Legislature(2007 - 2008)BARNES 124

04/23/2007 01:00 PM RESOURCES


Download Mp3. <- Right click and save file as

Audio Topic
01:07:16 PM Start
01:07:25 PM HB177
10:29:34 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 6:00 pm Today --
+= HB 177 NATURAL GAS PIPELINE PROJECT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 23, 2007                                                                                         
                           1:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Carl Gatto, Co-Chair                                                                                             
Representative Craig Johnson, Co-Chair                                                                                          
Representative Bob Roses                                                                                                        
Representative Paul Seaton                                                                                                      
Representative Peggy Wilson                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Vic Kohring                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Anna Fairclough                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 177                                                                                                              
"An  Act   relating  to  the   Alaska  Gasline   Inducement  Act;                                                               
establishing   the  Alaska   Gasline   Inducement  Act   matching                                                               
contribution  fund; providing  for an  Alaska Gasline  Inducement                                                               
Act coordinator; making conforming  amendments; and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 177                                                                                                                  
SHORT TITLE: NATURAL GAS PIPELINE PROJECT                                                                                       
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
03/05/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/05/07       (H)       O&G, RES, FIN                                                                                          
03/06/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/06/07       (H)       -- MEETING CANCELED --                                                                                 
03/08/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/08/07       (H)       -- MEETING CANCELED --                                                                                 
03/13/07       (H)       O&G AT 3:30 PM HOUSE FINANCE 519                                                                       
03/13/07       (H)       Heard & Held                                                                                           
03/13/07       (H)       MINUTE(O&G)                                                                                            
03/15/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/15/07       (H)       Heard & Held                                                                                           
03/15/07       (H)       MINUTE(O&G)                                                                                            
03/19/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
03/19/07       (H)       Heard & Held                                                                                           
03/19/07       (H)       MINUTE(O&G)                                                                                            
03/20/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/20/07       (H)       Heard & Held                                                                                           
03/20/07       (H)       MINUTE(O&G)                                                                                            
03/21/07       (H)       O&G AT 5:30 PM SENATE FINANCE 532                                                                      
03/21/07       (H)       Heard & Held                                                                                           
03/21/07       (H)       MINUTE(O&G)                                                                                            
03/22/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/22/07       (H)       Heard & Held                                                                                           
03/22/07       (H)       MINUTE(O&G)                                                                                            
03/23/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
03/23/07       (H)       Heard & Held                                                                                           
03/23/07       (H)       MINUTE(O&G)                                                                                            
03/24/07       (H)       O&G AT 1:00 PM SENATE FINANCE 532                                                                      
03/24/07       (H)       -- Public Testimony --                                                                                 
03/26/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
03/26/07       (H)       Heard & Held                                                                                           
03/26/07       (H)       MINUTE(O&G)                                                                                            
03/27/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/28/07       (H)       O&G AT 7:30 AM CAPITOL 106                                                                             
03/28/07       (H)       Heard & Held                                                                                           
03/28/07       (H)       MINUTE(O&G)                                                                                            
03/28/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
03/28/07       (H)       Heard & Held                                                                                           
03/28/07       (H)       MINUTE(O&G)                                                                                            
03/29/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
03/29/07       (H)       Heard & Held                                                                                           
03/29/07       (H)       MINUTE(O&G)                                                                                            
03/30/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
03/30/07       (H)       Heard & Held                                                                                           
03/30/07       (H)       MINUTE(O&G)                                                                                            
03/31/07       (H)       O&G AT 1:00 PM BARNES 124                                                                              
03/31/07       (H)       -- MEETING CANCELED --                                                                                 
04/02/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
04/02/07       (H)       Heard & Held                                                                                           
04/02/07       (H)       MINUTE(O&G)                                                                                            
04/03/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
04/03/07       (H)       Moved CSHB 177(O&G) Out of Committee                                                                   
04/03/07       (H)       MINUTE(O&G)                                                                                            
04/04/07       (H)       O&G RPT CS(O&G) NT 3DP 2NR 2AM                                                                         
04/04/07       (H)       DP: RAMRAS, DOOGAN, OLSON                                                                              
04/04/07       (H)       NR: SAMUELS, KAWASAKI                                                                                  
04/04/07       (H)       AM: DAHLSTROM, KOHRING                                                                                 
04/04/07       (H)       O&G AT 8:30 AM CAPITOL 106                                                                             
04/04/07       (H)       -- MEETING CANCELED --                                                                                 
04/05/07       (H)       O&G AT 3:00 PM BARNES 124                                                                              
04/05/07       (H)       -- MEETING CANCELED --                                                                                 
04/10/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/10/07       (H)       Heard & Held                                                                                           
04/10/07       (H)       MINUTE(RES)                                                                                            
04/11/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/11/07       (H)       Heard & Held                                                                                           
04/11/07       (H)       MINUTE(RES)                                                                                            
04/12/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/12/07       (H)       Heard & Held                                                                                           
04/12/07       (H)       MINUTE(RES)                                                                                            
04/13/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/13/07       (H)       Heard & Held                                                                                           
04/13/07       (H)       MINUTE(RES)                                                                                            
04/14/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/14/07       (H)       Heard & Held                                                                                           
04/14/07       (H)       MINUTE(RES)                                                                                            
04/16/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/16/07       (H)       Heard & Held                                                                                           
04/16/07       (H)       MINUTE(RES)                                                                                            
04/17/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/17/07       (H)       Heard & Held                                                                                           
04/17/07       (H)       MINUTE(RES)                                                                                            
04/18/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/18/07       (H)       Heard & Held                                                                                           
04/18/07       (H)       MINUTE(RES)                                                                                            
04/19/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/19/07       (H)       Heard & Held                                                                                           
04/19/07       (H)       MINUTE(RES)                                                                                            
04/20/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/20/07       (H)       Heard & Held                                                                                           
04/20/07       (H)       MINUTE(RES)                                                                                            
04/21/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/21/07       (H)       Heard & Held                                                                                           
04/21/07       (H)       MINUTE(RES)                                                                                            
04/23/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MARCIA DAVIS, Deputy Commissioner                                                                                               
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    During hearing  of  the  administration's                                                             
amendments to CSHB 177(O&G), answered questions.                                                                                
                                                                                                                                
CODY RICE, Staff                                                                                                                
to Representative Gatto                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     During  hearing  of   HB  177,  answered                                                             
questions.                                                                                                                      
                                                                                                                                
PAT GALVIN, Commissioner                                                                                                        
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     During  hearing  of   HB  177,  answered                                                             
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR  CARL   GATTO  called   the  House   Resources  Standing                                                             
Committee  meeting  to  order at  1:07:16  PM.    Representatives                                                             
Gatto, Johnson, Kawasaki, Wilson,  Seaton, Roses, Guttenberg, and                                                               
Edgmon  were  present  at  the call  to  order.    Representative                                                               
Kohring arrived as  the meeting was in  progress.  Representative                                                               
Fairclough was also in attendance.                                                                                              
                                                                                                                                
HB 177-NATURAL GAS PIPELINE PROJECT                                                                                           
                                                                                                                                
1:07:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  announced that the  only order of  business would                                                               
be HOUSE  BILL NO. 177,  "An Act  relating to the  Alaska Gasline                                                               
Inducement Act;  establishing the  Alaska Gasline  Inducement Act                                                               
matching  contribution  fund;  providing for  an  Alaska  Gasline                                                               
Inducement  Act coordinator;  making  conforming amendments;  and                                                               
providing  for an  effective date."   [Before  the committee  was                                                               
CSHB 177(O&G).]                                                                                                                 
                                                                                                                                
1:09:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 1, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page 1, line 4-5- Delete "establishing the gas utility                                                                     
     revolving loan fund;"                                                                                                      
                                                                                                                                
CO-CHAIR GATTO objected  for discussion purposes.   He noted that                                                               
Administration Amendment 1 changes the title.                                                                                   
                                                                                                                                
1:10:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  surmised  that  this  is  a  policy  call                                                               
regarding  entirely eliminating  the gas  utility revolving  loan                                                               
fund from the legislation.                                                                                                      
                                                                                                                                
CO-CHAIR GATTO responded yes.   He withdrew his objection.  There                                                               
being  no  further  objections, Administration  Amendment  1  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:10:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  [moved that  the committee  adopt] Administration                                                               
Amendment 2, which  seems to be merely  a grammatical correction.                                                               
Administration Amendment 2 read:                                                                                                
                                                                                                                                
     Page 1, line 12, replace the second "of" with "in"                                                                         
                                                                                                                                
There  being   no  objection,  Administration  Amendment   2  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:10:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 3, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page 2, line 3 - replace "from the" with "of"                                                                              
                                                                                                                                
     Page 2, line 5 -  insert "state" after "encourages" and                                                                    
     delete "in the state"                                                                                                      
                                                                                                                                
     Section   43.90.110   Natural  gas   pipeline   project                                                                  
     construction inducement                                                                                                  
                                                                                                                                
     Page 2 Line  16 - Page 3,  line 8 - Revise  (1) and (2)                                                                    
     as follows:                                                                                                                
                                                                                                                                
     (1)    subject   to    appropriate,   state    matching                                                                    
     contributions  in an  [a total]  amount  not to  exceed                                                                
     $500,000, paid in total to  the licensee over a [during                                                                
     the]  five-year  period;  the  payment  period  may  be                                                                  
     extended  by the  commissioners under  an amendment  or                                                                  
     modification of  the project  plan under  AS 43.90.210;                                                                  
     the  payment  period  commences  on  the  date  of  the                                                                  
     issuance  of the  license;  [immediately following  the                                                                  
     date  the  license  is awarded;]  payments  under  this                                                                    
     paragraph shall be made according to the following:                                                                        
                                                                                                                                
          (A) on or before the close of the first binding                                                                       
     open  season, the  state  shall  match [contribute  the                                                                  
     amount  of] the  licensee's  qualified expenditures  at                                                                    
     the  [a] level  specified in  the license;  however the                                                                  
     state's  matching contribution  may  not  be more  than                                                                
     [exceed]  50  percent  of  the  qualified  expenditures                                                                    
     incurred before  the close [end]  of the  first binding                                                                  
     open season;                                                                                                               
                                                                                                                                
          (B) after the close of the first binding season,                                                                      
     the state  shall match [may  contribute an  amount for]                                                                  
     the licensee's qualified expenditures  at a [the] level                                                                  
     specific in the license;  however, the state's matching                                                                  
     contribution may not be greater  than 80 percent of the                                                                    
     qualified expenditures incurred after  the close of the                                                                    
     first open season;                                                                                                         
                                                                                                                                
          (C) [a] qualified expenditures are [is a] costs                                                                   
     that  are [is]  incurred  after the  license is  issued                                                                  
     under this  chapter, [is incurred]  by the  licensee or                                                                    
     the  licensee's  designated  affiliate,  and  are  [is]                                                                  
     directly   and  reasonably   related  to   obtaining  a                                                                    
     certificate   or   amended    certificate   of   public                                                                  
     convenience  and  necessity  from  the  Federal  Energy                                                                    
     Regulatory Commission  or the Regulatory  Commission of                                                                    
     Alaska,   as  appropriate,   for  development   of  the                                                                    
     project;   [but]  in   this  subparagraph,   "qualified                                                                  
     expenditures"   does   not  include   overhead   costs,                                                                  
     litigation  costs  [the  cost  of an]  assets  or  work                                                                  
     product   predating  the   issuance  of   the  license,                                                                  
     [acquired  by  the  licensee   before  the  license  is                                                                    
     issued]  or  civil  or  criminal  penalties,  [criminal                                                                
     penalties] or fines; and                                                                                                 
                                                                                                                                
     (2)  the benefit  of an  Alaska Gasline  Inducement Act                                                                    
     coordinator  who has  the  authority  prescribed in  AS                                                                    
     43.90.250.[; and]                                                                                                        
                                                                                                                                
     Page 2,  line 9 -  Insert "(a)" between  "project." and                                                                    
     "The".                                                                                                                     
                                                                                                                                
      Page 2, line 12 -Insert "(b)Nothing in this section                                                                       
          precludes a person's pursuing a gas pipeline                                                                          
     independently from this chapter."                                                                                        
                                                                                                                                
1:11:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON said that  he doesn't understand the change                                                               
to page 2, line 3, specified in Administration Amendment 3.                                                                     
                                                                                                                                
MARCIA  DAVIS,   Deputy  Commissioner,  Department   of  Revenue,                                                               
explained  that  the change  to  page  2,  line 3,  specified  in                                                               
Administration Amendment 3  is merely a grammatical  change.  She                                                               
mentioned that this  is a small change that will  also drive CSHB                                                               
177(O&G)  closer   to  the  language  of   the  Senate  companion                                                               
legislation.  The change specified  in Administration Amendment 3                                                               
to page 2, line 5, is a similar change.                                                                                         
                                                                                                                                
1:13:17 PM                                                                                                                    
                                                                                                                                
MS. DAVIS,  in response to Representative  Seaton, confirmed that                                                               
the  term  "appropriate"  in   paragraph  (1)  of  Administration                                                               
Amendment  3 is  a typographical  error  and should  be the  term                                                               
"appropriation".                                                                                                                
                                                                                                                                
REPRESENTATIVE  SEATON   moved  that   the  committee   adopt  an                                                               
amendment  to  Administration  Amendment  3 such  that  the  term                                                               
"appropriate" in paragraph (1)  is replaced with "appropriation".                                                               
There  being  no  objection,   the  amendment  to  Administration                                                               
Amendment 1 was adopted.                                                                                                        
                                                                                                                                
1:14:39 PM                                                                                                                    
                                                                                                                                
MS. DAVIS  specified that all  of Administration Amendment  3, as                                                               
amended, save lines  11-13 of the written  amendment, are changes                                                               
to  conform to  the Senate  companion legislation.   The  changes                                                               
specified on  lines 11-13  of the written  amendment is  a change                                                               
that  was adopted  on  the Senate  side  that the  administration                                                               
recommends be included in the HB  177.  This change would provide                                                               
some flexibility to allow the payment period to be extended.                                                                    
                                                                                                                                
1:15:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON, referring to  subparagraphs (A) and (B) of                                                               
Administration   Amendment    3,   as   amended,    related   his                                                               
understanding  that  the  language   specifying  that  the  state                                                               
"shall"  match the  qualified expenditures  would only  occur "if                                                               
the  licensee  has requested  in  its  proposal for  license  for                                                               
matching money, this doesn't require the match be taken."                                                                       
                                                                                                                                
MS. DAVIS confirmed that is correct.                                                                                            
                                                                                                                                
1:16:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON  inquired as to  the reasons the  payment period                                                               
would be extended.                                                                                                              
                                                                                                                                
MS. DAVIS  explained that there is  a hard deadline of  36 months                                                               
for the  initiation of open  season, thereafter there is  no hard                                                               
deadline  for the  initiation of  the  Federal Energy  Regulatory                                                               
Commission   (FERC)   certification   process.     However,   the                                                               
legislation does  specify a hard  deadline of five years  for the                                                               
dispersal of the matching funds.   The desire, she related, is to                                                               
ensure  that there  is an  intelligent expenditure  of funds  and                                                               
that the  applicant doesn't feel  the need to accelerate  some of                                                               
the  expenditures  in  order  to  come  in  under  the  five-year                                                               
deadline.   There may be  expenditures that occur after  the five                                                               
years  and may  be more  in step  with the  manner in  which FERC                                                               
certification occurred.   Ms. Davis said  that the administration                                                               
didn't believe  that any  delay of the  matching fund  would hurt                                                               
the  state, but  there  is the  desire  for intelligent  decision                                                               
making with regard to the applicant's expenditures.                                                                             
                                                                                                                                
1:17:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   JOHNSON  commented   that   he  didn't   know  if   he                                                               
conceptually agreed that the state  should give another unlimited                                                               
period of time for an applicant  to continue to a second or third                                                               
open season.   This  would extend the  second open  season beyond                                                               
five years.                                                                                                                     
                                                                                                                                
MS. DAVIS  pointed out  that the  funds aren't  tied to  the open                                                               
season but rather to the  FERC certification process.  Therefore,                                                               
there could be  multiple open seasons with  the five-year period.                                                               
The five-year deadline  is a straight deadline  regardless of the                                                               
point  at  which  the  applicant is  in  the  FERC  certification                                                               
process.                                                                                                                        
                                                                                                                                
CO-CHAIR JOHNSON said he would  like to qualify that statement by                                                               
referring to "successful open season."                                                                                          
                                                                                                                                
1:19:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG, referring to  the language inserted on                                                               
page 2, line  12, as specified in Administration  Amendment 3, as                                                               
amended, asked,  "Doesn't that go without saying?"                                                                              
                                                                                                                                
MS. DAVIS stated that it's a  matter of federal law and that this                                                               
language was added  in the Senate companion  legislation in order                                                               
to  quell the  producers'  concerns that  this  was an  exclusive                                                               
arrangement and process.                                                                                                        
                                                                                                                                
1:20:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  inquired as to  how one would pursue  a gas                                                               
pipeline independently from the contract.                                                                                       
                                                                                                                                
MS. DAVIS  explained that one  would essentially apply  for their                                                               
right-of-ways, their  permitting processes, and apply  to the RCA                                                               
and FERC where appropriate.                                                                                                     
                                                                                                                                
REPRESENTATIVE ROSES  related his understanding that  there is no                                                               
mechanism in place to proceed with the state other than AGIA.                                                                   
                                                                                                                                
MS. DAVIS replied no, and pointed  out that part of the mechanism                                                               
for  obtaining permitting  for  a  pipeline is  to  apply to  the                                                               
Department  of  Natural  Resources (DNR)  for  rights-of-way  for                                                               
which they have the exclusive  province for issuing and deal with                                                               
the   Department   of   Environmental  Conservation   (DEC)   for                                                               
environmental permitting.   Therefore,  a pipeline  builder would                                                               
deal  with  the state  for  all  of  its permitting  and  various                                                               
administrative jurisdictional areas.   The state would be engaged                                                               
in  issuing permits  and authorizing  the  various activities  on                                                               
state land  and the  areas for which  the state  exercises police                                                               
powers.  Ms.  Davis pointed out that there  would be consequences                                                               
if the  state preferentially issued a  tax rebate, preferentially                                                               
provided  a royalty  benefit, or  provided  an outright  monetary                                                               
grant.   Although the  state could  do the  aforementioned, there                                                               
would  be  consequences under  AGIA  for  supporting a  competing                                                               
pipeline project with the AGIA licensee.                                                                                        
                                                                                                                                
1:22:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  surmised, "You  would only be  precluded up                                                               
until  a point  in which  you  issued or  selected, according  to                                                               
AGIA, a licensee.   Prior to the assignment or  the awarding of a                                                               
licensee, that  would not  preclude the  state from  making those                                                               
kinds of inducements, would it?"                                                                                                
                                                                                                                                
