, sponsor.
TAM COOK, Director
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 369, answered
questions.
ACTION NARRATIVE
1:06:11 PM
CO-CHAIR CRAIG JOHNSON called the House Resources Standing
Committee meeting to order at 1:06 p.m. Present at the call to
order were Representatives Seaton, P. Wilson, Olson, Neuman, and
Johnson. Representative Guttenberg arrived as the meeting was
in progress.
HB 369-IN-STATE PIPELINE/ MANAGER/TEAM
1:06:22 PM
CO-CHAIR JOHNSON announced that the only order of business is
HOUSE BILL NO. 369, "An Act relating to an in-state natural gas
pipeline, the office of in-state gasline project manager, the
Joint In-State Gasline Development Team, and the In-State
Gasline Steering Committee; and providing for an effective
date."
1:07:22 PM
REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, sponsor
of HB 369, paraphrased from the following written sponsor
statement [original punctuation provided]:
House Bill 369 was introduced as an effort to expedite
the process for an in-state natural gas pipeline. The
in-state gasline has been a topic of discussion in the
Legislature and the Administration for a number of
years. Currently, there are two separate state
entities, the Alaska Natural Gas Development Authority
and the in-state gasline coordinator, working on a
project. House Bill 369 combines these two entities
along with the Department of Transportation and Public
Facilities and the Alaska Railroad Corporation to
create a Joint In-state Gasline Development Team
within the Office of the Governor. The Development
Team is to ensure the in-state gasline is construction
ready by July 1, 2011 with gas flowing by 2015. It is
my hope the Development Team will be able to focus the
state's efforts in putting a construction plan
together and leverage the best ideas and data to get a
gasline built.
The Department of Transportation and Public Facilities
and the Alaska Railroad Corporation were included as
members of the team due primarily to their having
existing rights of way which could speed up any
permitting process that may need to be undertaken.
The Alaska Railroad Corporation also has bonding
ability which could be an answer in financing a
gasline.
The Development Team will cover all aspects of the
line's development and are to select the most
economically sound route that will deliver gas to
Alaskans, plan permitting and construction by using
existing rights of way and take any action necessary
to get the project underway as soon as possible.
House bill 369 also creates an In-state Gasline
Steering Committee to provide advice and
recommendations to the development team. Their duties
are spelled out within the legislation. Proposed
members of the Steering Committee come from the
private sector, municipalities, state agencies and the
two presiding officers of the Legislature.
The bill provides for an expedited review and action
process and the sharing of information that may
already have been accumulated or completed. The bill
also requires that state agencies or entities
cooperate with and give priority to requests for
information from the Development Team.
1:12:30 PM
REPRESENTATIVE CHENAULT added that an in-state gasline would
provide economic opportunities and supply Alaskans' energy needs
for many years. It is time for Alaska to move forward and an
in-state gasline gives the opportunity to do just that. He held
up a garden spade and quipped that he is shovel-ready.
CO-CHAIR NEUMAN, in regard to the 2015 deadline for gas flow,
inquired whether specific measuring sticks have been established
for dates along the way to ensure that that deadline is met.
REPRESENTATIVE CHENAULT responded that such a timeline is not
available today, but the in-state coordinator is working on that
process and the Alaska Natural Gas Development Authority (ANGDA)
has its own timelines on a project. He is pushing for this
combined group to come out with that information. He
acknowledged that this is an aggressive timeline for having a
project by 2011. However, he said this project has been worked
on for years and it is time to quit studying the project and put
together the information that has already been gathered to
actually build a pipeline.
1:16:51 PM
CO-CHAIR NEUMAN said he is of the same opinion about meshing
everything together. He cautioned that this timeline could be
thrown forward or back depending upon a sea lift or gas
treatment plant in Prudhoe Bay and that right now, while the
economy is slow, would be a good time to start ordering
materials. He asked whether there would be penalties for
missing the dates, or whether the measurement would be done
through reports to the legislature.
REPRESENTATIVE CHENAULT concurred the dates are aggressive and
the timeline could change. Some people say being aggressive can
increase the costs, he related. However, [as a contractor] he
has never worked on a construction project that did not have a
deadline, and the sooner a contractor completes a project the
more money in the contractor's pocket.
CO-CHAIR NEUMAN added he thinks the project could come in under
cost by having the aggressive timeline and starting to get
things built in the factory.
REPRESENTATIVE CHENAULT agreed.
1:19:48 PM
TOM WRIGHT, Staff, Representative Mike Chenault, Alaska State
Legislature, provided a sectional analysis of HB 369. He said
Section 1 would add a new chapter, Chapter 34: In-State Natural
Gas Pipeline, and new sections to AS 38, which deals with public
lands. Sec. 38.34.010 would create the position and describe
the duties of an in-state gasline project manager who is
appointed by the governor. There is currently no statute for
such a manager, so a statutory provision is necessary to put
that person into the position of the Joint In-state Gasline
Development Team with certain duties.
1:21:07 PM
REPRESENTATIVE SEATON inquired whether this proposed project
manager and the current in-state gas project manager/coordinator
would work in parallel positions.