MS. DAVIS said that's correct.                                                                                                  
                                                                                                                                
1:22:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO related  his understanding that such  would be the                                                               
case with any pipeline.                                                                                                         
                                                                                                                                
MS.  DAVIS  said  that's correct,  adding  that  essentially  any                                                               
pipeline  can  be  built  in  the state.    She  reiterated  that                                                               
consequences for building  a competing pipeline are  set forth in                                                               
AGIA.  The  legislation defines a competing pipeline  as one that                                                               
delivers gas of greater than 500 million cubic feet a day.                                                                      
                                                                                                                                
1:23:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO,  after ascertaining  there were no  objections to                                                               
Administration   Amendment   3,   as  amended,   announced   that                                                               
Administration Amendment 3, as amended, was adopted.                                                                            
                                                                                                                                
1:24:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 4, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page 2, line 13 - Delete "(a)"                                                                                             
                                                                                                                                
There  being   no  objection,  Administration  Amendment   4  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:25:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 5, which read [original punctuation provided]:                                                                        
                                                                                                                                
         Page 3, line 9-14 - Delete subsection (3) and                                                                          
     subsection (b).                                                                                                            
                                                                                                                                
MS.  DAVIS  explained  that  [paragraph]  (3)  is  being  deleted                                                               
because  the benefits  of  the qualified  job  training has  been                                                               
moved  to  a  later  section  in the  legislation  and  isn't  an                                                               
exclusive inducement.   Subsection (b) has been  addressed in the                                                               
[provisions] addressing  the right of the  commissioners to issue                                                               
regulations.                                                                                                                    
                                                                                                                                
1:25:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG related his  desire to have a committee                                                               
substitute  (CS)  that  incorporates  these  amendments  for  the                                                               
committee to review prior to it moving out of committee.                                                                        
                                                                                                                                
CO-CHAIR  GATTO related  his  understanding  that the  amendments                                                               
will  be adopted  and  the  CS will  be  presented  in the  House                                                               
Finance Committee.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  surmised  then   that  once  all  the                                                               
amendments are dispensed  with, the motion will be  to report the                                                               
legislation,  as amended,  from committee  without the  committee                                                               
seeing that  amended legislation.   He  reiterated his  desire to                                                               
have the amended legislation in a  CS for the committee to review                                                               
prior to moving the legislation from committee.                                                                                 
                                                                                                                                
1:26:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  inquired as the  time required for  the committee                                                               
to have  a CS that  incorporates the  amendments.  He  noted that                                                               
the House  Finance Committee would  like to have  the legislation                                                               
on Friday in order to take it up that day.                                                                                      
                                                                                                                                
MS. DAVIS  said that one  of the  challenges is working  with the                                                               
legislative attorneys  who work  in a certain  Word format.   She                                                               
said she can work in a Word  format to create a document that has                                                               
the changes without  the numbering down the margin.   She offered                                                               
to check  with Legislative Legal  and Research Services  in order                                                               
to coordinate and facilitate getting the committee a CS.                                                                        
                                                                                                                                
1:28:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   GATTO   returned    the   committee's   attention   to                                                               
Administration Amendment 5.                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON inquired as to  why the language on page 3,                                                               
lines 12-14 of CSHB 177(O&G) is being deleted.                                                                                  
                                                                                                                                
MS.  DAVIS explained  that later  in the  legislation there  is a                                                               
general authorizing  provision that  allows the  commissioners to                                                               
enact  all regulations  necessary for  the implementation  of the                                                               
chapter.     Therefore,  the  drafter  felt   it  appropriate  to                                                               
eliminate the  special regulation  for each section  and maintain                                                               
the general  authorizing authority  at the  back of  the chapter.                                                               
In  response to  Representative Guttenberg,  Ms. Davis  confirmed                                                               
that the language in paragraph (3)  on page 3, lines 9-12 of CSHB                                                               
177(O&G) is located elsewhere in the legislation.                                                                               
                                                                                                                                
CO-CHAIR GATTO noted that there  has been a substantial amount of                                                               
re-ordering in order to mesh HB 177 and SB 104.                                                                                 
                                                                                                                                
CO-CHAIR   GATTO,  after   ascertaining   that   there  were   no                                                               
objections,  announced   that  Administration  Amendment   5  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:29:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 6, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Sec.  43.90.120.  Request   for  applications  for  the                                                                  
     license.                                                                                                                 
                                                                                                                                
     Page  3, Line  16, insert  after "license"-"under  this                                                                    
     chapter"                                                                                                                   
                                                                                                                                
     Page 3, Line 18-20,  Revise to read: "The commissioners                                                                    
     may use  independent contractors  [,including technical                                                                    
     advisors]   to   advise   [them]  in   developing   the                                                                    
     provisions  for the  application for  a license  and in                                                                
     evaluating  [the]  applications   received  under  this                                                                  
     chapter.                                                                                                                 
                                                                                                                                
     Section 43.90.130. Application requirements                                                                              
                                                                                                                                
     Page 3,  line 25  - Delete  first sentence  and replace                                                                    
     with:                                                                                                                      
                                                                                                                                
     "An application  for a license must  be consistent with                                                                    
     the  terms of  the  request for  applications under  AS                                                                    
     43.90.120 and must"                                                                                                        
                                                                                                                                
     Page 3,  line 28,  replace "file the  application" with                                                                    
     "be filed"                                                                                                                 
                                                                                                                                
MS.  DAVIS   characterized  Administration   Amendment  4   as  a                                                               
conforming amendment.                                                                                                           
                                                                                                                                
1:31:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG   requested  an  explanation   of  the                                                               
language change of "shall" to "must"  in the new language for the                                                               
first sentence on page 3, line 25.                                                                                              
                                                                                                                                
MS. DAVIS informed the committee that  the change was made by the                                                               
drafter to comport  with standard drafting protocols.   Ms. Davis                                                               
related  her understanding  that there  is no  difference in  the                                                               
meaning of "must" versus "shall".                                                                                               
                                                                                                                                
REPRESENTATIVE SEATON  related his understanding that  "shall" is                                                               
an order for  somebody to do something while "must"  refers to an                                                               
application including something.                                                                                                
                                                                                                                                
There  being   no  objection,  Administration  Amendment   6  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:32:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  that  the  committee adopt  Administration                                                               
Amendment 7, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page 3, lines 22-24 - Delete the rest of the sentence                                                                      
     after "chapter"                                                                                                            
                                                                                                                                
MS. DAVIS  said that  Administration Amendment  7 relates  to the                                                               
adoption  of  regulations  and  there   is  a  provision  in  the                                                               
legislation  that  requires  applicants  to  waive  their  appeal                                                               
rights,  both appeal  against an  award and  the decision  not to                                                               
award.  Therefore, these provisions aren't necessary.                                                                           
                                                                                                                                
1:33:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked  if there are any  changes in the                                                               
way in which protest and appeal procedures are provided.                                                                        
                                                                                                                                
MS.  DAVIS explained  that  in  this case,  because  there was  a                                                               
policy  change to  remove  the  right of  appeal  to protest  the                                                               
application,  the award  of licenses,  the provision  [deleted in                                                               
Administration Amendment 7]  no longer has a function.   In other                                                               
words,  she  explained  that  there   is  no  need  to  adopt  or                                                               
incorporate analogous provisions to  the procurement code because                                                               
there won't be  authorized an administrative appeal  of the award                                                               
of licenses.   In further response  to Representative Guttenberg,                                                               
Ms. Davis said that she would  expand on the new procedure, which                                                               
is found in the application requirements.                                                                                       
                                                                                                                                
There  being   no  objection,  Administration  Amendment   7  was                                                               
adopted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE ROSES mentioned that  although he didn't object to                                                               
Administration Amendment  7, he reserves the  right to reconsider                                                               
Administration Amendment 7 once the committee reviews the                                                                       
provision where the language appears.                                                                                           
                                                                                                                                
1:35:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO moved that the committee adopt Administration                                                                    
Amendment 8, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page  4,  line 12  -  Insert  "how the  applicant  will                                                                    
     implement  practices for  controlling carbon  emissions                                                                    
     from natural  gas systems as established  by the United                                                                    
     States   Environmental   Protection   Agency"   between                                                                    
     "engineering," and "and"                                                                                                   
                                                                                                                                
     Page 4,  line 12 -  Delete "complying" and  insert "how                                                                    
     the applicant will comply"                                                                                                 
                                                                                                                                
There being no objection, Administration Amendment 8 was                                                                        
adopted.                                                                                                                        
                                                                                                                                
1:36:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO moved that the committee adopt Administration                                                                    
Amendment 9, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Page 4, line 1,  insert semi-colon after "pipeline" and                                                                    
     delete remainder of subsection (A)                                                                                         
                                                                                                                                
     Page 4,  line 3, delete  "the location of" and  add "s"                                                                    
     to end of "receipt"                                                                                                        
                                                                                                                                
     Page 4,  line 6, after "points"  and before semi-colon,                                                                    
     add "unless the  application proposes specific in-state                                                                    
     delivery points"                                                                                                           
                                                                                                                                
     Page  4, line  8-9,  revise (C)  to  read "an  analysis                                                                    
     demonstrating  the  project's  economic  and  technical                                                                  
     viability [of  the project] as required  in the request                                                                  
     for application;                                                                                                         
                                                                                                                                
     Page 4, line  9-14 revise (D) to  read "an economically                                                                    
     and   technically  viable   work  plan,   timeline  and                                                                    
     associated budget for  developing the proposed project,                                                                  
     including  how the  applicant  will  perform [and  work                                                                  
     associated with the project  that includes] field work,                                                                    
     environmental  studies,  design, and  engineering,  how                                                                
     the applicant will  implement practices for controlling                                                                  
     carbon   emissions   from   natural  gas   systems   as                                                                  
     established   by   the  United   States   Environmental                                                                  
     Protection Agency,  and how  the applicant  will comply                                                                  
     [and  complying] with  all  applicable state,  federal,                                                                    
     and international  regulatory requirements  that affect                                                                    
     the  proposed project;  the  [applicant shall  provide]                                                                    
     work plan must address the following:                                                                                    
                                                                                                                                
     Page  4,  line  16:  revise to  read  "...a  [detailed]                                                                    
     description in detail of the ..."                                                                                        
                                                                                                                                
     Page 4, line 17 - add semi-colon after "Canada"                                                                            
                                                                                                                                
     Page 4, line 20 -  add semi-colons after "agencies" and                                                                    
     "services", insert "and" after "agencies;"                                                                                 
                                                                                                                                
     Page 4, line 24 - insert "marine" after "the"                                                                              
                                                                                                                                
     Page 4, line 24-26 - Delete from "pipeline" to "of"                                                                        
                                                                                                                                
     Page 4, line  28 - delete "and"  after "services;" then                                                                    
     insert "by third parties" after "services;"                                                                                
                                                                                                                                
     Page 4,  line 29 -  delete "that" and  insert "propose"                                                                    
     after "would"                                                                                                              
                                                                                                                                
     Page  4,  line  29-31   -  delete  "including"  through                                                                    
     "terms"                                                                                                                    
                                                                                                                                
     Page 4,  line 31  delete "a"  and replace  "party" with                                                                    
     "parties"                                                                                                                  
                                                                                                                                
1:37:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked if there is another location in the                                                                        
legislation where the over the top route is addressed.                                                                          
                                                                                                                                
MS. DAVIS said that she will have to double check that.                                                                         
                                                                                                                                
1:38:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON opined that he wasn't sure about the deletion                                                                  
proposed in Administration Amendment 9.  He mentioned the                                                                       
possibility of bifurcating the amendment.                                                                                       
                                                                                                                                
CO-CHAIR GATTO announced that the committee will review                                                                         
Administration Amendment 9 and address it once there is an                                                                      
answer  regarding whether  the over  the top  route is  addressed                                                               
elsewhere in the legislation.                                                                                                   
                                                                                                                                
The committee took an at-ease from 1:39:21 PM to 2:02:35 PM.                                                                
                                                                                                                                
2:02:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  suggested that from  this point on  the committee                                                               
will stop voting on the  administration's amendments and have the                                                               
drafter  incorporate the  administration's amendments  into a  CS                                                               
for  review.   The  committee  would then  turn  to the  member's                                                               
amendments and  take those up  and vote  on them.   Therefore, he                                                               
explained   that  the   committee  would   review  Administration                                                               
Amendment 9, but  won't vote on it  because it will be  in the CS                                                               
for the committee to consider.                                                                                                  
                                                                                                                                
2:06:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   WILSON  pointed   out   that   the  portion   of                                                               
Administration Amendment  9 deleting  from "pipeline" to  "of" on                                                               
page  4,  lines 24-26,  should  actually  delete from  "pipeline"                                                               
through "of".                                                                                                                   
                                                                                                                                
MS. DAVIS noted her agreement.                                                                                                  
                                                                                                                                
CO-CHAIR  GATTO announced  that  the committee  will address  the                                                               
members' amendments at 6:00 p.m.                                                                                                
                                                                                                                                
2:07:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  agreed  with the  proposed  approach,  but                                                               
opined that  he didn't  know if it's  appropriate to  continue to                                                               
review  the  administration's  amendments  without  them  in  the                                                               
context  of the  CS.   Therefore,  he related  his preference  to                                                               
suspend addressing  the administration's amendments until  the CS                                                               
is before the committee.                                                                                                        
                                                                                                                                
MS. DAVIS  interjected that  there are large  chunks that  have a                                                               
substantive rationale that  she could review in  order to perhaps                                                               
save the committee some time.                                                                                                   
                                                                                                                                
CO-CHAIR GATTO stated his agreement.                                                                                            
                                                                                                                                
2:09:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    SEATON     indicated    that     perhaps    the                                                               
administration's  amendments  that  are  policy  calls  could  be                                                               
discussed.                                                                                                                      
                                                                                                                                
CO-CHAIR  GATTO asked  if the  Senate  deleted the  over the  top                                                               
route.                                                                                                                          
                                                                                                                                
MS.  DAVIS answered  that the  provision wasn't  included in  the                                                               
Senate legislation.  She offered her  guess that the over the top                                                               
route language  was added in  the House Special Committee  on Oil                                                               
and Gas.                                                                                                                        
                                                                                                                                
REPRESENTATIVE EDGMON  confirmed that  the language was  added in                                                               
the House Special Committee on Oil and Gas.                                                                                     
                                                                                                                                
2:11:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON moved to divide  Administration Amendment 9 such                                                               
that   Administration   Amendment   9A   would   read   [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page 4, line 1,  insert semi-colon after "pipeline" and                                                                    
     delete remainder of subsection (A)                                                                                         
                                                                                                                                
Administration Amendment  9B would  read, with  technical changes                                                               
noted during the meeting, [original punctuation provided]:                                                                      
                                                                                                                                
     Page 4,  line 3, delete  "the location of' and  add "s"                                                                    
     to end of "receipt"                                                                                                        
                                                                                                                                
     Page 4,  line 6, after "points"  and before semi-colon,                                                                    
     add "unless the  application proposes specific in-state                                                                    
     delivery points"                                                                                                           
                                                                                                                                
     Page  4, line  8-9,  revise (C)  to  read "an  analysis                                                                    
     demonstrating  the  project's  economic  and  technical                                                                  
     viability [of  the project] as required  in the request                                                                  
     for application;                                                                                                         
                                                                                                                                
     Page 4, line  9-14 revise (D) to  read "an economically                                                                    
     and   technically  viable   work  plan,   timeline  and                                                                    
     associated budget for  developing the proposed project,                                                                  
     including  how the  applicant  will  perform [and  work                                                                  
     associated with the project  that includes] field work,                                                                    
     environmental  studies,  design, and  engineering,  how                                                                  
     the applicant will  implement practices for controlling                                                                  
     carbon   emissions   from   natural  gas   systems   as                                                                  
     established   by   the  United   States   Environmental                                                                  
     Protection Agency,  and how  the applicant  will comply                                                                  
     [and  complying] with  all  applicable state,  federal,                                                                    
     and international  regulatory requirements  that affect                                                                    
     the  proposed project;  the  [applicant shall  provide]                                                                    
     work plan must address the following:                                                                                    
                                                                                                                                
     Page  4,  line  16:   revise  to  read"...a  [detailed]                                                                    
     description in detail of the ..."                                                                                        
                                                                                                                                
     Page 4, line 17 - add semi-colon after "Canada"                                                                            
                                                                                                                                
     Page 4, line 20 -  add semi-colons after "agencies" and                                                                    
     "services", insert "and" after "agencies;"                                                                                 
                                                                                                                                
     Page 4, line 24 - insert "marine" after "the"                                                                              
                                                                                                                                
     Page 4, line 24-26 - Delete from "pipeline" to "of"                                                                        
                                                                                                                                
     Page 4, line  28 - delete "and"  after "services;" then                                                                    
     insert "by third parties" after "services;"                                                                                
                                                                                                                                
     Page 4,  line 29 -  delete "that" and  insert "propose"                                                                    
     after "would"                                                                                                              
                                                                                                                                
     Page  4,  line  29-31   -  delete  "including"  through                                                                    
     "terms"                                                                                                                    
                                                                                                                                
     Page 4,  line 31  delete "a"  and replace  "party" with                                                                    
     "parties"                                                                                                                  
                                                                                                                                
2:12:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO,   upon  determining  there  was   no  objection,                                                               
announced  that   Administration  Amendment  9  was   divided  as                                                               
specified above.   He  then announced  that before  the committee                                                               
was Administration Amendment 9A.                                                                                                
                                                                                                                                
REPRESENTATIVE WILSON objected for discussion purposes.                                                                         
                                                                                                                                
CO-CHAIR GATTO  explained that  if the  committee fails  to adopt                                                               
Administration Amendment  9A, then the  over the top  route would                                                               
remain in  the legislation as written  on the first few  lines of                                                               
page 4.  He then related  his understanding that the over the top                                                               
route was eliminated as a possibility by FERC.                                                                                  
                                                                                                                                
2:13:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  pointed  out that  federal  statute  does                                                               
eliminate  the over  the top  route.   However, noting  precludes                                                               
someone  wanting  the gas  to  seek  a  change from  the  federal                                                               
government  to allow  it  to  traverse over  the  top.   If  that                                                               
occurred and the state removed  its prohibition on going over the                                                               
top, then  the pipeline  owner can make  the modification  and go                                                               
over the top.  The state  has consistently said the pipeline will                                                               
go through  Alaska.  Therefore, leaving  the language prohibiting                                                               
the  proposal of  an over  the top  route simply  means that  the                                                               
state doesn't  support and  won't allow such  a pipeline  to take                                                               
gas from  the North Slope over  the top and through  the McKenzie                                                               
Valley.  He  related his belief that the prohibition  of the over                                                               
the top route should be left in the legislation.                                                                                
                                                                                                                                
2:15:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  highlighted  that the  language  in  CSHB                                                               
177(O&G)   says  "may   not  be   the  route   described  in   AS                                                               
38.55.017(b)" rather than "shall not".                                                                                          
                                                                                                                                
MS. DAVIS explained  that this language is in the  context of the                                                               
application an  applicant is  required to file  under AGIA.   The                                                               
applicant must describe  the route of the proposed  pipeline.  By                                                               
leaving  intact  the language  currently  in  CSHB 177(O&G),  the                                                               
applicant can't  propose a pipeline  that would utilize  the over                                                               
the  top route.   The  Senate companion  legislation didn't  have                                                               
such a prohibition,  which she said could be related  to the fact                                                               
that the  language hadn't  yet passed  through the  House Special                                                               
Committee on Oil and Gas.  In  an effort to conform the House and                                                               
Senate legislation,  the notion with Administration  Amendment 9A                                                               
is to delete  the language.  However, she  acknowledged that it's                                                               
a policy issue.                                                                                                                 
                                                                                                                                
2:16:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KOHRING noted  his agreement  with Representative                                                               
Seaton's statements,  adding that the House  Special Committee on                                                               
Oil and Gas was being proactive by adding the prohibition.                                                                      
                                                                                                                                
REPRESENTATIVE WILSON removed her objection.                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON stated his  objection, adding that in order                                                               
to maintain  the language  in CSHB  177(O&G) the  committee would                                                               
have  to oppose  Administration Amendment  9A, which  proposed to                                                               
delete the language.                                                                                                            
                                                                                                                                
CO-CHAIR GATTO stated his objection also.                                                                                       
                                                                                                                                
A roll call vote was taken.   Representative Gatto voted in favor                                                               
of  Administration   Amendment  9A.     Representatives  Kohring,                                                               
Wilson, Seaton, Roses, Guttenberg,  Edgmon, Kawasaki, and Johnson                                                               
voted against it.  Therefore,  Administration Amendment 9A failed                                                               
to be adopted by a vote of 1-8.                                                                                                 
                                                                                                                                
2:20:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO,  upon  determining   there  was  no  comment  on                                                               
Administration Amendment 9B, turned  the committee's attention to                                                               
Administration Amendment 9C, which,  with technical changes noted                                                               
during the meeting, read [original punctuation provided]:                                                                       
                                                                                                                                
     Page  5, line  1, delete  "the identification  of that"                                                                    
     and replace with "identify the"                                                                                            
                                                                                                                                
     Page  5,  line 2,  replace  "party  with "parties"  and                                                                    
     delete  "applicable to  the liquefaction  services" and                                                                    
     insert "they would offer"                                                                                                  
                                                                                                                                
     Page 5, line 3 - delete from "marine" through "the"                                                                        
                                                                                                                                
     Page 5, line 7 -  delete semi-colon and replace with ",                                                                    
     and"                                                                                                                       
                                                                                                                                
     Page 5, line 8 - delete "and licenses"                                                                                     
                                                                                                                                
     Page 5,  line 10  - insert after  "Commission" -  " for                                                                    
     the   transportation  of   liquefied  natural   gas  in                                                                    
     interstate  commerce  if   United  States  markets  are                                                                    
     proposed;"                                                                                                                 
                                                                                                                                
     Page 5, line 12 - insert "commit that" before "if"                                                                         
                                                                                                                                
     Page 5,  line 13 -  delete "commit to" and  insert "the                                                                    
     applicant will"                                                                                                            
                                                                                                                                
     Page 5, line 14, delete "is"                                                                                               
                                                                                                                                
     Page  5,  line 20  -  insert  "or amended  certificate"                                                                    
     after "certificate"                                                                                                        
                                                                                                                                
     Page  5,  line 23  -  insert  "or amended  certificate"                                                                    
     after "certificate"                                                                                                        
                                                                                                                                
     Page 5, line 26 - insert "commit that" before "if"                                                                         
                                                                                                                                
      Page 5, line 27 - delete "commit to" and insert "the                                                                      
     applicant will"                                                                                                            
                                                                                                                                
CO-CHAIR GATTO  highlighted that the  changes to page 5,  line 10                                                               
in Administration Amendment 9C  are referencing liquefied natural                                                               
gas (LNG).  He then requested explanation of that change.                                                                       
                                                                                                                                
MS. DAVIS  explained that beginning  on page 4, line  23, through                                                               
page  5, line  11,  sub-subparagraph (ii)  is  designed to  focus                                                               
exclusively on a project that proposes an LNG project.                                                                          
                                                                                                                                
2:22:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  related  his understanding  that  if  the                                                               
project  goes  through  pipeline,  then there  will  be  pipeline                                                               
details.   However, he said  that he  doesn't see the  details of                                                               
the  800 miles  of pipeline  if  it were  to  go to  Valdez.   He                                                               
requested that Ms. Davis ensure it's addressed.                                                                                 
                                                                                                                                
MS. DAVIS  specified that  the intent is  for the  application to                                                               
describe each component of the  transportation arm with a project                                                               
that involves a pipeline to an  LNG plant that then proceeds into                                                               
marine  transportation.   She pointed  out that  the language  on                                                               
page 4,  lines 1-14,  address the  details focusing  on pipelines                                                               
while page 4, line 15 through  page 5, line 11, details a project                                                               
involving  transport through  Canada or  liquefaction of  natural                                                               
gas liquids.   She  noted that the  administration "tried  not to                                                               
double  up the  requirements  within"  sub-subparagraphs (i)  and                                                               
(ii) on page 4, line 15 through page 5, line 11.                                                                                
                                                                                                                                
2:25:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said that he  doesn't see the  tariffs for                                                               
the in-state portion of either pipeline.                                                                                        
                                                                                                                                
CO-CHAIR GATTO  directed Representative  Seaton to page  4, lines                                                               
20-22.                                                                                                                          
                                                                                                                                
REPRESENTATIVE SEATON  clarified that the language  refers to the                                                               
Canadian tariffs and terms.                                                                                                     
                                                                                                                                
MS. DAVIS  acknowledged that the structure  is misleading because                                                               
it  suggests  that  the  rate information  only  relates  to  the                                                               
Canadian portion.   However, she  didn't believe that's  the case                                                               
because the  language discusses regulatory agencies.   Therefore,                                                               
the focus is  on the whole pipeline.  Still,  Ms. Davis suggested                                                               
that the language  should be placed in a section  that applies to                                                               
all.   To that  end, she  suggested that  she would  [review] the                                                               
language to  ensure that the  generic request for  description of                                                               
ratemaking  methodology  and  rates   is  included.    Ms.  Davis                                                               
highlighted that part  of the challenge is  that the legislation,                                                               
under  the  application  requirements, reflect  upon  the  tariff                                                               
rates.                                                                                                                          
                                                                                                                                
2:30:53 PM                                                                                                                    
                                                                                                                                
CODY   RICE,  Staff   to  Representative   Gatto,  Alaska   State                                                               
Legislature,  speaking to  Administration  Amendment 9C,  related                                                               
his belief that  the language change to  "amended certificate" is                                                               
substantive.   He said that  language references  the possibility                                                               
of  an   amended  certificate,  such  as   the  certificate  that                                                               
TransCanada currently holds.                                                                                                    
                                                                                                                                
MS.  DAVIS explained  that because  TransCanada  already holds  a                                                               
certificate,  TransCanada  wanted  to  be sure  that  under  this                                                               
process  they  would be  committing  to  amend their  certificate                                                               
versus obtaining a new certificate.                                                                                             
                                                                                                                                
2:32:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR    GATTO   turned    the   committee's    attention   to                                                               
Administration  Amendment 11,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 6, line  20 - page 7 line 8  - Delete this section                                                                    
     in its entirety and substitute:                                                                                            
     "Sec. 43.90.130. (7) commit that the applicant                                                                             
          A. will propose and support the recovery of                                                                           
     mainline  capacity  expansion   costs,  including  fuel                                                                    
     costs, from  all mainline system users  through rolled-                                                                    
     in rates as  provided in (B) and (C)  of this paragraph                                                                    
     or through  a combination of incremental  and rolled-in                                                                    
     rates as provided in (D) of this paragraph;                                                                                
          B. will propose and support the recovery of                                                                           
     mainline  capacity  expansion   costs,  including  fuel                                                                    
     costs, from  all mainline system users  through rolled-                                                                    
     in  rates;   an  applicant  is  obligated   under  this                                                                    
     subparagraph   only  if   the  rolled-in   rates  would                                                                    
     increase the rates                                                                                                         
               i.   not   described   in    (ii)   of   this                                                                    
     subparagraph  by not  more than  15  percent above  the                                                                    
     initial  maximum recourse  rates for  capacity acquired                                                                    
       before commercial operations commence; in this sub-                                                                      
     subparagraph,  "initial maximum  recourse rates"  means                                                                    
     the   highest  cost-based   rates   for  any   specific                                                                    
     transportation  service  set   by  the  Federal  Energy                                                                    
     Regulatory  Commission,  the Regulatory  Commission  of                                                                    
     Alaska,  or the  National  Energy Board  of Canada,  as                                                                    
     appropriate,  when  the pipeline  commences  commercial                                                                    
     operations;                                                                                                                
               ii. by not more than 15 percent above the                                                                        
     negotiated rate  for pipeline capacity  on the  date of                                                                    
     commencement of commercial  operations where the holder                                                                    
     of the  capacity is  not an affiliate  of the  owner of                                                                    
       the pipeline project; for the purposes of this sub-                                                                      
     subparagraph,  "negotiated rate"  means the  rate in  a                                                                    
     transportation  service agreement  that provides  for a                                                                    
     rate that  varies from  the otherwise  applicable cost-                                                                    
     based  rate,  or  recourse  rate,  set  out  in  a  gas                                                                    
     pipeline's  tariff  approved   by  the  Federal  Energy                                                                    
     Regulatory  Commission,  the Regulatory  Commission  of                                                                    
     Alaska,  or the  National  Energy Board  of Canada,  as                                                                    
     appropriate; or                                                                                                            
               iii. for capacity acquired in an expansion                                                                       
     after commercial  operations commence, to a  level that                                                                    
     is  not more  than 115  percent of  the volume-weighted                                                                    
     average  of all  rates collected  by the  project owner                                                                    
     for   pipeline   capacity   on  the   date   commercial                                                                    
     operations commence;                                                                                                       
                                                                                                                                
2:33:35 PM                                                                                                                    
                                                                                                                                
MS. DAVIS  explained that this  is the provision  that identifies                                                               
the size of the  cap for the cost of expansion.   In the original                                                               
legislation the cap  was identified as 15 percent  of the maximum                                                               
initial recourse rate.   She reminded committee  members that the                                                               
recourse rate,  the rack  rate, is the  listed price  approved by                                                               
FERC.    However, what  happens  most  often  is that  an  entity                                                               
shipping that entity's own gas will  negotiate a rate in order to                                                               
obtain  more favorable  terms, which  often results  in a  tariff                                                               
lower than  the rack  rate.   The independent  pipeline companies                                                               
expressed concern  that capping  expansion at  15 percent  of the                                                               
higher rack  rate would impair  their ability to  negotiate rates                                                               
with  the   shippers.     Therefore,  the   independent  pipeline                                                               
companies  wanted  the   cap  to  reflect  the   reality  of  the                                                               
marketplace.   The aforementioned resulted in  the administration                                                               
taking the 15 percent cap and  created three different caps.  She                                                               
explained that  a shipper paying  the rack  rate is capped  at 15                                                               
percent  of the  maximum initial  recourse  rate.   If an  entity                                                               
negotiates a rate  with the shipper, that entity is  capped at 15                                                               
percent above  the negotiated  rate.  For  an entity  that enters                                                               
after the  initial shippers have signed  on, subsequent shippers,                                                               
the third  category is a  weighted average  of the rack  rate and                                                               
the negotiated  rate and thus the  cap will be 15  percent of the                                                               
blended rate.                                                                                                                   
                                                                                                                                
2:36:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  questioned why  the language  "not more  than 115                                                               
percent of"  when the  language "15  percent" could've  been used                                                               
each time.                                                                                                                      
                                                                                                                                
MS. DAVIS  related her  understanding that it  works best  in the                                                               
math and  has to  do with  the weighted number.   She  offered to                                                               
check into that.                                                                                                                
                                                                                                                                
MR. RICE related his understanding  that sub-subparagraph (ii) of                                                               
Administration  Amendment 11  doesn't appear  to be  available to                                                               
integrated  pipelines and  upstream shippers.   He  characterized                                                               
the aforementioned as a policy call for the committee.                                                                          
                                                                                                                                
2:38:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO then  moved on  to Administration  Amendment 11A,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
          C. will, if recovery of mainline capacity                                                                             
     expansion costs, including  fuel costs, through rolled-                                                                    
     in  rate   treatment  would  increase  the   rates  for                                                                    
     capacity described  in (B)  of this  paragraph, propose                                                                    
     and support  the partial roll-in of  mainline expansion                                                                    
     costs, including  fuel costs, to the  extent that rates                                                                    
     acquired before  commercial operations commence  do not                                                                    
     exceed the levels described in (B) of this paragraph;                                                                      
          D. may, for the recovery of mainline capacity                                                                         
     expansion  costs,  including  fuel costs,  that,  under                                                                    
     rolled-in rate  treatment, would  result in  rates that                                                                    
     exceed the level in (B)  of this paragraph, propose and                                                                    
     support  the  recovery  of   those  costs  through  any                                                                    
     combination of incremental and rolled-in rates;                                                                            
          E. agrees not to enter into a negotiated rate                                                                         
     agreement  that  would   preclude  the  applicant  from                                                                    
     collecting from  any shipper, including a  shipper with                                                                    
     a negotiated  rate agreement, the rolled-in  rates that                                                                    
     are  required  to  be proposed  and  supported  by  the                                                                    
     applicant under  (B) of this  paragraph or  the partial                                                                    
     rolled-in rates  that are required  to be  proposed and                                                                    
     supported   by  the   applicant  under   (C)  of   this                                                                    
     paragraph;"                                                                                                                
                                                                                                                                
MR.  RICE  highlighted  that  the  fuel  costs  are  included  in                                                               
Administration Amendment 11A.                                                                                                   
                                                                                                                                
2:39:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  on to  Administration Amendment  12, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Page 7, line 19 -  insert a comma after "plant"; insert                                                                    
     "that" after "whether" and delete "such a"                                                                                 
                                                                                                                                
     Page 7,  line 20  - delete "such  a" and  insert "that"                                                                    
     after "that"                                                                                                               
                                                                                                                                
     Page 7, line 22, insert comma after "commerce"                                                                             
                                                                                                                                
     Page  7,  line 25,  delete  "owned"  and insert  "used"                                                                    
     after "previously"                                                                                                         
                                                                                                                                
     Page 7, line 27 - insert semi-colon after "operation"                                                                      
                                                                                                                                
     Page  7,  line 31,  insert  "for  the state's  matching                                                                    
     contribution  under AS  43.90.110(1)(A) and  (B)" after                                                                    
     "amount"                                                                                                                   
                                                                                                                                
MR. RICE suggested  that it may be better to  insert the language                                                               
"described the  identity of" before  "operation" on page  7, line                                                               
27, in  Administration Amendment 12.   He also suggested  on page                                                               
7,  line 29,  inserting "described"  between "and"  and "the"  in                                                               
order to clarify the requirement.                                                                                               
                                                                                                                                
2:41:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO moved  on to  Administration Amendment  13, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Page 8,  line 1 -  replace comma with  semi-colon after                                                                    
     "license" and delete remainder of sentence.                                                                                
                                                                                                                                
     Page 8, line 3 -  delete "to" after "commit" and insert                                                                    
     "that the applicant will" after "commit"                                                                                   
                                                                                                                                
     Page 8, line 7 -  after "means", delete "for preventing                                                                    
     or"  and  insert "by  which  the  applicant plans  to";                                                                    
     replace  "managing  cost  overruns  for"  with  "manage                                                                    
     overruns in costs of"                                                                                                      
                                                                                                                                
     Page 8,  line 8  - insert  "if any,"  after "project,";                                                                    
     after  "measures", delete  "for minimizing"  and insert                                                                    
     "that  the  applicant  proposes to  mitigate";  replace                                                                    
     "from" with "of"                                                                                                           
                                                                                                                                
     Page 8, line 9, insert "for" after "provide"                                                                               
                                                                                                                                
     Page 8, line  22 - Replace "award" with  "issuance of a                                                                    
     license"; insert "to appeal" after "or"                                                                                    
                                                                                                                                
     Page 8, line 28, insert "matching" after "state"                                                                           
                                                                                                                                
     Page 8, line 29 - insert comma after "base"                                                                                
                                                                                                                                
     Page 8, line 31 - replace semi-colon with comma                                                                            
                                                                                                                                
MR. RICE highlighted that Administration Amendment 13 does deal                                                                 
with specific language related to managing cost overruns.  He                                                                   
said that he didn't view it as specifically substantive.                                                                        
                                                                                                                                
2:41:43 PM                                                                                                                    
                                                                                                                                
MR. RICE related his  understanding that Administration Amendment                                                               
14 is  one that addresses  an area in which  Representative Roses                                                               
is  interested.    Administration  Amendment  14  read  [original                                                               
punctuation provided]:                                                                                                          
                                                                                                                                
     Page  8,   line  18-21  -   Delete  section   (15)  and                                                                    
     substitute:                                                                                                                
          (15) to the extent permitted by law, commit to                                                                        
               (A) hire      qualified    residents     from                                                                    
     throughout  the  state   for  management,  engineering,                                                                    
     construction,   operations,   maintenance,  and   other                                                                    
     positions on the proposed project;                                                                                         
               (B) contract with businesses located in the                                                                      
     state;                                                                                                                     
               (C) establish hiring facilities or use                                                                           
     existing hiring facilities in the state; and                                                                               
               (D) use, as far as is practicable, the job                                                                       
     centers  and   associated  services  operated   by  the                                                                    
     Department  of Labor  &  Workforce  Development and  an                                                                    
     Internet-based  labor exchange  system operated  by the                                                                    
     state;                                                                                                                     
                                                                                                                                
     Page 8, line 25-27                                                                                                         
          Line 25 - delete "prior to" and replace with                                                                          
     "before"                                                                                                                   
          Line 26 - after "agreement" delete "to assure                                                                         
     expedited  construction and"  and  replace  with ";  in                                                                    
     this  paragraph,  "project   labor  agreement  means  a                                                                    
     comprehensive  collective bargaining  agreement between                                                                    
     the  licensee or  its agent  and the  appropriate labor                                                                    
     representatives to ensure expedited construction with"                                                                     
                                                                                                                                