MR. WRIGHT replied no, it would be the same person and that
would be the person currently holding the coordinator position.
He related that Legislative Legal and Research Services advised
that statutory language is needed because this person would be
in the administrative branch. This position would be filled
until one year after completion of the project, he added.
1:22:16 PM
REPRESENTATIVE SEATON noted that page 2, lines 9-12, would
require written monthly progress reports, but that no due date
for the reports is specified in the language. He suggested a
due date be defined for the reports and added to the language.
MR. WRIGHT answered that the sponsor would be willing to look at
such an amendment.
CO-CHAIR JOHNSON pointed out that there are several cleanup
amendments that will be presented.
MR. WRIGHT reiterated that the sponsor is amenable to looking at
language specifying a timeline for the reports.
CO-CHAIR JOHNSON noted that Representative Seaton's suggestion
is not included in any of the cleanup amendments.
MR. WRIGHT, in response to Representative Seaton, stated that
the fifteenth of the month following the completion of the
previous month's activities would suffice for the written
monthly report deadline.
1:24:40 PM
CO-CHAIR NEUMAN, in regard to establishing the project manager
within the governor's office, related there is currently concern
among legislators, including himself, that an in-state pipeline
is being slow-tracked due to fear of competition from the large-
diameter line created through the Alaska Gasline Inducement Act
(AGIA). He said this concern is caused by the current project
manager being housed within the Department of Administration.
He asked how a manager appointed by the governor and in the
governor's office will stand alone and be separated from that.
MR. WRIGHT responded that this is addressed in further sections
of the bill, but the whole team would be within the office of
the governor. To accomplish what was wanted to be accomplished,
the team had to be put under the control of a state agency,
which he will explain later in the sectional analysis. An
expedited process is only possible by having this development
team within the administration.
1:27:13 PM
MR. WRIGHT resumed his sectional analysis, explaining that Sec.
38.34.020 would provide for an expedited review and action by
state agencies. Any state agency conducting and taking action
relating to the in-state gasline shall be expedited. The state
agency may not include in any project certificate, right-of-way,
permit or other authorization issued to a licensee a term or
condition that is not required by law if the in-state project
manager determines the term or condition would prevent or impair
the expeditious construction and operation or expansion of the
in-state gasline. A state agency may not, unless required by
law, amend or abrogate any certificate, right-of-way, permit or
other authorization issued to a licensee if the project manager
determines the action would prevent or impair the expeditious
construction and operation or expansion of the in-state gasline.
1:28:22 PM
REPRESENTATIVE SEATON drew attention to the language on page 2,
line 17, "Notwithstanding any contrary provision of law," and
line 19, "that is not required by law". He interpreted the line
17 language as abrogating the provisions of law related to
rights-of-way or permits and asked whether this is the intent.
He suggested a clarification of the language because it seems to
him that it is saying no other law applies and this provision
takes precedence over everything else.
MR. WRIGHT replied the intent is that, not withstanding any
other law, this is to be followed. He said he thinks this is
more drafting style than anything else and suggested the
question be directed to the bill drafter, Ms. Tam Cook. The
intent is that agencies are to cooperate and provide information
in an expedited manner to the Joint In-state Gasline Development
Team unless something prohibits this, such as a natural disaster
that takes an agency's time away from the gasline.
1:31:36 PM
REPRESENTATIVE SEATON stated that unless he is reading the
language wrong, "Notwithstanding any contrary provision of law"
provides that a right-of-way permit is not needed as required by
other law because this takes precedence over all other law. He
offered to ask Ms. Cook the question.
MR. WRIGHT agreed it would be beneficial to ask Ms. Cook.
CO-CHAIR NEUMAN said he reads this language as meaning an in-
state gasline will become the number one priority for Alaska.
MR. WRIGHT responded that he is not trying to avoid answering
Representative Seaton's question; sometimes drafting style
stymies him as well. He agreed with Co-Chair Neuman that the
intent is to plow forward.
1:33:54 PM
REPRESENTATIVE P. WILSON said she reads page 2, line 19, as
meaning that the project manager can require agencies to do what
the manager requests.
MR. WRIGHT replied yes.
REPRESENTATIVE P. WILSON added that she is questioning this
because there may be other projects that are going on
simultaneously that may be just as important to someone else as
is the gasline to the project manager. Therefore, this sounds
to her like the state is going to stop everything else until an
in-state gasline is done.
MR. WRIGHT answered yes, that could happen if it was taken to
that letter. However, common sense will likely prevail and
there are ample state employees working on other things that
will not be involved in this project.
1:35:50 PM
CO-CHAIR JOHNSON said there is a perception of slow rolling.
REPRESENTATIVE P. WILSON argued that those parts of state
government that are slowing things down should be fixed.
CO-CHAIR JOHNSON responded he is unsure that can be done because
of the separation of powers, but that Representative P. Wilson
has struck the nail on the head.
1:37:17 PM
MR. WRIGHT continued his sectional analysis. He said Sec.