MS. DAVIS explained that Administration  Amendment 14 fleshes out                                                               
paragraph (15) in response to  concerns expressed regarding local                                                               
hire and business impact.   The language also makes more specific                                                               
references  to hiring  facilities  and the  use  of existing  and                                                               
future job centers.                                                                                                             
                                                                                                                                
2:42:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO  expressed  concern  with the  use  of  the  term                                                               
"hiring  facilities".    Although  he  indicated  that  it  isn't                                                               
necessary  to  describe  such facilities  specifically,  but  the                                                               
language in  the amendment could  be satisfied by  establishing a                                                               
phone booth.                                                                                                                    
                                                                                                                                
MS. DAVIS  recalled that part  of the  concern was that  the term                                                               
"hiring   hall"    carries   many   legal    nuances,   including                                                               
institutional  knowledge relative  to being  restricted to  union                                                               
halls.  The  attempt with Administration Amendment 14  was to use                                                               
broader language than the phrase "hiring hall".                                                                                 
                                                                                                                                
CO-CHAIR GATTO stated his satisfaction with the language.                                                                       
                                                                                                                                
2:43:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  recalled testimony  at a  previous hearing                                                               
in which  the only requirement  under subparagraph (D)  is 30-day                                                               
residency  whereas  under  project  labor  agreements  (PLAs)  an                                                               
individual  has  to  be  a   resident,  but  there  can  be  pre-                                                               
applications  over time.   He  asked if  there is  an explanation                                                               
regarding whether  the inclusion of subparagraph  (D) lessens the                                                               
ability  of residents  to get  on  a priority  list for  applying                                                               
under a PLA.                                                                                                                    
                                                                                                                                
MR. RICE said he can't speak  to this definitely, but pointed out                                                               
that Administration  Amendment 14 does address  the definition of                                                               
PLA.   He  related his  assumption that  through the  PLA process                                                               
there will be clarified residency  requirements.  He then related                                                               
his  understanding that  most  union halls  require  one year  of                                                               
residency.                                                                                                                      
                                                                                                                                
2:45:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   SEATON  clarified   that   his  question   about                                                               
subparagraph  (D)  is that  it  automatically  results in  30-day                                                               
residency.  However, he doesn't  see any language specifying that                                                               
these facilities will be used  where jobs can't be filled through                                                               
a PLA.   Therefore, he asked whether there needs  to be a default                                                               
position so that  jobs that can't be filled through  the PLA will                                                               
use  subparagraph  (D).    He  opined  that  it  seems  that  the                                                               
legislation would  circumvent the  PLA requirements  by mandating                                                               
that job  centers and  the Internet be  used, which  only require                                                               
30-day residency.  He then asked  Ms. Davis to review this matter                                                               
with the labor organizations.                                                                                                   
                                                                                                                                
MS. DAVIS agreed to do so.                                                                                                      
                                                                                                                                
2:47:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO inquired  as to whether the  term "practicable" is                                                               
the preferred term.                                                                                                             
                                                                                                                                
MS. DAVIS deferred to the drafter.                                                                                              
                                                                                                                                
2:48:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR    GATTO   turned    the   committee's    attention   to                                                               
Administration Amendment 15, which,  with technical changes, read                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Page 9, line 1 - replace semi-colon with comma                                                                             
                                                                                                                                
     Page 9, line 2 - replace semi-colon with comma                                                                             
                                                                                                                                
      Page 9, line 8, Replace "the readiness and ability"                                                                       
     with "that the applicant is ready and able"                                                                                
                                                                                                                                
     Page 9, line 9 - delete "following"                                                                                        
                                                                                                                                
     Page 9, line 10 - delete "operation within the"                                                                            
                                                                                                                                
     Sec. 43.90.140. Initial  application review; additional                                                                  
     information requests; complete applications.                                                                             
                                                                                                                                
     Page  9,   line  12  -   insert  "submitted   under  AS                                                                    
     43.90.120" after "application"                                                                                             
                                                                                                                                
     Page 9, line  13 - Replace "meets  the requirements in"                                                                    
     with "is consistent with the  terms of"; insert "meets"                                                                    
     after "and"                                                                                                                
                                                                                                                                
     Page 9, line 14 -  Replace "in" with "of"; Replace "an"                                                                    
     with "any"                                                                                                                 
                                                                                                                                
     Page 9, line 15 - Replace "the" with "those terms and"                                                                     
                                                                                                                                
     Page 9,  line 16 -  Replace "The" with "To  evaluate an                                                                    
     application not rejected in (a)  of this section, the";                                                                    
     insert "from an applicant" after "request"                                                                                 
                                                                                                                                
     Page  9,  line  17-18   -  Insert  period  after  first                                                                    
     "application".  Delete  "from   an  applicant  for  the                                                                    
     purpose  of  evaluating  an  application  that  is  not                                                                    
     rejected under (a) of this section."                                                                                       
                                                                                                                                
     Page  9, line  19 -  Replace "An  application shall  be                                                                    
     rejected if the"  with " If, within  the time specified                                                                    
     by the commissioners, an"; delete "timely"                                                                                 
                                                                                                                                
     Page 9, line 20 -  Insert "additional" at the beginning                                                                    
     of the line; delete "in"                                                                                                   
                                                                                                                                
     Page 9,  line 21  - Delete "answer  to a  request under                                                                    
     (b)  of this  section"; replace  period with  comma and                                                                    
     insert   after   comma,   "the  application   will   be                                                                    
     rejected."                                                                                                                 
                                                                                                                                
     Page  9,  line   22  -  Replace  "The"   with  "For  an                                                                    
     application  not  rejected under  (a)  or  (c) of  this                                                                    
     section, the"; delete "that an application not"                                                                            
                                                                                                                                
     Page 9, line 23 -  Delete "rejected under this section"                                                                    
     and insert "that the application" before "including"                                                                       
                                                                                                                                
MR. RICE  highlighted the  deletion of "timely"  on page  9, line                                                               
19, which  refers to  the requirement when  documents were  to be                                                               
returned  to  the  commissioners.   He  questioned  whether  that                                                               
deletion would weaken the commissioners' position or not.                                                                       
                                                                                                                                
MS. DAVIS  explained that the  changes amplify the  term "timely"                                                               
and  sets   it  out   as  a  specific   time  specified   by  the                                                               
commissioners.     Therefore,   the  timeliness   requirement  is                                                               
actually fortified.                                                                                                             
                                                                                                                                
2:49:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  drew attention to  the change made  to page                                                               
9, lines  17-19, which would  make the language read  as follows:                                                               
"The  commissioners may  request additional  information relating                                                               
to the application from an applicant."                                                                                          
                                                                                                                                
MS. DAVIS characterized the change  as a stylistic change made by                                                               
the drafter.   She  specified that  the change  in Administration                                                               
Amendment 15  on page 9,  lines 17-19, results in  subsection (b)                                                               
reading as follows:  "To  evaluate an application not rejected in                                                               
(a)  of  this section,  the  commissioners  may request  from  an                                                               
applicant additional information relating to the application."                                                                  
                                                                                                                                
2:51:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  moved on to  Administration Amendment  15A, which                                                               
read [original punctuation provided]:                                                                                           
                                                                                                                                
       Sec. 43.90.150. Proprietary information and trade                                                                      
     secrets.                                                                                                                 
                                                                                                                                
     Page 9, line 28 - insert comma after "AS 40.25"                                                                            
                                                                                                                                
       Page 9, line 29 - replace semi-colon with period;                                                                        
     replace "after" with "After"                                                                                               
                                                                                                                                
     Page 9, line 30 - insert "and retained" before "under"                                                                     
                                                                                                                                
MR. RICE noted that the  one substantive change in this amendment                                                               
is  the insertion  of "and  retained"  on page  9, line  30.   He                                                               
related his understanding that the  language change means that if                                                               
the document is  returned to the originator, some  of the release                                                               
requirements could be waived.                                                                                                   
                                                                                                                                
MS.  DAVIS  explained that  this  was  picked  up in  the  Senate                                                               
Judiciary Standing  Committee because information  not considered                                                               
confidential  or  trade  secret   by  the  commissioners  can  be                                                               
requested and returned  to the applicant if they so  choose.  The                                                               
existing language is inaccurate.                                                                                                
                                                                                                                                
2:52:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO continued with Administration Amendment 16, which                                                                
read [original punctuation provided]:                                                                                           
                                                                                                                                
     Page  10, line  1  -  delete "is  not"  after "or"  and                                                                    
     before "trade secret"                                                                                                      
                                                                                                                                
     Page 10, line 2 - replace "at the" with "on"                                                                               
                                                                                                                                
     Page  10, line  3  - Replace  "An"  with "The";  insert                                                                    
     "challenges"  after  "that"  and  delete  "protests  or                                                                    
     appeals"                                                                                                                   
                                                                                                                                
     Page 10,  line 4  - Replace  "by which  the award  of a                                                                    
     license is made" with "for making the award"                                                                               
                                                                                                                                
     Page  10, line  6 -  Replace "protest  or appeal"  with                                                                    
     "challenge"; replace "that is" with "held"                                                                                 
                                                                                                                                
     Sec. 43.90.160. Notice, review, and comment.                                                                             
                                                                                                                                
     Page 10, line 15 - Delete "not public records and are"                                                                     
                                                                                                                                
     Page 10, line  20 - Replace "this  subsection" with "AS                                                                    
     43.90.150"                                                                                                                 
                                                                                                                                
     Page  10,  line  21   -  Insert  "confidential"  before                                                                    
     "information"; insert "that  is" before "satisfactory";                                                                    
     insert comma after first "commissioners"                                                                                   
                                                                                                                                
     Page 10,  line 22 -  Insert "of the  information" after                                                                    
     "summary"                                                                                                                  
                                                                                                                                
     Page 10, line 27 - Replace "upon" with "on"                                                                                
                                                                                                                                
CO-CHAIR GATTO related his understanding that the point behind                                                                  
this amendment is to help the applicant with trade secrets and                                                                  
confidentiality.                                                                                                                
                                                                                                                                
MS. DAVIS confirmed that to be the case in the first section of                                                                 
Administration Amendment 16.                                                                                                    
                                                                                                                                
2:53:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES drew attention to the language on page 10,                                                                 
lines 3-7 of (CSHB 177(O&G).                                                                                                    
                                                                                                                                
MS.  DAVIS clarified  that it  will  read:   "The applicant  that                                                               
challenges the award  of a license or the process  for making the                                                               
award shall be considered to  have consented to the disclosure of                                                               
all  information submitted  under this  chapter by  the applicant                                                               
making  the challenge,  including  information held  confidential                                                               
under (a) of this section."                                                                                                     
                                                                                                                                
REPRESENTATIVE   ROSES   related   his  understanding   that   no                                                               
challenges were going to be allowed.                                                                                            
                                                                                                                                
MS. DAVIS  noted her  agreement, adding  that she  didn't believe                                                               
anyone caught  this.   She then reminded  the committee  that the                                                               
remaining piece is  a constitutional challenge in  the section of                                                               
the  legislation  addressing the  statute  of  limitations.   She                                                               
explained that  if an applicant filed  a constitutional challenge                                                               
against the award  process, conceivably they wouldn't  be held to                                                               
have  waived  a  constitutional  claim.   Therefore,  this  could                                                               
operate  in  that  limited  context.    In  further  response  to                                                               
Representative Roses, Ms. Davis  confirmed that as it's currently                                                               
written  it  only  challenges  the  award.   The  only  right  to                                                               
challenge would be a constitutional challenge, she said.                                                                        
                                                                                                                                
REPRESENTATIVE ROSES  said that  he didn't  read the  language in                                                               
the same way.                                                                                                                   
                                                                                                                                
2:55:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   asked  if   [the  changes   proposed  in                                                               
Administration Amendment  16] mean that an  applicant's data will                                                               
be released or does the  language refer specifically to a supreme                                                               
court challenge.                                                                                                                
                                                                                                                                
MS.  DAVIS explained  that this  section was  written before  the                                                               
right to challenge was eliminated.   Therefore, the primary focus                                                               
was  on an  applicant  who  challenged the  award  and felt  they                                                               
should've received the award.  The  concern was to be sure not to                                                               
have  the successful  applicant's  information  fully public  and                                                               
allow the unsuccessful  applicant to "shoot from  the bushes" and                                                               
select what  they were willing  to put out or  not put out.   The                                                               
goal was to  ensure that the challenger is on  equal footing with                                                               
the  winning licensee.   However,  since the  right to  challenge                                                               
awards  has  been  eliminated,  the  only  provision  left  is  a                                                               
constitutional challenge.   The question then  becomes, she said,                                                               
whether the  [remaining language] has  a limited function  in the                                                               
context of constitutional challenges.   She acknowledged that the                                                               
aforementioned is a policy call.                                                                                                
                                                                                                                                
2:57:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON posed  a situation  in which  an applicant                                                               
who  opposes  the license  will  fall  under the  suggested  term                                                               
"challenge."   He then  asked if  the challenging  applicant will                                                               
have  to  make  all  of  its bid  information  public  under  the                                                               
suggested term "challenge."                                                                                                     
                                                                                                                                
MS. DAVIS replied yes.                                                                                                          
                                                                                                                                
MR.  RICE related  his understanding  that Representative  Seaton                                                               
believes the  term "challenge" may  be somewhat broader  than the                                                               
previous language  and questions whether that  could encompass an                                                               
editorial critical of the licensee.   He said that he didn't know                                                               
the answer and suggested that  perhaps several lawyers would need                                                               
to debate the matter.                                                                                                           
                                                                                                                                
2:59:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO recessed until 6:00 p.m.                                                                                         
                                                                                                                                
6:12:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO reconvened the meeting  at 6:12 p.m.  Present upon                                                               
reconvening were  Representatives Gatto, Johnson,  Seaton, Roses,                                                               
Wilson, Guttenberg, Edgmon, and Kawasaki.                                                                                       
                                                                                                                                
6:12:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON  moved that the  committee rescind  its previous                                                               
action in approving or  disapproving Administration Amendments 1-                                                               
9A  to CSHB  177(O&G).    There being  no  objection,  it was  so                                                               
ordered.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  moved   that  the   committee  adopt                                                               
Conceptual   Amendment  1,   which  read   [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 24, line 25                                                                                                           
                                                                                                                                
     Add                                                                                                                        
                                                                                                                                
     Sec.  43.90.480  Community   impacts.  The  Legislature                                                                
     recognizes  that  as a  result  of  construction of  an                                                                  
     Alaska   Natural  Gas   Pipeline,  municipalities   and                                                                  
     communities  will  be  faced with  potential  increased                                                                  
     demand  for  public   services  without  increased  tax                                                                  
     revenue to pay  for those services.   The Department of                                                                  
     Commerce,  Community  and  Economic  Development  shall                                                                  
     develop an assessment of  the socio-economic impacts of                                                                  
     the Natural  Gas Pipeline  project. The  examination of                                                                  
     community   impacts   should   include   socio-cultural                                                                  
     impacts, and cumulative impacts.                                                                                         
                                                                                                                                
     The   Department   shall   review  the   Stranded   Gas                                                                  
     Development  Act   Municipal  Impact   Analysis,  dated                                                                  
     November   8,  2004   (corrected)   developed  by   the                                                                  
     Municipal Advisory Group as a  basis for developing the                                                                  
     socio-economic impact assessment.                                                                                        
                                                                                                                                
     The Department  shall also make recommendations  to the                                                                  
     Legislature about  the best way to  provide assistance,                                                                  
     such as  Payment in Lieu  of Taxes, or  other financial                                                                  
     assistance, to impacted communities.                                                                                     
                                                                                                                                
     The   Department    shall   deliver   a    report   and                                                                  
     recommendations on  municipal and community  impacts to                                                                  
     the Speaker  of the House  and President of  the Senate                                                                  
     of  the Alaska  Legislature  within 30  days after  the                                                                  
     convening  of the  2nd Regular  Session  of the  Alaska                                                                  
     Legislature  after  the  date a  natural  gas  pipeline                                                                  
     project that provides for delivery  points in the state                                                                  
     receives a license under 43.90.100,  as enacted by sec.                                                                  
     1 of this Act.                                                                                                           
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
6:15:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG opined that the  history of Alaska is a                                                               
boom and bust cycle and every  community will be impacted by this                                                               
project.     He  recalled  that   last  year  the   Stranded  Gas                                                               
Development Act  Municipal Impact Analysis found  that the socio-                                                               
economic impacts will  amount to about $180 million.   He said he                                                               
wanted to be sure that  the communities understand that the state                                                               
and the legislature  recognize there will be  impacts long before                                                               
the communities  will be  able to raise  taxes to  mitigate those                                                               
impacts.                                                                                                                        
                                                                                                                                
6:17:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  moved   that  the   committee  adopt                                                               
Amendment 1 to Conceptual Amendment  1, such that paragraph three                                                               
of Conceptual Amendment 1 would read:                                                                                           
                                                                                                                                
     The Department shall also make recommendations to the                                                                    
     Legislature about the best way to provide assistance,                                                                    
                                                                                                                                
CO-CHAIR  GATTO  questioned   whether  Representative  Guttenberg                                                               
wanted to use the language "about  the best way" or is the intent                                                               
merely to make a recommendation  to the legislature "about how to                                                               
provide assistance."                                                                                                            
                                                                                                                                
REPRESENTATIVE  GUTTENBERG said  he  considered  that a  friendly                                                               
amendment.                                                                                                                      
                                                                                                                                
CO-CHAIR  GATTO moved  that the  committee adopt  Amendment 1  to                                                               
Conceptual  Amendment  1,  such   that  the  third  paragraph  of                                                               
Conceptual Amendment 1 would read:                                                                                              
                                                                                                                                
     The Department shall also make recommendations to the                                                                    
     Legislature about how to provide assistance,                                                                             
                                                                                                                                
There  being  no  objection,  it  was  so  ordered.    Therefore,                                                               
Conceptual Amendment 1, as amended, was before the committee.                                                                   
                                                                                                                                
6:18:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   JOHNSON  maintained   his   objection  to   Conceptual                                                               
Amendment  1, as  amended, and  questioned whether  the timeframe                                                               
specified in  the last  paragraph of  Conceptual Amendment  1, as                                                               
amended, should be  shortened in order to  accommodate the 90-day                                                               
session.   He  suggested having  the report  delivered within  15                                                               
days rather than 30 days.                                                                                                       
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  pointed   out  that   the  amendment                                                               
specifies that  the report  should be  delivered within  90 days,                                                               
and therefore  it could be  delivered within  15 days.   He noted                                                               
that he isn't sure when the license will be issued.                                                                             
                                                                                                                                
CO-CHAIR GATTO  noted his  inclination to  leave the  language as                                                               
is.                                                                                                                             
                                                                                                                                
CO-CHAIR JOHNSON  moved that the  committee adopt Amendment  2 to                                                               
Conceptual  Amendment  1,  as  amended, such  that  in  the  last                                                               
paragraph  of Conceptual  Amendment 1,  as amended,  the deadline                                                               
for the report would be changed from "30 days" to "15 days".                                                                    
                                                                                                                                
There being no objection, Amendment  2 to Conceptual Amendment 1,                                                               
as amended was adopted.                                                                                                         
                                                                                                                                
6:20:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  expressed concern that the  third paragraph                                                               
of  Conceptual Amendment  1,  as amended,  assumes  that all  the                                                               
socio-economic impacts will be negative,  which is why assistance                                                               
is being  requested.   He questioned whether  there would  be the                                                               
need for  assistance in how  the communities spend  any increases                                                               
in revenue or  will such be shared with other  communities in the                                                               
state.                                                                                                                          
                                                                                                                                
REPRESENTATIVE GUTTENBERG  stated that the impacts  come in prior                                                               
to the  project and the  gas flowing.   With regard to  how those                                                               
revenues  will  be  spent  or spread  throughout  the  state,  he                                                               
offered  that, generally  speaking,  it's an  enhancement to  the                                                               
community.  He  highlighted that it cost more to  have a pipeline                                                               
and it brings in revenue.                                                                                                       
                                                                                                                                
6:21:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  clarified that  his  concern  is that  the                                                               
underlying assumption  is that the  impacts are only going  to be                                                               
negative   impacts,   and   therefore   communities   will   need                                                               
assistance.   He informed  the committee that  he was  a property                                                               
owner when  the oil pipeline  was built  and still holds  many of                                                               
the same  apartments.  He  assured the committee that  during the                                                               
pipeline's construction  his rents weren't stagnate  and although                                                               
there were  impacts, there  were positive  economic impacts.   In                                                               
fact, he recalled that he went  from owning one business to three                                                               
during   that  time   [when   the   pipeline  was   constructed].                                                               
Representative Roses  said that he didn't  believe he experienced                                                               
any  negative impact,  although  he  acknowledged that  municipal                                                               
services had to be increased.   Still, during the construction of                                                               
the pipeline, property values increased  1-1.5 percent per month.                                                               
Therefore,  municipalities  were   receiving  additional  revenue                                                               
during  that time.   Furthermore,  that  additional revenue  came                                                               
from the  many businesses  that came into  town to  construct the                                                               
pipeline.   He expressed  hope that  the aforementioned  would be                                                               
taken  into  consideration  when determining  assistance  levels.                                                               
Representative Roses asked  if HB 177 specified  that the impacts                                                               
must be addressed in the impact analysis.                                                                                       
                                                                                                                                
6:24:07 PM                                                                                                                    
                                                                                                                                
PAT GALVIN,  Commissioner, Department of Revenue,  clarified that                                                               
currently  the  Alaska  Gasline  Inducement  Act  (AGIA)  doesn't                                                               
include  a requirement  on impacts.   There  is some  language in                                                               
FERC  regulations  referencing  the  need  for  an  impact  study                                                               
primarily associated with  local demand rather than  impacts.  He                                                               
acknowledged that  this project is  going to have  impacts beyond                                                               
just impacts to municipalities as  it will have statewide impacts                                                               
and  those  will  have  to  be   dealt  with  at  all  levels  of                                                               
government.   Commissioner  Galvin said,  "What we  recognize, as                                                               
far as  the legislature's  intent, is to  assure the  public that                                                               
those  [impacts]  are  going to  be  identified,  addressed,  and                                                               
responded  to in  a  timely  manner."   He  said  that he  didn't                                                               
believe  the  method  proposed  in  Conceptual  Amendment  1,  as                                                               
amended, is  the most comprehensive way  of doing so as  it seems                                                               
to  address the  impacts in  a piecemeal  fashion.   Although the                                                               
administration believes that there's  a more comprehensive manner                                                               
in which  to deal  with the  impacts, the  administration doesn't                                                               
believe it needs to be in AGIA at this time.                                                                                    
                                                                                                                                
6:26:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG opined  that  he wanted  to make  sure                                                               
that the impacts are at least recognized.                                                                                       
                                                                                                                                
REPRESENTATIVE WILSON  expressed concern  because this  will take                                                               
place before open season and thus  it's just going to be a guess.                                                               
She noted her agreement that  there will be statewide impacts and                                                               
that now isn't the time to address it.                                                                                          
                                                                                                                                
6:27:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  pointed out  that it was  already done                                                               
last year as it  was part of the requirement.   He noted that the                                                               
[Stranded  Gas Development  Act Municipal  Impact Analysis]  is a                                                               
statewide document that reviews many  things.  He opined that the                                                               
state  simply  needs  to  be  prepared  because  there  is  great                                                               
prosperity to  gain from this  project, but without  managing its                                                               
impacts there is a risk of having undue impacts in communities.                                                                 
                                                                                                                                
REPRESENTATIVE  EDGMON  noted  his   support  of  the  amendment,                                                               
although  he opined  that  Representative  Wilson's comment  does                                                               
have merit  in terms  of timing  of the report.   He  opined that                                                               
it's valid to place this requirement in AGIA.                                                                                   
                                                                                                                                
6:29:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO  related  his understanding  that  Representative                                                               
Wilson's concern is that if the  impact is addressed prior to the                                                               
gasline, her community would be hurt.                                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON  reminded  the  committee  that  when  the                                                               
legislature    addressed   this    matter   [under    the   prior                                                               
administration]  there  was  a  contract  and  any  taxes  during                                                               
pipeline construction  were forgiven.   However, nothing  in this                                                               
legislation forgives those property  taxes that accumulate as the                                                               
process occurs.   If the [property taxes  accumulate], there will                                                               
be the  need to offset it.   Therefore, he opined  that it should                                                               
be addressed in a situation  under a contract that specifies that                                                               
property  taxes  won't be  collected  until  the pipeline  is  in                                                               
service.  The aforementioned is why  the payment in lieu of taxes                                                               
was utilized  under the  [prior administration].   Representative                                                               
Seaton  said  that  although  he   agrees  with  the  concept  of                                                               
Conceptual  Amendment 1,  as amended,  it seems  to clutter  AGIA                                                               
without  achieving anything  and thus  it should  be part  of the                                                               
contract discussion.                                                                                                            
                                                                                                                                
REPRESENTATIVE  GUTTENBERG withdrew  Conceptual  Amendment 1,  as                                                               
amended.                                                                                                                        
                                                                                                                                
6:32:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG moved  that  the  committee adopt  New                                                               
Amendment 1, which read [original punctuation provided]:                                                                        
                                                                                                                                
     Sec. 43.90.320 Gas production tax exemption                                                                              
     Page 21-22                                                                                                                 
     Delete page 21, line 16 through page 22, line 9.                                                                           
                                                                                                                                
REPRESENTATIVE WILSON objected.                                                                                                 
                                                                                                                                
REPRESENTATIVE GUTTENBERG explained that  New Amendment 1 removes                                                               
the provision  that locks into  rates for 10  years.  He  said he                                                               
believes that can't  be done anyway.  He opined  that this is one                                                               
of  the  constitutional  issues  of  the  legislation  that  will                                                               
probably be laid out early on.                                                                                                  
                                                                                                                                
6:33:52 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  GALVIN related  the administration's  opposition to                                                               
New Amendment 1 because the  administration believes that the tax                                                               
inducement is  necessary to have  in the legislation in  order to                                                               
provide the appropriate  level of inducement at  the initial open                                                               
season.   Although he did acknowledge  that the constitutionality                                                               
of  the provision  is an  issue,  the language  in CSHB  177(O&G)                                                               
provides  a   strong  constitutional  argument  with   regard  to                                                               
providing  that durable  tax assurance  for  that 10  years.   He                                                               
pointed  out  that the  amendments  that  the committee  will  be                                                               
discussing tomorrow that have to do  with the changes made in the                                                               
Senate Judiciary Standing Committee  affect the durability of the                                                               
state's offer.  He specified  that the administration opposes the                                                               
removal of the entire inducement.                                                                                               
                                                                                                                                
6:35:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES noted  his opposition  to New  Amendment 1.                                                               
He then reminded  the committee of Dr.  Scott's presentation, the                                                               
basis of  which reviewed the effect  of locking in the  taxes for                                                               
10 years.   Whether one agrees  or disagrees with the  numbers he                                                               
presented, it  doesn't change  all of the  economics on  which it                                                               
was based, which had  to do with holding the tax  at a fixed rate                                                               
for 10 years.                                                                                                                   
                                                                                                                                
REPRESENTATIVE SEATON  stated his opposition to  New Amendment 1,                                                               
and opined that this provision has  to be viewed as an inducement                                                               
as  well as  a constraint  on inducements.   Without  a tax  rate                                                               
provision, the bids  could come forward with  various tax ratings                                                               
and a  very hard  to calculate  proposal.   Representative Seaton                                                               
stated his objection.                                                                                                           
                                                                                                                                
6:38:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG acknowledged  that he  has heard  much                                                               
dialogue regarding  concerns about  the state's taxes.   However,                                                               
the  state's  history  doesn't  support  [those  concerns].    He                                                               
recalled that  the committee saw  a PowerPoint that  related that                                                               
even the most radical idea for  tax increase has less impact than                                                               
the price fluctuations that will occur.                                                                                         
                                                                                                                                
A roll call  vote was taken.  Representative  Guttenberg voted in                                                               
favor  of New  Amendment  1.   Representatives Kawasaki,  Wilson,                                                               
Seaton,  Roses,  Edgmon, Gatto,  and  Johnson  voted against  it.                                                               
Therefore, New Amendment  1 failed to be adopted by  a vote of 1-                                                               
7.                                                                                                                              
                                                                                                                                
6:41:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  moved   that  the   committee  adopt                                                               
Amendment 2, which read [original punctuation provided]:                                                                        
                                                                                                                                
     page 2, line 30 through page 3, line 6                                                                                     
                                                                                                                                
     Sec. 43.90.110(a)(1)(C)                                                                                                  
                    (C) a qualified expenditure is a cost                                                                       
     that  is incurred  after the  license  is issued  under                                                                    
     this  chapter,  is  incurred by  the  licensee  or  the                                                                    
     licensee's  designated affiliate,  and is  directly and                                                                    
     reasonably  related  to   obtaining  a  certificate  of                                                                    
     public  convenience  and  necessity  from  the  Federal                                                                    
     Energy   Regulatory   Commission  or   the   Regulatory                                                                    
     Commission of  Alaska, as appropriate,  for development                                                                    
     of the  project, but does  not include  overhead costs,                                                                    
     litigation costs, the cost of  an asset or work product                                                                    
     acquired by the licensee  before the license is issued,                                                                    
     civil    penalties,   criminal    penalties,   lobbying                                                                
     expenses, or fines.                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
REPRESENTATIVE  GUTTENBERG explained  that  with  Amendment 2  he                                                               
wanted  to  ensure  that  lobbying fees  didn't  enter  into  the                                                               
calculation as a qualified expenditure.                                                                                         
                                                                                                                                
6:41:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES posed  a situation  when  someone hires  an                                                               
attorney and  asked if that  would be considered legal  [work] or                                                               
lobbying [work].                                                                                                                
                                                                                                                                
REPRESENTATIVE  GUTTENBERG related  his belief  that an  attorney                                                               
sitting before the  committee on the behalf of  someone should be                                                               
considered  lobbying whereas  an  attorney  working on  someone's                                                               
case is legal work.                                                                                                             
                                                                                                                                
REPRESENTATIVE  ROSES  said  that   he  doesn't  object  to  [not                                                               
including  in  the   qualified  expenditure]  lobbying  expenses.                                                               
However, he  emphasized that  it will  be difficult  to determine                                                               
what is considered lobbying and what isn't.                                                                                     
                                                                                                                                
6:43:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO pointed out that  lobbyists have to be registered.                                                               
Therefore, an attorney  who is registered as a  lobbyist is such,                                                               
but those not registered as such  are merely attorneys.  He noted                                                               
that lobbyist is defined in statute.                                                                                            
                                                                                                                                
6:43:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  interjected  that  the  definition  of  a                                                               
lobbyist  is  in   reference  to  the  amount   of  contact  with                                                               
legislators.  An attorney who is  registered as a lobbyist can be                                                               
so and not be strictly a  lobbyist.  An individual [being paid to                                                               
be  before the  legislature] and  who is  before legislators  for                                                               
more than  10 hours in a  30-day period is considered  a lobbyist                                                               
and  has to  register as  such, he  said.   Representative Seaton                                                               
stated that he has the  same concern as Representative Roses with                                                               
regard to differentiating  what is lobbying.   He then questioned                                                               
whether  lobbying is  incorporated  in overhead,  which can't  be                                                               
included [in a qualified expenditure].                                                                                          
                                                                                                                                
COMMISSIONER GALVIN  drew attention to the  language in Amendment                                                               
2  that says  "directly  and reasonably  related  to obtaining  a                                                               
certificate of public  convenience and necessity".   He said that                                                               
he doesn't consider lobbying expenses  as directly and reasonably                                                               
related  to  obtaining  the  certificate.    Therefore,  lobbying                                                               
expenses  could be  excluded on  those terms  or as  a matter  of                                                               
being  an  overhead  cost.    However, he  said  he  didn't  view                                                               
lobbying expenses  as a  typical overhead  cost.   Since lobbying                                                               
expenses  weren't   intended  to  be  included   in  a  qualified                                                               
expenditure,   it   isn't   particularly  troubling   that   it's                                                               
explicitly  specified,  he said.    He  mentioned that  it's  the                                                               
administration's  intent to  provide clarifying  language in  the                                                               
request of  applications (RFA) on  a number of items,  which will                                                               
probably include qualified expenditures.                                                                                        
                                                                                                                                
6:47:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES   asked  if  the  oil   and  gas  companies                                                               
currently  performing exploration  with  production or  corporate                                                               
taxes are  allowed to deduct  their lobbying expenses  under that                                                               
scenario.                                                                                                                       
                                                                                                                                
COMMISSIONER  GALVIN   replied  no.    In   further  response  to                                                               
Representative  Roses,  Commissioner  Galvin confirmed  that  the                                                               
state doesn't  have any taxation  in which lobbying  expenses are                                                               
deductible.                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROSES opined,  then, that it appears to  be a moot                                                               
point.                                                                                                                          
                                                                                                                                
6:47:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  said if  the commissioner is  going to                                                               
take  this  into consideration  in  the  RFA, he  would  withdraw                                                               
Amendment 2.   He then announced that after  discussions with the                                                               
administration today  he was satisfied with  their definitions of                                                               
offtake  and intake  points,  and therefore  will  not offer  his                                                               
remaining amendments.                                                                                                           
                                                                                                                                
CO-CHAIR GATTO  questioned whether nonquality pipeline  gas could                                                               
be placed in intake pipe that holds pipeline quality gas.                                                                       
                                                                                                                                
COMMISSIONER GALVIN said  that would be regulated  by FERC, which                                                               
wouldn't  allow   that.    Commissioner   Galvin,  in   terms  of                                                               
Representative  Guttenberg's   amendments,  clarified   that  the                                                               
administration considers its use of  "delivery points" to be both                                                               
inclusive of  receipt points  and thus the  line could  go either                                                               
way.                                                                                                                            
                                                                                                                                
6:49:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES posed  a situation in which  there were five                                                               
offtake  points,  and  inquired  as  to how  the  pipe  could  be                                                               
expanded  or  allow  for  a  new well  to  come  on  without  the                                                               
possibility of  having an intake.   He related  his understanding                                                               
that as part of a plan to  expand or bring on new production, the                                                               
[licensee] has to specify how it will get the gas in the line.                                                                  
                                                                                                                                
COMMISSIONER GALVIN explained that the  issue is that there would                                                               
be expansion  that would be  seen as coming through  the existing                                                               
infrastructure  at  the  initial  intake  location,  which  would                                                               
merely  be  an  expansion  issue.     However,  if  expansion  is                                                               
necessary due  to a new  discovery, then this issue  would arise.                                                               
He  said the  pipeline is  going to  be acting  as a  competitive                                                               
commercial player and  it's going to have  a commercial incentive                                                               
to provide  for this  in most  instances.   He further  said that                                                               
it's necessary to  provide for a certain expectation  of what the                                                               
state's needs  will be, whether  that number is  ultimately going                                                               
to prove to be the right number remains.                                                                                        
                                                                                                                                
REPRESENTATIVE ROSES opined,  "I think we ought to  be very, very                                                               
careful in sticking to numbers because  ... my hope would be that                                                               
25 years down  the road that we've got all  kinds of pipes coming                                                               
into that pipe.   And I don't think we want to  stick a number in                                                               
here for  fear of the fact  that we don't want  someone to assume                                                               
there's a limitation."                                                                                                          
                                                                                                                                
The committee took an at-ease from 6:54:20 PM to 6:57:43 PM.                                                                
                                                                                                                                
6:57:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES moved that the committee adopt Amendment 5,                                                                
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Sec. 43.90.250 is amended by adding a new title                                                                            
                                                                                                                                
          Commissioner of Alaska Gasline Inducement Act                                                                       
                                                                                                                                
     Pg. 17 Line 27                                                                                                             
          Following "of"                                                                                                      
               Insert "commissioner of"                                                                                       
                                                                                                                                
     Pg. 17 Line 28                                                                                                             
          Delete "coordinator"                                                                                                
                                                                                                                                
     Pg. 17 Line 31                                                                                                             
          Following "of"                                                                                                      
               Insert "commissioner of"                                                                                       
                                                                                                                                
     Pg. 18 Line 1                                                                                                              
          Delete "coordinator"                                                                                                
                                                                                                                                
     Pg. 18 Line 6                                                                                                              
          Following "The"                                                                                                     
               Insert "commissioner of"                                                                                       
                                                                                                                                
     Pg. 18 Line 6                                                                                                              
          Delete "coordinator"                                                                                                
                                                                                                                                
     Pg. 24 Line 31                                                                                                             
          Following "(2)"                                                                                                     
               Insert "Commissioner of"                                                                                       
                                                                                                                                
     Pg. 24 Line 31                                                                                                             
          Delete "coordinator and "coordinator""                                                                              
                                                                                                                                
     Pg. 3 Line 7                                                                                                               
          Delete "an"                                                                                                         
          Insert "the"                                                                                                        
          Delete "coordinator"                                                                                                
          Following "the"                                                                                                     
          Insert "commissioner of"                                                                                            
                                                                                                                                
CO-CHAIR GATTO objected.                                                                                                        
                                                                                                                                