38.34.030 would establish the Joint In-state Gasline Development
Team within the governor's office for the reasons stated
previously and would name the Alaska Railroad's chief executive
officer as the chair. The development team would be allowed to
hire staff, enter into contracts, and exercise any other powers
it needs to carry out its functions.
MR. WRIGHT explained that Sec. 38.34.040 describes the duties of
the development team. These duties would be to ensure that
construction for an in-state gasline is ready to commence by
July 1, 2011 and to take any necessary actions to enable the
flow of natural gas by 2015. The team is to select a route
that: runs from the North Slope to tidewater that is the most
economical, will provide gas to the greatest number of residents
at a reasonable cost, uses state land and existing state highway
and railroad rights of way to the maximum extent, uses existing
highway and railroad bridges, gravel pits, equipment yards,
maintenance facilities, and other existing facilities and
resources to the maximum extent possible. He noted that the
sponsor will have an amendment that addresses the issue of
providing gas to the greatest number of residents at a
reasonable cost. Team duties would also be to: identify land
or rights of ways that must be obtained for construction and
operation of the in-state gasline and take necessary action to
enable the Department of Transportation & Public Facilities to
acquire those interests; prepare plans and designs necessary for
the construction of the in-state gasline; identify all permits
and applications needed to construct the gasline and proceed
with applications for those permits and licenses; prepare and
update estimates of construction and other costs of
construction; and take any necessary action so that construction
may begin by July 1, 2011.
1:39:33 PM
REPRESENTATIVE SEATON inquired whether the term "economical" as
used on page 3, line 18, means the most economical to build, or
to operate, or serves the most people for the least cost.
MR. WRIGHT replied the sponsor is looking at the most economical
to construct.
REPRESENTATIVE SEATON asked whether the sponsor would be
amenable to an amendment that clarifies this.
MR. WRIGHT replied yes.
REPRESENTATIVE CHENAULT nodded his head yes.
CO-CHAIR JOHNSON added that saying the most economical would
also lower the tariffs by the nature of building the most
economical, but that the clarification would be appreciated.
1:40:39 PM
CO-CHAIR NEUMAN asked whether this setup would be a separate
corporation like the Alaska Railroad. He said he is asking this
in regard to state procurement codes and guidelines and whether
all of this could be done faster when the entity is a separate
corporation.
MR. WRIGHT answered that page 3, line 8, provides that the
development team may enter into contracts; they are not under
the procurement code. In further response, he reiterated that
the team would not be under the state procurement code. [See
differing response of Ms. Tam Cook under 1:49:53 p.m.]
REPRESENTATIVE P. WILSON inquired whether that means the team
does not have to issue requests for proposals (RFPs).
MR. WRIGHT responded that the team would not have to do RFPs.
[See differing response of Ms. Tam Cook under 1:49:53 p.m.]
1:42:29 PM
REPRESENTATIVE SEATON presumed the authority there would be to
do sole-source contracting dependent upon the project manager.
MR. WRIGHT replied this would be under the development team's
purview, not solely with the in-state gasline project manager.
CO-CHAIR JOHNSON clarified it is not being said that a pipeline
would be built as a sole-source project. This is just the
developing of the team and some of the information.
MR. WRIGHT added that this is to obtain the information that is
needed to construct the gasline, such as engineering and any
other actions necessary to get to the construction stage.
REPRESENTATIVE P. WILSON surmised that what is being said is
that an in-state gasline project would not be subject to jumping
through as many hoops as a federal project, which would save
time and money.
MR. WRIGHT answered yes, unless the gasline goes through federal
land, which would be avoided at all cost.
1:44:31 PM
CO-CHAIR JOHNSON returned to Representative Seaton's question
regarding Sec. 38.34.020.
REPRESENTATIVE SEATON reiterated his previous question in regard
to the language on page 2, line 17, "Notwithstanding any
contrary provision of law," and the language on line 19, "that
is not required by law".
TAM COOK, Director, Legislative Legal Counsel, Legislative Legal
and Research Services, Legislative Affairs Agency, responded
that the state agency would be required to continue to apply
other law, but it could not include additional requirements that
the agency might believe particular to this particular project.
This proposed language is modeled on AS 43.90.260(b), which is
the language that currently applies to the in-state coordinator
under existing law.
1:46:37 PM
REPRESENTATIVE SEATON understood Ms. Cook to be saying that if
the proposed gasline project manager determines that a term or
condition would prevent or delay the building date beyond July
1, 2011, the state agencies would still have the authority to
put in all the conditions that they are required to do under
existing law.
MS. COOK replied she believes that is correct. The language
comes directly out of the 2007 Alaska Gasline Inducement Act
(AGIA), and it has not yet been construed as far as she knows.
REPRESENTATIVE P. WILSON reiterated her supposition that the
language on page 2, line 19, would mean the project manager
could require agencies to do what the manager requests.
MS. COOK answered that that is exactly what it would mean and it
would be akin to the powers that the Alaska Gasline Inducement
Act attempts to give to the AGIA coordinator.
1:48:46 PM
CO-CHAIR NEUMAN inquired whether the current in-state gasline
coordinator has that authority.