6:58:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES reminded the  committee that although HB 177                                                               
originally  called   for  the   Alaska  Gasline   Inducement  Act                                                               
coordinator,   Senate   Judiciary  Standing   Committee   members                                                               
questioned whether  it was constitutional for  the legislature to                                                               
have  approval over  that position  and cited  a case  during the                                                               
Knowles  Administration.    He  highlighted  that  the  amendment                                                               
striking  the language  for any  oversight  removes the  original                                                               
intent of  the legislation.   Also, the House Labor  and Commerce                                                               
Standing  Committee  is  considering legislation  addressing  the                                                               
Regulatory  Commission of  Alaska  (RCA) and  an amendment  under                                                               
discussion has  to do with  the governor appointing the  chair of                                                               
the RCA.   Therefore,  if there  is no  approval process  for the                                                               
coordinator and the governor appoints  the chair of the RCA, then                                                               
the  legislature  would  have  no   oversight  over  any  of  the                                                               
positions  involving  a  gasline  that  was  constructed  instate                                                               
because  the   RCA  would  have   preference  over  FERC.     The                                                               
aforementioned would  mean that  the coordinator,  the regulator,                                                               
and  board members  of  the RCA  would all  be  appointed by  the                                                               
governor, with  no legislative  oversight.   Representative Roses                                                               
suggested then that changing the  reference from "coordinator" to                                                               
"commissioner"  would   maintain  the  original  intent   of  the                                                               
legislative confirmation  of the  coordinator position  and avoid                                                               
constitutional  concerns.   The  aforementioned  would also  mean                                                               
that the  position would be  dealt with  in a similar  fashion as                                                               
other commissioners with regard to salary, et cetera.                                                                           
                                                                                                                                
7:01:47 PM                                                                                                                    
                                                                                                                                
COMMISSIONER GALVIN  explained that  the position  was originally                                                               
envisioned a  one that was  appointed by the governor  and didn't                                                               
require  legislative approval.   [The  legislative approval]  was                                                               
added  by the  House  Special  Committee on  Oil  and  Gas.   The                                                               
question of  constitutionality resulted  in the  Senate Judiciary                                                               
Standing Committee removing that  language and inserting language                                                               
that  addresses   the  aforementioned   concerns.     The  Senate                                                               
Judiciary  Standing Committee  included  language that  specifies                                                               
that the governor can appoint the  position as well as remove the                                                               
position.   He  highlighted that  the position  doesn't have  any                                                               
specific  authority  in  regard to  departmental-type  authority.                                                               
The position has  a coordination role and  the position exercises                                                               
authority  with  regard  to the  expedited  review  process  that                                                               
doesn't  directly contravene  another  agency's  authority.   The                                                               
language merely specifies that coordination  must be done through                                                               
the  AGIA coordinator  who can  eliminate  any requirements  that                                                               
aren't legally  required.  The  aforementioned, he opined,  is an                                                               
exercise    of   the    governor's   authority,    administrative                                                               
prerogative.   Within  that construct,  the administration  feels                                                               
that  it's appropriate  to  have the  position  appointed by  the                                                               
governor,  to  work  with the  commissioners  of  the  respective                                                               
agencies,  and  serve  at  the  pleasure of  the  governor.    He                                                               
acknowledged that  the commissioners  are subject  to legislative                                                               
confirmation,  and pointed  out that  the commissioners  exercise                                                               
agency  authority  under the  direction  of  the governor.    The                                                               
administration,  he  related, provides  a  fair  balance of  both                                                               
legislative oversight  of appointment and the  governor's ability                                                               
to exercise executive power.                                                                                                    
                                                                                                                                
7:04:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES asked if there  are any other positions that                                                               
fall into  this same  category in which  the governor  appoints a                                                               
position  and has  the ability  to remove  an individual  without                                                               
following due process rights.                                                                                                   
                                                                                                                                
COMMISSIONER GALVIN  responded that would be  any position within                                                               
the  governor's  office.     Furthermore,  positions  within  the                                                               
governor's  office  serve  at  the  same  type  of  discretionary                                                               
pleasure  of  the  governor and  aren't  subject  to  legislative                                                               
approval.                                                                                                                       
                                                                                                                                
7:05:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EDGMON related his opposition  to Amendment 5.  He                                                               
opined  that  when  the governor  appoints  a  commissioner,  the                                                               
governor  is  de facto  appointing  additional  staff.   He  then                                                               
recalled hotly contested confirmation battles.                                                                                  
                                                                                                                                
REPRESENTATIVE SEATON  related his belief that  changing the name                                                               
from  coordinator   to  commissioner   doesn't  get   around  the                                                               
constitutional  problem because  this  AGIA coordinator  position                                                               
isn't the head of an agency.                                                                                                    
                                                                                                                                
7:07:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  noted  that  there is  a  history  of                                                               
commissioners  and   turf  wars.     This   position  coordinates                                                               
expeditious performance of all activities  by state agencies.  If                                                               
it was  a single commissioner, he  opined that there would  be an                                                               
immediate  conflict of  interest  within  the governor's  office.                                                               
Without the amendment, is the right way  to go, he said.  He then                                                               
mentioned that  the committee  just received  a fiscal  note, and                                                               
asked if the position went from a step A to a step B.                                                                           
                                                                                                                                
COMMISSIONER GALVIN said  that he can't comment  since he doesn't                                                               
have access to the fiscal note at this time.                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  related his understanding that  it was                                                               
a step A.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROSES withdrew Amendment 5.                                                                                      
                                                                                                                                
7:09:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES moved that  the committee adopt Amendment 6,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Pg. 12 Line 6                                                                                                              
                                                                                                                                
          Following "success"                                                                                                 
           Insert: "which may include multiple design                                                                         
      proposals that may include different pipe sizes and                                                                     
     capacities"                                                                                                              
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
7:09:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES reminded  the committee  that he  has asked                                                               
the  presenters  whether  a  bid   would  be  considered  out  of                                                               
compliance if the  applicant listed multiple sizes of  pipe.  Two                                                               
of the  three producers said that  if they were to  submit a bid,                                                               
it  probably  would  include  various sizes  of  pipe  since  the                                                               
commitment for  the gas  is unknown.   Amendment  6 is  to ensure                                                               
that an  entity did submitting a  bid with varying sizes  of pipe                                                               
wouldn't be considered noncompliant.                                                                                            
                                                                                                                                
7:10:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO offered an amendment  to Amendment 6, such that it                                                               
would read as follows:                                                                                                          
                                                                                                                                
     Pg. 12 Line 6                                                                                                              
                                                                                                                                
          Following "success"                                                                                                 
           Insert: "which may include multiple design                                                                         
       proposals that may include but not limited to pipe                                                                     
     diameters, wall thicknesses, and capacities"                                                                             
                                                                                                                                
REPRESENTATIVE  ROSES   said  he   considered  that   a  friendly                                                               
amendment.                                                                                                                      
                                                                                                                                
COMMISSIONER  GALVIN related  his understanding  that the  common                                                               
statutory  interpretation of  the term  "include" means  "include                                                               
but not limited  to".  Commissioner Galvin then  opined that it's                                                               
problematic for  this language to  be inserted strictly  into the                                                               
evaluation  criteria  as it  would  be  more appropriate  in  the                                                               
application description  itself.   He suggested  that on  page 3,                                                               
line  31,  following the  word  "market"  delete "including"  and                                                               
insert the  language "; a  proposal may include  multiple designs                                                               
with different pipe sizes and  capacities; the detail description                                                               
shall include".                                                                                                                 
                                                                                                                                
REPRESENTATIVE  ROSES   said  he  didn't  have   a  problem  with                                                               
Commissioner Galvin's proposed amendment to Amendment 6.                                                                        
                                                                                                                                
The committee took an at-ease from 7:13:56 PM to 7:17:28 PM.                                                                
                                                                                                                                
7:17:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES stated  that he  didn't object  to changing                                                               
Amendment  6 to  Conceptual Amendment  6 such  that opportunities                                                               
for multiple pipe  sizes, capacities, and designs  to be included                                                               
in   the  AGIA   language  wherever   most  appropriate   in  the                                                               
legislation.    However,  he  did note  his  preference  for  the                                                               
language to be inserted in AS 43.90.130.                                                                                        
                                                                                                                                
7:18:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG objected.  He  then posed a scenario in                                                               
which an  entity comes forward  with three projects  within their                                                               
application and then  they are granted the license.   He inquired                                                               
as to  whether an  entity would  be required  to bring  all three                                                               
proposals  to FERC.    He  further inquired  as  to whether  [the                                                               
state] would be part of the discussion.                                                                                         
                                                                                                                                
COMMISSIONER GALVIN explained  that in order to  be evaluated, an                                                               
applicant  would need  to provide  a description  of its  primary                                                               
project and  what it will use  to determine which design  will go                                                               
forward.   He  surmised  that  the selection  of  a design  would                                                               
primarily depend upon  the amount of gas  that's committed during                                                               
an  open  season.    The  project would  be  evaluated  upon  the                                                               
expectation of the likelihood of  each scenario.  To some extent,                                                               
he explained, the applicant would  provide these various paths as                                                               
well  as the  conditions upon  which  the entity  would make  the                                                               
determination  in order  to evaluate  the ultimate  value of  the                                                               
proposal to the state.                                                                                                          
                                                                                                                                
7:19:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG   posed  a   situation  in   which  an                                                               
applicant with three  projects is accepted and  the process moves                                                               
forward  to  the  open  season  and  the  applicant  renders  its                                                               
proposal to  the parameters going  forward.  However, one  of the                                                               
applicants had a  better focus on what is going  forward, but the                                                               
criteria/understanding didn't  arrive until  later.   He inquired                                                               
as to the potential for a challenge at that point.                                                                              
                                                                                                                                
COMMISSIONER GALVIN  reminded the committee that  the legislation                                                               
includes limitations  on challenges.   He recognized the  need to                                                               
provide  fair competition  and in  that regard  [the legislation]                                                               
tries to establish  a balance between allowing  the applicants to                                                               
provide a complete picture of  what they are considering in order                                                               
to  maximize  the  state's opportunity  to  obtain  the  greatest                                                               
value.   If another  project comes  in low  and doesn't  pursue a                                                               
more aggressive project, consideration  of the likelihood of each                                                               
of these  coming through  would have  to be made  as part  of the                                                               
ranking  of the  projects.   If  the  more complete  application,                                                               
through  subsequent  events,  resembles the  modest  application,                                                               
there's not  much that  can be  done other  than ensure  that the                                                               
evaluation  is  being  rigorous in  evaluating  those  conditions                                                               
placed  on it  and that  the applicant  is legitimately  pursuing                                                               
each of those alternatives.                                                                                                     
                                                                                                                                
7:22:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG   inquired    as   to   whether   the                                                               
administration would  prefer a multi-tiered project  or a single-                                                               
tiered project.                                                                                                                 
                                                                                                                                
COMMISSIONER GALVIN  said he  can't answer  that question  in the                                                               
abstract.   The decision would come  down to whether or  not that                                                               
multi-tiered approach  has a legitimate possibility  of coming in                                                               
with a higher-valued project.   If so, the [administration] would                                                               
prefer that the applicant make  the provisions for that potential                                                               
success opportunity that  would provide some value  to the state.                                                               
Therefore, it wouldn't  be looked upon favorably  if an applicant                                                               
came  forth with  three options,  two of  which were  really just                                                               
"pie in the  sky."  He opined that the  [administration] would be                                                               
looking for  an applicant that  is proposing a full  package with                                                               
the  greatest likelihood  of moving  forward and  identifying the                                                               
highest value project.  If  the aforementioned is unattainable at                                                               
the time of  selection but the applicant has the  ability to move                                                               
forward, that would provide value to the state.                                                                                 
                                                                                                                                
7:24:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked  if the administration considered                                                               
the multi-tiered proposal when AGIA was originally conceived.                                                                   
                                                                                                                                
COMMISSIONER  GALVIN answered  that  [the administration]  always                                                               
considered the multi-tiered approach as  one that might likely be                                                               
reflected  back  through the  application  process.   In  further                                                               
response to  Representative Guttenberg, Commissioner  Galvin said                                                               
that  he  didn't view  the  [proposed  process] as  precluding  a                                                               
multi-tiered approach.                                                                                                          
                                                                                                                                
7:24:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  posed a  situation  in  which there  is  a                                                               
single source  applicant with no right  to an appeal.   In such a                                                               
situation, if that applicant comes in  with a 52-inch pipe but at                                                               
open season  it's discovered that there's  only enough commitment                                                               
for  48-inch pipe,  there's no  ability to  go back  and evaluate                                                               
whether an  applicant tossed out  in the application  process had                                                               
already  discovered   that  48-inch  pipe  was   the  best  pipe.                                                               
However, allowing  for a multi-tier approach  allows for multiple                                                               
options and doesn't waste time redesigning.                                                                                     
                                                                                                                                
COMMISSIONER  GALVIN  clarified  that  under  AGIA  the  scenario                                                               
described by  Representative Roses in  which the pipe  would have                                                               
to  be redesigned  for a  lower  size and  smaller capacity  line                                                               
couldn't occur.   The aforementioned  couldn't occur  because the                                                               
commissioners don't  have the  ability to  modify the  license to                                                               
allow for such a reduction in  the value of the licensed project.                                                               
Therefore, the  assumption was  that there  would be  a step-down                                                               
opportunity that  would be presented in  the applicant's proposal                                                               
in  order to  avoid the  outcome of  the license  being withdrawn                                                               
after significant expenditures.                                                                                                 
                                                                                                                                
7:28:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI  surmised  that  the  decision  is  made                                                               
harder  when the  applicants come  forward with  single proposals                                                               
and  others  come  forward  with multiple  proposals.    He  then                                                               
inquired as to how the public process would work.                                                                               
                                                                                                                                
COMMISSIONER GALVIN  reminded the  committee that  the evaluation                                                               
criteria is  in two parts:   the  net present value  analysis and                                                               
the likelihood  of success.   The net  present value,  he pointed                                                               
out, will  have to deal  with these potential  multiple projects.                                                               
Therefore,  there would  have to  be some  probability associated                                                               
with which would  likely be the ultimate design  of this project,                                                               
which  would  weigh  the  net   present  value  figure  for  that                                                               
proposal.   There  would  be overlap  between  the likelihood  of                                                               
success and the net present value,  which will be inherent in the                                                               
evaluation.     Commissioner  Galvin  said   that  Representative                                                               
Kawasaki has  hit upon the  fact that  it will be  incumbent upon                                                               
[the administration] to explain how  its decision was made at the                                                               
quantitative side as  well as the ultimate  ranking of proposals.                                                               
Although it isn't going to be simple,  it is going to be based on                                                               
the following:   the type  of proposal that the  applicants make;                                                               
the  level  of confidence  that  the  applicants can  demonstrate                                                               
regarding their  ability to  succeed at  any particular  point of                                                               
the proposal;  and the state's  assessment of whether  the market                                                               
will accommodate that.                                                                                                          
                                                                                                                                
7:31:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON questioned  whether  all applicants  would                                                               
come forward with  a 48-inch, 42-inch, and 24-inch  pipeline.  If                                                               
that's  the  case,  then  the likelihood  of  success  under  any                                                               
scenario  would   be  that  anyone  controlling   the  gas  would                                                               
automatically  obtain  the  license.    If  this  full  range  of                                                               
projects is allowed, is any  pipeline company expected to forward                                                               
a proposal, he asked.                                                                                                           
                                                                                                                                
COMMISSIONER GALVIN  related his  belief that the  proposals will                                                               
likely have some  form of that tiered-down  approach, although he                                                               
didn't  believe they  would all  be exactly  the same.   However,                                                               
those proposals  will likely  include all  those factors  that go                                                               
toward  the likelihood  of success,  in terms  of the  ability to                                                               
deliver the  design.  The pipe  diameter and the capacity  of the                                                               
line are only  one part of the ultimate  determination of whether                                                               
the project  has value and  will succeed.  Whether  the proposals                                                               
mirror each other  in terms of how they approach  the problem, he                                                               
said there  will be significant variety  regarding the applicants                                                               
and the projects.                                                                                                               
                                                                                                                                
7:33:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON said that  she likes Conceptual Amendment 6                                                               
because  it   gives  the  applicant   permission  to   have  some                                                               
variables.   Furthermore, any applicant  would be wise [to  use a                                                               
multi-tiered approach].                                                                                                         
                                                                                                                                
REPRESENTATIVE  GUTTENBERG withdrew  his objection  to Conceptual                                                               
Amendment 6.                                                                                                                    
                                                                                                                                
There  being no  further objections,  Conceptual Amendment  6 was                                                               
adopted.                                                                                                                        
                                                                                                                                
7:34:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES moved to adopt Amendment 7, as follows:                                                                    
                                                                                                                                
     Pg. 8 Line 31 - Pg. 9 Line 1                                                                                               
          Following "applicant"                                                                                               
         Delete "; the affiliates of the applicant; all                                                                       
     partners, members of a joint venture,"                                                                                   
                                                                                                                                
CO-CHAIR GATTO objected.                                                                                                        
                                                                                                                                
7:35:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  spoke to  Amendment 7.   He said  he thinks                                                               
requiring the applicant to provide  a detailed description of all                                                               
affiliates, partners, and members of  a joint venture who are not                                                               
even involved in the pipeline is inappropriate.                                                                                 
                                                                                                                                
REPRESENTATIVE  SEATON pointed  out that  in between  semi-colons                                                               
the language read:  "; all  partners, members of a joint venture,                                                               
and  other  entities participating  with  the  applicant and  the                                                               
project proposed  by the  applicant;".  He  said that  means that                                                               
the bill would only require the  applicant to submit the names of                                                               
only  those entities  involved  with the  project  for which  the                                                               
application is being submitted.                                                                                                 
                                                                                                                                
COMMISSIONER  GALVIN  stated his  agreement  with  the intent  of                                                               
Representative Roses'  amendment.   He noted  that in  the Senate                                                               
version of this legislation, there is  a comma instead of a semi-                                                               
colon  on  page  8,  line  31  and  on  page  9,  line  1,  after                                                               
"applicant".   He indicated  that the  punctuation in  the Senate                                                               
version seems to support Representative Seaton's observation.                                                                   
                                                                                                                                
7:39:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES moved  to amend  Amendment 7  to make  it a                                                               
conceptual  amendment to  reflect his  intent that  the applicant                                                               
would not be required to reveal global information.                                                                             
                                                                                                                                
CO-CHAIR  GATTO  announced that  Amendment  7  is now  Conceptual                                                               
Amendment 7.                                                                                                                    
                                                                                                                                
7:40:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked Commissioner  Galvin if there are                                                               
some aspects of "revealing disclosure  in that manner" that would                                                               
be relevant to the success of an evaluation.                                                                                    
                                                                                                                                