MS. COOK responded yes, it is available in AS 43.90.260(b). In
further response, she said the language in HB 369 is precisely
modeled on that, except the name of the officer has been
changed.
MS. COOK, in response to Co-Chair Johnson, clarified that
something new would be created in that a similar power would be
given to this new state official. The existing act is not
appealed, amended, or changed in any way, so there is still a
similar power that is vested under the Alaska Gasline Inducement
Act and its coordinator.
1:49:53 PM
REPRESENTATIVE SEATON stated it seems the power that would be
given to the gasline development team under Sec. 38.34.040(b)(6)
on page 4, line 5, is extremely broad. He asked what the
constraints would be on the team under this provision.
MS. COOK replied she believes this power is indeed extremely
broad and she expects it would be circumscribed only by laws
that precisely conflict.
REPRESENTATIVE SEATON inquired whether the breadth would go
beyond the permitting and licenses to other aspects, be it
workforce development, procurement codes, or sole-source
contracting.
MS. COOK answered that even though it is extremely broad, she
does not think it would enable an action to be taken that
violates an existing law. For example, nothing in this
particular legislation exempts this particular agency from
requirements of the procurement code.
CO-CHAIR JOHNSON corrected his previous misunderstanding in this
regard, and clarified that according to Ms. Cook's statement
everything under HB 369 would be subject to the procurement
code, RFPs, and basic laws.
1:53:08 PM
REPRESENTATIVE GUTTENBERG referenced Sec. 38.34.040(b)(6) on
page 4, line 5, and posed a scenario in which the gasline
development team determines that the only way construction can
begin on July 1, 2011, is if the pipe is ordered today. He
asked whether it would be within the team's purview to do so.
MS. COOK responded she thinks that the team would have broad
authority to enter into contracts within the scope of the
procurement code and to solicit requests for proposals and that
sort of thing, but the team's ability to execute these would be
subject to appropriations available to them for the purpose.
There is the requirement that appropriations be available to any
agency that enters into a contract.
1:54:14 PM
REPRESENTATIVE GUTTENBERG commented that it is appealing to
appoint someone as pipeline manager and telling him or her to
steam right through and get it done. He presumed that the most
economical provision on page 3, line 18, would pertain only to
the construction cost of the gasline without consideration of
other costs such as doing the project another way, waiting a
year, state ownership, or a mainline contract.
MS. COOK replied that page 3, line 18, is a subparagraph that
relates to the process of selecting a route for an in-state
natural gas pipeline, so the proposed development team would be
required to select a route that is the most economical. The
team would be required to consider three other things as well.
REPRESENTATIVE GUTTENBERG said he is trying to see if it
excludes other things that may bring down the cost.
CO-CHAIR JOHNSON added he thinks what is being dealt with is the
selection of the most economical route as opposed to the most
economical pipe or actually starting the construction.
1:56:52 PM
REPRESENTATIVE OLSON surmised the bill's proposed timeline would
have gas in Fairbanks four years earlier than anything else that
is currently being looked at.
REPRESENTATIVE CHENAULT answered that he feels it is an
aggressive timeline and the state does not have the luxury to
wait for someone else to control its destiny. In further
response, he said he believes the state would be buying pipe
considerably earlier than would be the case for any other
project that has been laid out thus far.
REPRESENTATIVE OLSON inquired what would be done about the 0.5
billion cubic feet per day (Bcf/d) limit.
REPRESENTATIVE CHENAULT responded he does not have the answer to
that and it may be another question the legislature needs to
take up at some future time. He offered his belief that the
current in-state gas pipeline team is looking at three options
for gas flow through an in-state line - 250 million, 500
million, and 1 billion cubic feet of gas per day. The costs for
each option are being looked at, including the differences in
tariff rates. In further response, he said he is does not know
if this could be fixed in the House Finance Committee as he is
no longer on that committee.
1:59:39 PM
CO-CHAIR JOHNSON said if the numbers shake out that the state
must look at exceeding the 0.5 Bcf/d, then knowing this sooner
would be much better than later given the cost will be three
times greater.
REPRESENTATIVE CHENAULT replied he wishes the state had the need
for 0.5 Bcf/d in Alaska because that would mean Alaskans are
working and the economy is thriving.
CO-CHAIR NEUMAN, in regard to the 0.5 Bcf/d, offered his belief
that if the state were to sell off and no longer be involved,
and industry wanted to have throughput of more than 0.5 Bcf/day,
then it would not matter because the state would not be involved
in that part.
CO-CHAIR JOHNSON answered that that is debatable, but it would
be a pleasant conversation to be having.
2:01:18 PM
MR. WRIGHT apologized for misspeaking about the procurement
question and offered his appreciation for the clarification by
Ms. Cook. He noted that the Joint In-state Gasline Development
Team is to report an outline of its plans to the legislature by
July 1, 2011. There is an appropriation question that can only
be answered by the legislature, depending upon what type of plan
the development team derives. Thus, the legislature would have
final say at some point over how this would be financed. The
steering committee and the team are being tasked with providing
the legislature with answers to these questions.
MR. WRIGHT resumed his sectional analysis. He said Sec.
38.34.050 deals with cooperation and access to information.
This section would provide that the development team has access
to a state entity's information, including confidential
information that may relate to the in-state gasline or prove
useful in planning, design, construction, or operation of the
gasline; the development team must keep this confidential
information confidential. This section would also provide that
all state agencies are to cooperate and give priority to
requests for information from the development team.
Additionally, the development team is to avoid duplicating
studies, plans, and designs that have already been produced or
otherwise obtained by state entities.
2:03:19 PM
REPRESENTATIVE SEATON asked whether the state would be in
conflict with the triple damages provision [of the Alaska
Gasline Inducement Act] should an in-state gasline be designed
with a capacity greater than 0.5 Bcf/d.
REPRESENTATIVE CHENAULT responded that in regard to economics,
the more gas pushed through a line the cheaper the tariffs. He
said he does not think the state has the answer from any of the
studies as to whether crossing over that 0.5 Bcf/d gets the
state into a legal matter. Unless it is a very small line, any
gasline can be pressured to go above 0.5 Bcf/d. These may be
issues that have to be addressed in the future.
2:05:10 PM
REPRESENTATIVE SEATON, in regard to the provision on page 4,
line 14, that state agencies shall give priority to requests for
information from the development team, said he thinks this runs
directly against the provision to cooperate. The priority
language could elevate the request above the statutory language
in the Alaska Gasline Inducement Act and could possibly cause
legal damage to the state by going beyond the AGIA process.
REPRESENTATIVE CHENAULT allowed that Representative Seaton may
be right. He said his understanding is that the state's
departments have been given the priority to assist on the AGIA
project. Therefore, his argument for leaving this priority
language in the bill is that as long as the Joint In-state
Development Team gets the same priority as the AGIA process, he
does not believe this would cross the legal line of putting the
state in non-compliance with the AGIA process. If the
development team is given more authority than is given the AGIA
process, then he thinks the state would get into trouble.
2:08:10 PM
REPRESENTATIVE SEATON said he is raising this issue given that
HB 369 would be the later-passed law, and if the later-passed
law requires that its provisions have priority he thinks it
would result in [elevating the priority above the AGIA
language]. He requested that the sponsor consider whether to
leave this language in the bill.
CO-CHAIR JOHNSON doubted that giving an equal priority is the
same as incentivizing. He said he thinks the treble damage is
going to end up in court regardless what other kind of pipeline
is built. Cleanup of the language is up to the sponsor, he
added, but this is splitting hairs way down the road.
CO-CHAIR NEUMAN agreed with Co-Chair Johnson. He noted that the
administration has been looking at a 24-inch gasline, which
optimally carries about 1 Bcf/d. He offered his belief that
AGIA states shipping, not the ability to ship, because the
intent was not to further inhibit in the future.
REPRESENTATIVE CHENAULT concurred and said that, at a minimum,
in-state gas should have the same priority as the other project.
CO-CHAIR JOHNSON said he thinks HB 369 would set up something
very similar to the federal government pipeline coordinator
whose job it is to cut through all the red tape and get the
process done expeditiously without inter-agency fighting.
REPRESENTATIVE P. WILSON urged this be verified with Ms. Cook or
other legal counsel.
REPRESENTATIVE CHENAULT agreed to do so.
2:11:25 PM
MR. WRIGHT returned to his sectional analysis and explained that
Sec. 38.34.060 deals with conflicts of interest. A member of
the Joint In-state Development Team would be required to make an
immediate disclosure if he or she acquires, owns, or controls a
direct or indirect interest in property, an organization, or
business that might be affected by the in-state gasline project
or other matters under consideration by the development team.
This disclosure would be part of the public record and would be
included in the minutes of the development team's first meeting
after the disclosure has been made.
MR. WRIGHT said Sec. 38.34.070 creates the In-state Gasline
Steering Committee within the governor's office to provide
advice to the development team. Members would serve without
compensation but would collect per diem and travel expenses
authorized for boards and commissions. The steering committee
would select a chair and vice-chair from its membership.
2:12:36 PM
REPRESENTATIVE CHENAULT, in response to Representative P.
Wilson, stated that the Alaska Permanent Fund Corporation would
be included as one of a number of different organizations on the
steering committee because of the investing and financing
knowledge that the fund would bring to a project of this size.
It is not being said that the fund should invest or that it is
wanted for the fund to invest. The fund has the state's biggest
pot of money and has done well on the state's investments.
CO-CHAIR JOHNSON inquired whether designating a member of the
legislature to an administrative branch is constitutional.
MR. WRIGHT responded that the sponsor was advised of that by the
Legislative Legal and Research Services, and the sponsor's
position is to fight it.
CO-CHAIR JOHNSON said he supports that.
MR. WRIGHT added this would be part of the steering committee,
which provides information to the development team. The
development team is the one to come up with the entire game plan
based on advice from steering committee members.