COMMISSIONER  GALVIN answered  that yes,  there is  a possibility                                                               
that having  information regarding  the worldwide  affiliation of                                                               
an  applicant may  provide insight  into  some additional  value;                                                               
however,  he said  he also  recognizes  that there  is a  certain                                                               
level of reasonableness  with regard to the  level of information                                                               
expected  from the  applicants.    He said  he  thinks  it is  an                                                               
unreasonable request  to require huge companies  to disclose much                                                               
information beyond that  pertaining to the parties  that would be                                                               
participating in the project.  He concluded:                                                                                    
                                                                                                                                
     To the  extent that there  may be additional  values in                                                                    
     an affiliate,  we would expect  that if  it's something                                                                    
     that  adds   value  to   the  application,   then  it's                                                                    
     incumbent upon  the applicant to include  that in their                                                                    
     application ....                                                                                                           
                                                                                                                                
7:42:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG asked:                                                                                                
                                                                                                                                
     And  so,  if  an applicant  didn't  disclose  something                                                                    
     because they didn't think it  was relevant, and then it                                                                    
     became  very  relevant  after the  licensing  had  been                                                                    
     either  evaluated or  issued, would  you think  you had                                                                    
     the authority to go back and take corrective action?                                                                       
                                                                                                                                
COMMISSIONER  GALVIN  said Representative  Guttenberg's  question                                                               
assumes that the missing information is negative.                                                                               
                                                                                                                                
7:43:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  offered   an  example   wherein  one                                                               
component of the equation went  bankrupt and that information was                                                               
significant.                                                                                                                    
                                                                                                                                
COMMISSIONER  GALVIN   directed  attention  to   the  definitions                                                               
section of the  legislation, and pointed out  that when companies                                                               
submit  an application  a lot  of information  will be  received.                                                               
Therefore, he said  he didn't believe it's necessary  to cast the                                                               
net beyond the participants in  the project, who they're bringing                                                               
into  the  project, and  the  affiliates  of  those -  under  the                                                               
definition of affiliate.  "Beyond  that you're getting pretty far                                                               
removed  from  the types  of  behavior  or contingency  that  may                                                               
ultimately  wind  back and  affect  the  actual success  of  this                                                               
project," he opined.                                                                                                            
                                                                                                                                
7:44:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO questioned  whether  there may  be oil  companies                                                               
that are  embargoed.  He  explained that  his concern is  to know                                                               
whether the company  that may apply is affiliated  with any other                                                               
embargoed company.                                                                                                              
                                                                                                                                
COMMISSIONER  GALVIN suggested  considering  how Alaska  protects                                                               
itself against  "that type of  arrangement" in other  places, for                                                               
example, the  hurdle that must  be cleared  to enter the  oil and                                                               
gas leasing  program.  He stated,  "I think that here  the stakes                                                               
are raised in  that we're offering a significant  amount of state                                                               
money."   He said he thinks  it's appropriate to look  beyond the                                                               
applicant to  ensure there are no  wayward subsidiaries; however,                                                               
he  indicated that  Representative Roses'  interpretation of  the                                                               
current language goes "far beyond  that level of information that                                                               
we would need to protect the state's interest."                                                                                 
                                                                                                                                
7:46:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROSES    said   he   thinks    the   legislation                                                               
unnecessarily asks for information  from the applicant that tends                                                               
to be included in putting together  a financial package.  He said                                                               
the state is  the reviewer of the application and  it assigns the                                                               
license - it doesn't finance the project.                                                                                       
                                                                                                                                
CO-CHAIR GATTO withdrew his objection  to Conceptual Amendment 7.                                                               
There  being no  further  objection, Conceptual  Amendment 7  was                                                               
adopted.                                                                                                                        
                                                                                                                                
7:49:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  moved to adopt Amendment  9, labeled 25-                                                               
GH1060\M.16, Bullock, 4/21/07, which read:                                                                                      
                                                                                                                                
     Page 30, following line 21:                                                                                                
          Insert a new bill section to read:                                                                                    
         "* Sec. 7. The uncodified law of the State of                                                                        
     Alaska is amended by adding a new section to read:                                                                         
          CONSISTENCY WITH THE ALASKA NATURAL GAS PIPELINE                                                                      
     ACT. It is the intent  of the legislature that that the                                                                    
     licensed  project  the   commissioners  submit  to  the                                                                    
     presiding  officer of  each  house  of the  legislature                                                                    
     under AS 43.90.180, as  enacted in sec. 1  of this Act,                                                                    
     conforms as closely as possible with 15 U.S.C. 720a et                                                                     
     seq. (Alaska Natural Gas Pipeline Act)."                                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 31, line 4:                                                                                                           
          Delete "sec. 9"                                                                                                       
          Insert "sec. 10"                                                                                                      
                                                                                                                                
REPRESENTATIVE ROSES objected for discussion purposes.                                                                          
                                                                                                                                
7:49:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI explained  that Amendment  9 relates  to                                                               
"some of the public law dealing  with the sense of Congress."  He                                                               
cited Title  15, Chapter  15D, Section 720m  of U.S.  Code, which                                                               
read as follows:                                                                                                                
                                                                                                                                
     It is the sense of Congress that-                                                                                          
     (1)  Alaska  Native  Regional  Corporations,  companies                                                                    
     owned   and  operated   by  Alaskans,   and  individual                                                                    
     Alaskans should  have the opportunity to  own shares of                                                                    
     the Alaska natural gas pipeline  in a way that promotes                                                                    
     economic development for the State;                                                                                        
                                                                                                                                
REPRESENTATIVE KAWASAKI said although  it wouldn't be possible to                                                               
include    "this   portion    of   text"    without   significant                                                               
constitutional challenges, it is important  to "add this into the                                                               
law in the uncodified section."                                                                                                 
                                                                                                                                
7:50:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  asked, "Was this  already deleted in the  list of                                                               
amendments from the administration?"                                                                                            
                                                                                                                                
COMMISSIONER  GALVIN answered  no.   He explained,  "Somehow this                                                               
was similar  ... in  theme to  an amendment  that was  offered in                                                               
[the House  Special Committee  on Oil and  Gas] ...  that failed,                                                               
but  it is  not  something that  has  been in  the  bill and  was                                                               
removed."                                                                                                                       
                                                                                                                                
7:52:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES asked Representative  Kawasaki to clarify if                                                               
Amendment 9 would allow Native  corporations to be part owners in                                                               
the pipeline.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KAWASAKI responded  that the  amendment does  not                                                               
specify  how  that can  be  done;  it is  more  of  a policy  and                                                               
framework statement.                                                                                                            
                                                                                                                                
REPRESENTATIVE  WILSON  offered  her  understanding  that  Native                                                               
corporations already have  the ability to be part  owners if they                                                               
so chose.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KAWASAKI  explained that he wanted  to include the                                                               
language from the U.S. Code in the bill to make it "measurable."                                                                
                                                                                                                                
7:55:22 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  GALVIN  directed  attention  to page  8,  line  18,                                                               
[paragraph (15)], which read:                                                                                                   
                                                                                                                                
               (15)   commit   to   hire   qualified   state                                                                    
     residents  for  management, engineering,  construction,                                                                    
     operation,  maintenance,  and  other positions  on  the                                                                    
     proposed  project  and   to  contract  with  businesses                                                                    
     located in the state to the extent permitted by law;                                                                       
                                                                                                                                
COMMISSIONER  GALVIN   noted  that  the  previous   committee  of                                                               
referral  had proposed  an  amendment to  this  paragraph to  add                                                               
Native corporations.   He said there is a  difference between the                                                               
federal  government  making  such  a requirement  and  the  state                                                               
making it.   He said, "It  raises legal questions with  regard to                                                               
the  state providing  some sort  of advantage  to these  types of                                                               
entities  under  a  state  law."   He  offered  his  belief  that                                                               
Representative  Kawasaki,  through  Amendment  9,  is  trying  to                                                               
establish,  through an  unenforceable provision  of the  law, the                                                               
legislature's  stated  desire  that  there  be  consideration  of                                                               
"these entities" among the application process.                                                                                 
                                                                                                                                
7:57:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG said he thinks  "the folks at home" are                                                               
looking  for a  way  to invest  in this  project  - not  directly                                                               
through a  corporation or licensee,  but through  another device.                                                               
He indicated that there would be some way for that to happen.                                                                   
                                                                                                                                
REPRESENTATIVE  KAWASAKI  noted  that another  consideration  had                                                               
been to  provide a means  by which individuals could  own shares.                                                               
He said there had been consideration  of how to put that into the                                                               
law itself.   However, the drafter pointed out that  if a limited                                                               
liability company  (LLC) was the  pipeline owner, there  would be                                                               
no way  to own equity  shares in an  LLC.  The  aforementioned is                                                               
why it couldn't be included in the legislation as it stands.                                                                    
                                                                                                                                
7:58:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES said although  he doesn't necessarily object                                                               
to the concept of Amendment 9,  the language is nearing the point                                                               
of being  overly prescriptive.   Choosing to offer  private stock                                                               
is  an  option.     He  related  that  he   supports  giving  the                                                               
opportunity to  every Alaskan who  wants to work on  the project,                                                               
if and when it gets completed.   Furthermore, anyone who wants to                                                               
be able to invest his/her money in  it ought to be able to do so.                                                               
However, he  said he  doesn't think the  [state] should  tell the                                                               
applicant what they have to do  in that regard.  He characterized                                                               
it as stretching the limit of expectation.                                                                                      
                                                                                                                                
REPRESENTATIVE   KAWASAKI  opined   that   [Amendment  9]   isn't                                                               
prescriptive because:                                                                                                           
                                                                                                                                
     It's   consistent  with   ANGPA  [Alaska   Natural  Gas                                                                    
     Pipeline  Act], and  if  you want  a  $18 billion  loan                                                                    
     guarantee, that's  what ANGPA's going to  require under                                                                    
     the ... Sense of Congress  portion.  ... We're going to                                                                    
     be using  an $18 billion  federal loan guarantee  - the                                                                    
     federal government's  going to sign  off on that  - $20                                                                    
     million for  workforce development.  I  think that this                                                                    
     is fair.  It's not  constitutional under state law, but                                                                    
     it's constitutional  under federal law, and  I think it                                                                    
     needs to be weighed in on in a pretty significant way.                                                                     
                                                                                                                                
REPRESENTATIVE  KAWASAKI explained  that since  he has  been told                                                               
that  the provision  isn't constitutional,  he placed  it in  the                                                               
uncodified section of law.                                                                                                      
                                                                                                                                
REPRESENTATIVE ROSES maintained his objection.                                                                                  
                                                                                                                                
8:01:16 PM                                                                                                                    
                                                                                                                                
A roll  call vote was  taken.  Representatives  Edgmon, Kawasaki,                                                               
Seaton,   and  Guttenberg   voted  in   favor  of   Amendment  9.                                                               
Representatives Wilson,  Roses, Johnson, and Gatto  voted against                                                               
it.  Therefore, Amendment 9 failed by a vote of 4-4.                                                                            
                                                                                                                                
REPRESENTATIVE KAWASAKI  moved to adopt Amendment  10, which read                                                               
[original punctuation provided, with some handwritten changes]:                                                                 
                                                                                                                                
     Page 30, following line 26:                                                                                                
          Insert a new bill section to read:                                                                                    
     "*Sec.7. The uncodified  law of the State  of Alaska is                                                                  
     amended by adding a new section to read:                                                                                   
          CONSEQUENCES FOR A LACK OF FIRM TRANSPORTATION                                                                        
     COMMITMENTS.   It  is the  intent  of the  legislature,                                                                    
     that  in  the  event insufficient  firm  transportation                                                                    
     commitments  are made  during  the  first binding  open                                                                    
     season,  the  State  of  Alaska   will  act  to  secure                                                                    
     additional  firm transportation  commitments, including                                                                    
     the consideration of                                                                                                       
          (1) A gas reserves tax; or                                                                                            
          (2) Enforcement of oil and gas lease terms                                                                            
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
REPRESENTATIVE  KAWASAKI  indicated  that   HB  177  is  full  of                                                               
inducements whereas Amendment 10 uses "the stick approach."                                                                     
                                                                                                                                
8:04:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES indicated  that he  thinks the  language of                                                               
Amendment 10  is an option  whether or not  it is written  in the                                                               
legislation.  Furthermore, he questioned  whether stating the two                                                               
considerations with  "or" between them  would mean that  no other                                                               
type of  consideration could be  made.   He said the  language of                                                               
Amendment  10, if  adopted, would  be  "an unnecessary,  negative                                                               
part of the bill."                                                                                                              
                                                                                                                                
REPRESENTATIVE  GUTTENBERG said  he thinks  the people  of Alaska                                                               
need to state  how important [the gas pipeline] is  to the state,                                                               
and  negotiations are  currently being  made publicly.   He  said                                                               
Amendment 10  supports the  strongest possible  considerations to                                                               
be made.   He said he sees the amendment  as a recommendation for                                                               
a change  to the uncodified  section of law,  and it is  a strong                                                               
statement of beliefs.                                                                                                           
                                                                                                                                
8:06:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES expressed concern  that there is language in                                                               
the legislation that  discusses going to a second  open season if                                                               
the first one  is unsuccessful.  Amendment 10  would, between the                                                               
first and second season, allow  prescriptive measures to be used.                                                               
He said,  "Nothing stops us from  doing that, even if  this isn't                                                               
in  the  bill.    So,  I   don't  see  how  hanging  a  threat  -                                                               
specifically stating  it in  the bill,  whether it's  codified or                                                               
uncodified - does us any good."   He said he does not think there                                                               
is a  single producer who  doesn't realize  that this could  be a                                                               
possibility.   He offered  his understanding  that the  state has                                                               
"already done  that in one area"  and is currently involved  in a                                                               
court case.                                                                                                                     
                                                                                                                                
REPRESENTATIVE KAWASAKI disagreed with  Representative Roses.  He                                                               
stated  his  belief  that  Amendment  10  would  result  in  some                                                               
commitments.   He  said  if  the committee  were  to pass  "this"                                                               
unanimously, that would send a statement.                                                                                       
                                                                                                                                
8:09:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI,   in  response   to  the   comments  of                                                               
Representative Roses,  moved to  adopt a conceptual  amendment to                                                               
Amendment 10, to  add:  "(3) Other methods to  secure our natural                                                               
resources."                                                                                                                     
                                                                                                                                
[No  objection   was  stated  and   the  committee   treated  the                                                               
conceptual amendment to Amendment 10 as adopted.                                                                                
                                                                                                                                
The committee took an at-ease from 8:09:39 PM to 8:10:15 PM.                                                                
                                                                                                                                
8:10:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO, after  conferring with  Representative Kawasaki,                                                               
announced that before the committee  was now Conceptual Amendment                                                               
10, with the added paragraph (3).                                                                                               
                                                                                                                                
REPRESENTATIVE  SEATON objected  to Conceptual  Amendment 10  [as                                                               
amended] because  it would  change the  whole perspective  of the                                                               
proposed legislation.                                                                                                           
                                                                                                                                
A  roll   call  vote  was   taken.     Representatives  Kawasaki,                                                               
Guttenberg, and Edgmon voted in  favor of Conceptual Amendment 10                                                               
[as amended].  Representatives Wilson,  Seaton, Roses, Gatto, and                                                               
Johnson  voted against  it.   Therefore, Conceptual  Amendment 10                                                               
[as amended] failed by a vote of 3-5.                                                                                           
                                                                                                                                
The committee took an at-ease from 8:13:43 PM to 8:31:17 PM.                                                                
                                                                                                                                
8:31:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  moved to  adopt Amendment 11,  labeled 25-                                                               
GH1060\M.17, Bullock, 4/23/07, which read:                                                                                      
                                                                                                                                
     Page 11, line 19, following "state":                                                                                       
          Insert ", including the value of state income tax                                                                     
       or equivalent payment in lieu of tax, supplemental                                                                       
     profit-sharing   to   the    state   if   contractually                                                                    
     stipulated,   and    supplemental   profit-sharing   to                                                                    
     municipalities   if    contractually   stipulated   and                                                                    
     equitably distributed to all municipalities"                                                                               
                                                                                                                                
CO-CHAIR JOHNSON objected for discussion purposes.                                                                              
                                                                                                                                
8:31:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  explained that [Amendment 11]  falls under                                                               
the evaluation criteria.  Representative  Seaton opined, "We need                                                               
to have everything in the  evaluations ... so that everyone knows                                                               
what's being evaluated  for netback to the  state."  Furthermore,                                                               
there was discussion of a  60 percent supplemental profit-sharing                                                               
with the state.   Amendment 11 specifies  that the aforementioned                                                               
would only be calculated as part  of the net present value to the                                                               
state and  apply if the  contract stipulated that such  a profit-                                                               
sharing  arrangement  existed.     With  regard  to  supplemental                                                               
profit-sharing with  municipalities, the amendment says  it would                                                               
be considered  only if stipulated  in the contract  and equitably                                                               
distributed  to  all  municipalities.    Therefore,  there  would                                                               
basically need  to be revenue  sharing to all communities  in the                                                               
state.                                                                                                                          
                                                                                                                                
COMMISSIONER GALVIN  said that the administration  doesn't object                                                               
to  Amendment  11   conceptually.    He  pointed   out  that  the                                                               
administration considers  the specific things in  Amendment 11 as                                                               
items that would  likely be evaluated in  the catch-all provision                                                               
of the current language.   The section addressing revenue sharing                                                               
amongst  municipalities is  something  that would  go beyond  the                                                               
legislation's  existing language.    He opined  that adding  this                                                               
language is  going to add  a level of  complexity to the  RFA and                                                               
obtaining  the  necessary information  to  perform  this type  of                                                               
evaluation and ensure that it  will be carried out.  Commissioner                                                               
Galvin opined  that it's  really a  matter of  policy in  how the                                                               
administration is  going to  weigh the  various projects  and the                                                               
types of revenue streams that will be included.                                                                                 
                                                                                                                                
8:35:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI   inquired  as  to  what   an  equitable                                                               
distribution  would  be.    He  pointed  out  that  the  City  of                                                               
Fairbanks, where  the gasline will  likely pass through,  will be                                                               
differentially  impacted than  a city  not  on the  gasline.   He                                                               
questioned  whether the  aforementioned  would  be considered  in                                                               
determining whether there has been an equitable distribution.                                                                   
                                                                                                                                
8:36:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  inquired  as  to  what  happens  in  those                                                               
communities that aren't incorporated boroughs or municipalities.                                                                
                                                                                                                                