2:14:53 PM
REPRESENTATIVE SEATON surmised the corporation referred to on
page 5, lines 13-14, of the bill would be a regional Native
corporation.
MR. WRIGHT replied correct.
REPRESENTATIVE SEATON presumed the nonprofit corporation
referred to on page 5, lines 15-16, of the bill would be a
nonprofit formed under one of the regional corporations.
MR. WRIGHT answered correct.
REPRESENTATIVE SEATON asked whether tribal governments would be
included in the steering committee.
MR. WRIGHT responded the hope is that these regional and
nonprofit corporations would represent those interests.
2:16:31 PM
MR. WRIGHT, in response to Co-Chair Johnson, said he does not
believe a village corporation would be considered a nonprofit
corporation. A nonprofit corporation would be one of the 13
original regional corporations and he does not believe that goes
down to the village level.
CO-CHAIR JOHNSON offered his belief that a nonprofit could be a
nonprofit village organization formed by a Native organization
under federal law.
MR. WRIGHT allowed that could be, as long as it is nonprofit.
REPRESENTATIVE GUTTENBERG noted that the Denali Borough is not
listed as a member of the steering committee. He pointed out
that the steering committee has an even number of members and
someone may want to address that it be made an odd number.
REPRESENTATIVE OLSON supposed that the steering committee member
representing the North Slope Borough on page 5, line 23, would
be Inupiat.
2:18:28 PM
MR. WRIGHT commenced his sectional analysis and stated that Sec.
38.34.090 deals with conflicts of interest for the steering
committee and would apply the same provisions as for the
development team.
MR. WRIGHT addressed Sec. 38.34.080, which provides for the
steering committee's duties. This section would give the
development team the authority to assign specific issues to the
steering committee and the committee is to report its
conclusions and recommendations to the development team.
2:19:45 PM
REPRESENTATIVE SEATON, in regard to steering committee members
representing an institution, asked whether a conflict of
interest would be based on the institution being represented or
the individual personally.
MR. WRIGHT replied he reads the bill as meaning individually
because, for example, a municipality might gain if an in-state
gasline goes through.
CO-CHAIR JOHNSON said a steering committee member must disclose
a conflict but would not be excluded from participating.
REPRESENTATIVE SEATON agreed disclosure is appropriate.
2:21:39 PM
REPRESENTATIVE GUTTENBERG inquired whether HB 369 tightens or
loosens the disclosure of conflicts of interest.
MR. WRIGHT allowed it is loosened a bit because the financial
information disclosure requirements that are applied to public
officials would not be required of steering committee members as
otherwise no one would want to serve. He added that a number of
people who would be steering committee members already have to
file financial disclosure forms.
REPRESENTATIVE CHENAULT said the pipeline coordinator would be
giving the steering committee a task that must be reported back
with recommendations. Steering committee members would not be
voting on how the coordinator moves the project forward, which
is some of the reasoning for lessening the conflict of interest
requirements.
2:23:35 PM
REPRESENTATIVE P. WILSON referenced page 6, line 30, of the bill
and requested an explanation of AS 39.52.
MR. WRIGHT responded that AS 39.52 is the Alaska Executive
Branch Ethics Act, and under HB 369 this act would not apply to
a member of the steering committee.
REPRESENTATIVE P. WILSON surmised that steering committee
members would then not have to abide by any of the ethics that
are applied to legislators or the administration.
MR. WRIGHT replied correct. A steering committee member would
have to disclose a conflict of interest but would not be subject
to financial disclosure or the other requirements that public
officials must go through. In further response, he pointed out
that members of the development team are already subject to
conflict of interest disclosure [so HB 369 does not need a
provision in this regard].
2:25:18 PM
REPRESENTATIVE SEATON understood that under Sec. 38.34.060 a
member of the Joint In-state Gasline Development Team could have
a direct financial stake in what is being decided by the team as
long as it is disclosed.
MR. WRIGHT answered that the development team individuals are
probably already under the provisions of AS 39.52, although he
cannot say for sure. He agreed that Representative Seaton is
bringing up a valid point in that the desire is to avoid any
conflict of interest.
REPRESENTATIVE SEATON offered his belief that development team
members are not exempt from the Alaska Executive Branch Ethics
Act, but it is good to point out that the only provision is that
a financial conflict of interest must be disclosed.
MR. WRIGHT responded that members of the development team are
not excluded because as public officials they have had to
already file their financial information.
2:27:50 PM
REPRESENTATIVE P. WILSON pointed out that the project manager
would be picked by the governor and would therefore be brand
new, so this person would not have had to disclose any
information. Additionally, the project manager would be
partially exempt under AS 39.25.120.
MR. WRIGHT replied that the sponsor has an amendment to put the
project manager under exempt.
MR. WRIGHT concluded his sectional analysis by noting that Sec.
38.34.100 is the definitions section in which the in-state
natural gas pipeline and the North Slope are defined. Section 2
of the bill would amend AS 39.25.120(c) to provide for partially
exempt service for the in-state gasline project manager.
However, the sponsor has an amendment at the request of the
governor's office to put the manager under exempt service.
Section 3 is the immediate effective date.
2:28:54 PM
REPRESENTATIVE P. WILSON noted that the administration is
funneling everything to AGIA, and that HB 369 would have the
governor appoint the in-state project manager and others. She
inquired how this bill would make one entity work on both
projects.
REPRESENTATIVE CHENAULT answered he hopes that the governor does
not have to be made to do this and that this is a project the
governor wants to get on board with. There is frustration in
regard to the different entities that are working; a date would
be added and authority would be given to the manager - who would
not necessarily be a different person - that is similar to that
of the Alaska Railroad chief executive officer. He acknowledged
the governor could select a manager and give directions to not
come back to the legislature with a completed project by 2011.
However, the legislature has the ability to affect the
governor's office and budgets, as well as department budgets.
Unfortunately, the legislature cannot do the project itself and
must give the authority to the administration and a department.
He said he thinks the current in-state coordinator is headed
down the right path, but he believes there are other entities in
this building and departments across the state that feel the
state should be going in a different direction. This is not a
sure-fire thing, but it heads in the direction of bringing back
a project that moves Alaska forward.
2:33:06 PM
REPRESENTATIVE OLSON surmised that the bullet line envisioned by
Representative Chenault would flow from the north to the south
and not from Cook Inlet upward.
REPRESENTATIVE CHENAULT responded he wishes that Cook Inlet had
the gas to be able to ship north to Fairbanks, but such a fuel
supply has not yet been found in the inlet. It is known where
there is a minimum of 35 trillion cubic feet of gas; that supply
is 800 miles away and it is time for the legislature and the
governor to get on board with a project that puts Alaskans
first, not others.
REPRESENTATIVE OLSON commented that if a similar bill had been
before legislators three years ago, the state would be about one
year away from gas.
REPRESENTATIVE CHENAULT agreed.
CO-CHAIR JOHNSON said he shares the sponsor's frustrations and
he would like nothing more than a private entity coming in and
saying that this makes sense. He said he thinks the state has
signaled that it is closed for business; for example, he has
talked to companies that drill in Cook Inlet and that build
pipelines and both have said they believe there is gas in Cook
Inlet but that they are not going to do business in Alaska.
This bill clearly sends a signal that the state is open for
business.
2:35:45 PM
CO-CHAIR NEUMAN moved to adopt Amendment 1, labeled 26-
LS1527\R.1, Cook, 2/24/10, written as follows [original
punctuation provided]:
Page 1, line 13:
Delete "partially exempt service under AS
39.25.120"
Insert "exempt service under AS 39.25.110"
Page 7, line 6:
Delete "AS 39.25.120(c)"
Insert "AS 39.25.110"
Page 7, line 7:
Delete "(21)"
Insert "(43)"
REPRESENTATIVE OLSON objected for discussion purposes.
2:36:42 PM
MR. WRIGHT explained that Amendment 1 is at the recommendation
of the governor's office because none of the employees in the
Office of the Governor are under partially exempt service.
Amendment 1 would change the partially exempt service to exempt
service under AS 39.25.110.
REPRESENTATIVE SEATON noted that exempt service is subject to
the Alaska Executive Branch Ethics Act.
MR. WRIGHT replied correct.
CO-CHAIR JOHNSON added that exempt employees "serve at the
pleasure."
MR. WRIGHT answered correct.
REPRESENTATIVE OLSON removed his objection. There being no
further objection, Amendment 1 was adopted.
2:37:30 PM
CO-CHAIR NEUMAN moved to adopt Amendment 2, labeled 26-
LS1527\R.2, Cook, 2/24/10, written as follows [original
punctuation provided]:
Page 6, line 3, following "Valdez":
Insert ";
(Q) an individual who represents the Denali
Borough"
CO-CHAIR JOHNSON objected for purposes of explanation.
MR. WRIGHT allowed that during the drafting of HB 369 the Denali
Borough was inadvertently left out of the list of steering
committee members. He apologized for this omission.
CO-CHAIR JOHNSON removed his objection. There being no further
objection, Amendment 2 was adopted.
2:38:49 PM
CO-CHAIR NEUMAN moved to adopt Amendment 3, labeled 26-
LS1527\R.3, Cook, 2/24/10, written as follows [original
punctuation provided]:
Page 3, line 19:
Delete "the greatest number of"
CO-CHAIR JOHNSON objected for purposes of explanation.
2:38:58 PM
REPRESENTATIVE CHENAULT explained that upon looking at the
legislation it was determined that by stating greatest number of
residents the pipeline coordination group was being told which
route to run. That is not what he feels the legislature should
be involved with; rather, there needs to be the ability to look
at either project/either route and a decision made on the facts.
He wants it to be clear that it is gas orientated, not route
orientated.
REPRESENTATIVE GUTTENBERG noted that residents are people as
compared to utilities. He inquired whether it could include
utilities.
REPRESENTATIVE CHENAULT responded that it could, but it is known
that if gas is to residents of the state so will the utilities
be.
CO-CHAIR JOHNSON interjected that he thinks most of the
utilities in the state are cooperatives and represent residents.
2:41:07 PM
CO-CHAIR NEUMAN said getting power over to Donlin Creek Gold
Mine and the economies of scale must be looked at in addition to
the greatest number of people. The project could continue to
grow from where it is today and over to western Alaska. He
presumed the sponsor's intent is to have gas at a reasonable
cost to the residents of the state; for example, it would not be
for export of liquefied natural gas (LNG) to China.
REPRESENTATIVE CHENAULT replied that all Alaska residents should
have the opportunity. The hope is - if the first line is ever
constructed - that at a future date it will effectively help all
Alaskans across the state, but certainly not with this one
particular pipeline and certainly not at the very beginning. At
a future date there would be opportunities for additional
pipelines or LNG and other options to be able to affect the
energy costs of Alaskans. He does not have a problem with
putting Alaskans in there, but he thinks residents pretty much
covers the issue that needs to be covered.
CO-CHAIR NEUMAN said he does not intend to offer an amendment,
but only wanted clarification from the sponsor that the intent
is residents of the state.
CO-CHAIR JOHNSON offered his appreciation for this language
because he thinks there is also an opportunity for a pipeline to
have offtakes for taking high-value gas and propanes to other
parts of the state and he does not wish to exclude the people in
those areas. He removed his objection. There being no further
objection, Amendment 3 was adopted.
2:44:44 PM
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 4,
stated as follows:
Page 2, line 12:
Insert "Reports are due on the fifteenth of the
month following the month covered by the report."
CO-CHAIR NEUMAN objected. He said much of this could be
nitpicked to death and he feels a date is unnecessary; for
example, where the line is drawn if the fifteenth of the
following month falls on a weekend.
REPRESENTATIVE SEATON argued that a report due date follows the
idea of this bill - it sets a deadline. Without a date the
monthly reports could be submitted six months later. The law
should be specific enough that the people generating the reports
know when they are due, whether that due date is the thirtieth
day of the month following or some other date. He said it does
not matter how many days it is, there just needs to be a
timeline set for when they are due.
2:47:37 PM
CO-CHAIR JOHNSON appreciated both arguments, but said he is
concerned about a date certain on the fifteenth.
REPRESENTATIVE SEATON withdrew Conceptual Amendment 4.
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 5,
stated as follows:
[Page 2, line 12:]
[Insert] "Reports are due at the end of the month
following the month for which that report is covered."
CO-CHAIR NEUMAN objected, then removed his objection. There
being no further objection, Conceptual Amendment 5 was adopted.
2:49:06 PM
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 6,
stated as follows:
Page 3, line 18, after "economical":
Insert "to construct"
CO-CHAIR NEUMAN objected.
REPRESENTATIVE SEATON noted that the sponsor had previously said
this amendment was advisable and inquired whether the sponsor
still agrees.
REPRESENTATIVE CHENAULT said that is the intent so Conceptual
Amendment 2 would be acceptable.
CO-CHAIR JOHNSON clarified that this is just picking the route
and therefore he believes the amendment is appropriate.
CO-CHAIR NEUMAN contended the amendment is unneeded wordsmithing
that could tie people's hands. He maintained his objection.
A roll call vote was taken. Representatives Johnson, Seaton,
and P. Wilson voted in favor of Conceptual Amendment 6.
Representatives Neuman, Guttenberg, and Olson voted against it.
Therefore, Conceptual Amendment 6 failed by a vote of 3-3.
2:53:56 PM
REPRESENTATIVE SEATON moved to adopt Conceptual Amendment 7,
stated as follows:
Page 4, lines 13-14:
Delete "and give priority to"
CO-CHAIR NEUMAN objected.
REPRESENTATIVE SEATON expressed his concern that including these
words in the bill could run afoul of other statutes. Removing
the words would get around this potential problem while still
directing state agencies to cooperate.
REPRESENTATIVE P. WILSON commented that she questioned this
language during the sponsor's testimony and he assured her at
the time that he would check into it. She said she is hesitant
to do something until the sponsor does something and therefore
her vote on adopting the amendment will be no.
2:56:21 PM
CO-CHAIR NEUMAN argued that he thinks priority must be given to
an in-state gasline and priority is what Alaskans want. He does
not think the bill's current language gives permission to break
the law of existing statute.
REPRESENTATIVE OLSON objected to the amendment because he thinks
it will cost time and he does not want to be here four years
from now trying to explain to constituents why something has not
been started.
REPRESENTATIVE SEATON said there is no intent to slow things
down; rather, he thinks it avoids a legal problem that might
slow things down. He withdrew Conceptual Amendment 7 with the
understanding that the sponsor plans to check on this before the
bill's next hearing.
CO-CHAIR JOHNSON held over HB 369 and said he will open public
testimony when the bill is considered again on Monday, 3/1/10.
2:59:37 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 369.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Sponsor Statement.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Sectional Analysis.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Partially Exempt Service.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 ADN Article 2.14.10.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Amend 1.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Amend 2.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |
| HB 369 Amend 3.pdf |
HRES 2/26/2010 1:00:00 PM |
HB 369 |