REPRESENTATIVE SEATON  indicated that perhaps Amendment  1 should                                                               
be conceptual.  He reminded the  committee that for some time the                                                               
state has had a revenue sharing  formula and perhaps that and the                                                               
community dividend  formula should be  specified.  If  a pipeline                                                               
was giving  a lot of money  to Fairbanks, there is  no reason why                                                               
the state  should consider that  as net value  to the state.   He                                                               
explained,  "Say   [there  is  a]  revenue   sharing  formula  or                                                               
community dividend formula that  we utilize to distribute revenue                                                               
through the  state that's going  to replace ... revenue  that the                                                               
state  generally does  through  a community  dividend or  revenue                                                               
sharing.   ... in that case,  that would make a  logical thing to                                                               
analyze that at net present value."   He confirmed that this is a                                                               
policy call.   Either way,  he opined  that the policy  should be                                                               
specified  so  that  [applicants]  know how  to  structure  their                                                               
proposal for  the evaluation.   If the  committee decides  not to                                                               
consider community revenue  sharing as a net value  to the state,                                                               
it can  be eliminated and  the applicant  will know what  will be                                                               
considered in the formulation and analysis.                                                                                     
                                                                                                                                
8:39:39 PM                                                                                                                    
                                                                                                                                
COMMISSIONER  GALVIN   said  that  basically   questions  whether                                                               
applicants  will  be  encouraged  to  review  ways  of  spreading                                                               
project money  throughout the state  other than the  money coming                                                               
in through the  general fund and the legislature  deciding how to                                                               
spread  it through  the state.    He surmised  that the  existing                                                               
language [of Amendment 11] is  crafted such that there would need                                                               
to be a determination as  to whether the proposed distribution is                                                               
appropriate.   "Well, that puts the  commissioners in a bit  of a                                                               
bind  in terms  of  trying  to substitute  our  judgment for  the                                                               
legislature in terms  of what is an  appropriate distribution and                                                               
whether it should  be considered or not," he opined.   He further                                                               
opined  that  this path  is  uncomfortable  in  terms of  how  to                                                               
determine  whether a  particular type  of distribution  should be                                                               
considered  appropriate   and  thus   count  versus  not.     The                                                               
aforementioned  speaks  primarily  to the  distributions  to  the                                                               
municipalities, as  it's one  level of  it.   However, if  it's a                                                               
commitment on  the part of the  project to make a  payment to the                                                               
state, then it's difficult to  argue that should be excluded from                                                               
consideration  given that  royalties  and other  payments to  the                                                               
state  are being  considered.   Commissioner  Galvin opined  that                                                               
when  [Amendment 11]  is reviewed  in terms  of the  rest of  the                                                               
section to which  it's inserted, it does create  complexity and a                                                               
level of  difficulty in  the evaluation that  he would  prefer to                                                               
avoid.                                                                                                                          
                                                                                                                                
8:42:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  opined  that   Amendment  11  is  too                                                               
conceptual or  doesn't have enough  detail.  He pointed  out that                                                               
the City of Fairbanks is not going  to have any of the gasline in                                                               
it, but it  will be impacted to a significant  degree.  He opined                                                               
that the City of Fairbanks will  be impacted such that it will be                                                               
unrecognizable,  which  is what  occurred  with  TAPS.   He  then                                                               
questioned how  the term "equitable"  would be applied  since the                                                               
commissioner    isn't    being    provided    enough    guidance.                                                               
Representative Guttenberg  said he  failed to  see how  this will                                                               
actually provide fairness.                                                                                                      
                                                                                                                                
REPRESENTATIVE ROSES related his  understanding that this doesn't                                                               
become  an issue  unless it's  specified in  the contract  in the                                                               
bid.   If a bid is  based on the  fact that [the applicant]  is a                                                               
nonprofit  entity,   then  it's   appropriate  to   describe  the                                                               
distribution  process in  terms  of the  legislation, which  this                                                               
amendments  seems to  address, he  opined.   With  regard to  the                                                               
difficulty for the commissioners to  evaluate that as part of the                                                               
process,  he  opined  that  the  other  20  items  are  far  more                                                               
difficult and  cause more of  an impact than the  item [addressed                                                               
in Amendment 11].                                                                                                               
                                                                                                                                
8:45:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON opined  that it's  very necessary  to have                                                               
this  policy debate.    Therefore, he  moved  that the  committee                                                               
divide  Amendment  11  such  that Amendment  11A  would  read  as                                                               
follows:                                                                                                                        
                                                                                                                                
     Page 11, line 19, following "state":                                                                                       
     Insert ",  including the value  of state income  tax or                                                                    
     equivalent  payment   in  lieu  of   tax,  supplemental                                                                    
     profit-sharing   to   the    state   if   contractually                                                                    
     stipulated,"                                                                                                               
                                                                                                                                
Amendment 11B would read as follows:                                                                                            
                                                                                                                                
     Page 11, line 19, following "state":                                                                                       
          Insert   "and   supplemental   profit-sharing   to                                                                    
    municipalities   if    contractually   stipulated   and                                                                     
     equitably distributed to all municipalities"                                                                               
                                                                                                                                
There being no  objection, Amendment 11 was  divided as specified                                                               
above.                                                                                                                          
                                                                                                                                
CO-CHAIR GATTO  announced that before the  committee is Amendment                                                               
11A.                                                                                                                            
                                                                                                                                
CO-CHAIR JOHNSON withdrew his objection.                                                                                        
                                                                                                                                
CO-CHAIR GATTO objected to Amendment 11A.                                                                                       
                                                                                                                                
COMMISSIONER GALVIN related his belief  that all of the described                                                               
payments  on  page  11,  lines 18-19  of  CSHB  177(O&G)  already                                                               
encompass the provision of Amendment 11A.                                                                                       
                                                                                                                                
8:47:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON opined  that  clarity is  necessary.   The                                                               
descriptions in  the legislation refer  to the net  present value                                                               
of the netback and wellhead value.   Therefore, there is no other                                                               
description  throughout the  evaluation criteria  of income  tax,                                                               
other payments in  lieu of taxes, or profit-sharing.   He said it                                                               
would  be   good  for  the   legislation  to  clarify   that  the                                                               
aforementioned  items  do count  as  factors,  which is  why  the                                                               
language being inserted modifies paragraph (6).                                                                                 
                                                                                                                                
A  roll call  vote  was taken.    Representatives Wilson,  Roses,                                                               
Seaton, Edgmon, Kawasaki, Guttenberg,  and Johnson voted in favor                                                               
of  Amendment  11A.    Representative  Gatto  voted  against  it.                                                               
Therefore, Amendment 11A was adopted by a vote of 7-1.                                                                          
                                                                                                                                
8:49:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  moved that  the committee  adopt Amendment                                                               
11B [text previously provided].                                                                                                 
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
8:49:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GUTTENBERG  inquired   as   to   how  the   term                                                               
"equitably" is defined in Amendment 11B.                                                                                        
                                                                                                                                
REPRESENTATIVE SEATON said that it isn't well-defined.                                                                          
                                                                                                                                
CO-CHAIR GATTO  asked if Representative  Seaton wanted  to change                                                               
Amendment 11B to Conceptual Amendment 11B.                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON replied yes.                                                                                              
                                                                                                                                
REPRESENTATIVE  WILSON objected  for  discussion  purposes.   She                                                               
opined that Conceptual Amendment 11B  is a good amendment because                                                               
it gives every  community some kind of sharing.   Furthermore, if                                                               
a  community  isn't  a  municipality,   it  would  still  receive                                                               
something.                                                                                                                      
                                                                                                                                
CO-CHAIR GATTO  pointed out that Conceptual  Amendment 11B refers                                                               
to municipalities not communities, many  of which aren't close to                                                               
being a municipality.                                                                                                           
                                                                                                                                
8:51:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  expressed  concern with  Conceptual  Amendment                                                               
11B, and questioned whether it's  entering into the legislature's                                                               
ability  to  appropriate.   Profit-sharing  is  something  that's                                                               
voted on  each year, and  he questioned whether  [this amendment]                                                               
is  setting up  the legislature  to take  away the  legislature's                                                               
appropriation  ability by  contractually  having a  predetermined                                                               
payment to a municipality or entity.                                                                                            
                                                                                                                                
REPRESENTATIVE GUTTENBERG  highlighted that many of  the entities                                                               
along the  proposed routes of the  gasline aren't municipalities.                                                               
Furthermore,  there is  a lot  of  motivation for  some of  these                                                               
entities to form boroughs.   This amendment would prevent profit-                                                               
sharing from going to areas  that aren't municipalities, which he                                                               
opined is a basic unfairness.                                                                                                   
                                                                                                                                
8:52:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ROSES  offered   an   amendment  to   Conceptual                                                               
Amendment 11B,  such that the  term "municipalities"  is replaced                                                               
with "communities".                                                                                                             
                                                                                                                                
REPRESENTATIVE EDGMON  objected, and  noted that he  doesn't know                                                               
the definition of "communities".   He then suggested that perhaps                                                               
the  amendment could  refer to  "municipalities in  organized and                                                               
unorganized  areas"  in  order   to  capture  the  unincorporated                                                               
communities.                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO related  his belief that there is  a definition of                                                               
"community" in statute.                                                                                                         
                                                                                                                                
8:53:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON clarified  that under  the definitions  of                                                               
the state  a borough is a  municipality.  He then  suggested that                                                               
following the  term ["municipalities"],  the language  "under the                                                               
formula  used  by the  state  department  of commerce"  could  be                                                               
inserted  in order  to  include  the unincorporated  communities,                                                               
boroughs, cities, and municipalities.                                                                                           
                                                                                                                                
REPRESENTATIVE  ROSES   withdrew  his  amendment   to  Conceptual                                                               
Amendment 11B.                                                                                                                  
                                                                                                                                
8:55:16 PM                                                                                                                    
                                                                                                                                
COMMISSIONER GALVIN  specified that  his primary request  is that                                                               
the intent be  clear with regard to which  revenue streams should                                                               
be counted during the evaluation process.                                                                                       
                                                                                                                                
REPRESENTATIVE  KAWASAKI  said  that  he believes  he  will  vote                                                               
against  Conceptual Amendment  11B  because it's  getting into  a                                                               
policy   realm  that   the  legislature   could  address   later.                                                               
Furthermore,  revenue  sharing  has some  inherent  problems  and                                                               
falsehoods.   He  suggested that  the amendment  should be  voted                                                               
down and the  policies of community dividends  could be discussed                                                               
at a  later time.   He then opined  that any pipeline  route will                                                               
likely  head to  Fairbanks  first and  thus  anything along  that                                                               
route will be disproportionately impacted.                                                                                      
                                                                                                                                
8:57:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   moved  that   the  committee   adopt  an                                                               
amendment  to  Conceptual  Amendment   11B  such  that  the  term                                                               
"municipalities" would  be deleted and the  language "communities                                                               
under  the formula  used  by the  state  Department of  Commerce,                                                               
Community, & Economic Development" inserted.                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI objected.                                                                                               
                                                                                                                                
REPRESENTATIVE SEATON  explained that the language  refers to the                                                               
formulation  that  the  Department   of  Commerce,  Community,  &                                                               
Economic  Development (DCCED)  has  used that  gives $250,000  to                                                               
boroughs,  $75,000  to  municipalities, $25,000  (indisc.).    He                                                               
further explained that nothing in  the system prevents money from                                                               
going to a particular municipality,  [the amendment] merely means                                                               
that the  money wouldn't be  considered net present value  to the                                                               
state.                                                                                                                          
                                                                                                                                
8:59:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG opined, "...  it still falls short when                                                               
we  start  to micromanage  these  things.    He returned  to  the                                                               
concern with the  use of the term "equitable" and  asked if there                                                               
will be  a definition for  each area.   Representative Guttenberg                                                               
said that Conceptual  Amendment 11B raises too  many concerns and                                                               
leaves too many unanswered questions.                                                                                           
                                                                                                                                
REPRESENTATIVE KAWASAKI  withdrew his objection to  the amendment                                                               
to Conceptual Amendment 11B.                                                                                                    
                                                                                                                                
There  being no  further objection,  the amendment  to Conceptual                                                               
Amendment 11B was adopted.                                                                                                      
                                                                                                                                
CO-CHAIR JOHNSON maintained his objection.                                                                                      
                                                                                                                                
9:02:21 PM                                                                                                                    
                                                                                                                                
A roll call vote was  taken.  Representatives Wilson, Seaton, and                                                               
Edgmon voted  in favor of  Conceptual Amendment 11B,  as amended.                                                               
Representatives Roses,  Guttenberg, Kawasaki, Johnson,  and Gatto                                                               
voted  against  it.   Therefore,  Conceptual  Amendment  11B,  as                                                               
amended, failed to be adopted by a vote of 3-5.                                                                                 
                                                                                                                                
The committee took an at-ease from 9:03 p.m. to 9:18 p.m.                                                                       
                                                                                                                                
9:18:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  moved that the committee  adopt Conceptual                                                               
Amendment  12,   labeled  25-GH1060/M.18,  4/23/07,   which  read                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     Page 20, line 23, following "by":                                                                                          
          Insert "(A)"                                                                                                          
                                                                                                                                
     Page 20, line 25, following "project":                                                                                     
          Insert " ;or                                                                                                          
                                                                                                                                
                         (B) eliminating the ability of the                                                                     
     state  to take  its  royalty  in kind  for  gas in  the                                                                    
     quantity   and    volume   committed   to    the   firm                                                                    
     transportation  capacity  acquired   during  the  first                                                                    
     binding  open  season of  the  project,  if the  person                                                                    
     entitled  to this  election agrees  to provide  gas for                                                                    
     in-state  residential   and  commercial  uses   at  the                                                                    
     delivery points  described in the  license at  the same                                                                    
     value as  would be received  by the state if  the state                                                                    
     receives   its  royalty   in  value   under  subsection                                                                    
     43.93.10(c)(1)   with   the   corresponding   distance-                                                                    
     sensitive  transportation  charges;  if the  lessee  or                                                                    
     other   person  exercising   this  election   fails  to                                                                    
     adequately supply the  in-state gas requirements, after                                                                    
     reasonable  notice,  or  if  the  contract  effectively                                                                    
     prevents  the state  from  exercising  its rights  with                                                                    
     other lessees  to switch between taking  its royalty in                                                                    
     value  or in  kind because  of various  unit agreements                                                                    
     among   lessees,   the   election  is   considered   to                                                                    
     terminate,  and the  provisions of  the original  lease                                                                    
     relating to the state's taking  its royalty gas in kind                                                                    
     or in value apply"                                                                                                         
                                                                                                                                
CO-CHAIR GATTO objected.                                                                                                        
                                                                                                                                
REPRESENTATIVE SEATON explained that  Amendment 12 eliminates the                                                               
ability of the  state to take royalty in-kind (RIK),  but only if                                                               
the  person with  the initial  FT in  the open  season agrees  to                                                               
provide in-state gas  to residential and commercial  users at the                                                               
delivery  points described  in the  license at  the royalty  rate                                                               
plus  the  distance-sensitive  transportation rates  required  by                                                               
FERC.  The  aforementioned would eliminate the  problems with the                                                               
RIK  and   royalty  in-value  (RIV)   switching.     However,  he                                                               
highlighted  that this  change would  only occur  so long  as the                                                               
[lessee]  fulfills  its obligation  to  supply  the in-state  gas                                                               
needed  and  the contract  terms  don't  prevent the  state  from                                                               
taking  RIV  and  RIK  from   other  leaseholders  under  a  unit                                                               
agreement.  He mentioned that  such an arrangement would normally                                                               
be required if one member of a unit is taking off gas.                                                                          
                                                                                                                                
9:21:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI pointed out  that the subsection to which                                                               
Conceptual Amendment 12 refers should be 43.93.010(c)(1).                                                                       
                                                                                                                                
COMMISSIONER  GALVIN stated  that  although the  [administration]                                                               
doesn't oppose the concept of  Conceptual Amendment 12, he wasn't                                                               
sure if it's  practical to achieve this concept  given the nature                                                               
of the  RIV and  RIK scenario.   This  amendment tells  a company                                                               
that if  it chooses  the option presented  in the  amendment, the                                                               
state won't ever  switch to RIK.  Furthermore,  the company would                                                               
be  bound, any  time  it receives  a request  to  sell in  state.                                                               
There are practical limitations  whether the requirement has been                                                               
met.   Conceptual Amendment  12 creates  a practical  hurdle that                                                               
may   not  be   overcome  through   careful  language   crafting.                                                               
Moreover, he  questioned whether this  will ever be  requested or                                                               
implemented  because it  includes  exceptions  that "swallow  the                                                               
value of it."                                                                                                                   
                                                                                                                                
9:25:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES   asked  if  the  language   in  Conceptual                                                               
Amendment 12  is an impediment  for an entity  to enter a  bid or                                                               
for the  state to evaluate  a bid that  an entity may  provide in                                                               
the application process.                                                                                                        
                                                                                                                                
COMMISSIONER GALVIN replied no.                                                                                                 
                                                                                                                                
CO-CHAIR GATTO  withdrew his objection.   There being  no further                                                               
objection, Conceptual Amendment 12 was adopted.                                                                                 
                                                                                                                                
9:26:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON  moved  Amendment 13,  labeled  25-GH1060\M.20,                                                               
Bullock, 4/23/07, which read:                                                                                                   
                                                                                                                                
     Page 11, line 4, following "section.":                                                                                     
     Insert   "When   evaluating   each   application,   the                                                                    
     commissioners   shall   give   a   preference   to   an                                                                    
     application  that  meets  all of  the  requirements  in                                                                    
     AS 43.90.130  and may  consider applications  that fail                                                                    
     to  meet  the  requirements in  AS 43.90.130  but  that                                                                    
     address   in-state   needs,  financing,   access,   and                                                                    
     alternatives for expansion of the project."                                                                                
                                                                                                                                
CO-CHAIR GATTO objected.                                                                                                        
                                                                                                                                
CO-CHAIR  JOHNSON  explained  that  Amendment  13  maintains  the                                                               
ability  of the  commissioners to  evaluate the  criteria without                                                               
automatically rejecting  a bidder  who can't meet  all 20  of the                                                               
"must-haves".                                                                                                                   
                                                                                                                                
9:27:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  opined that Amendment 13  "guts a better                                                               
part of AGIA."  He opined  that if the "must-haves" aren't liked,                                                               
then there should be discussion of those.                                                                                       
                                                                                                                                
COMMISSIONER GALVIN said that the  administration agrees with the                                                               
view  expressed  by Representative  Kawasaki  in  that AGIA  will                                                               
either include "must-haves"  or it won't.  He opined  that only a                                                               
handful of the "must-haves" are  perceived as posing a barrier to                                                               
applications.   Again, those perceived as  barriers should either                                                               
be required  or changed to  something more reasonable.   From the                                                               
administration's  view,  none of  the  requirements  that it  has                                                               
heard  objection to  are what  it considered  to be  commercially                                                               
unreasonable.   Additionally, the  expansion and  rolled-in rates                                                               
are something  that the  state has strove  for in  FERC advocacy,                                                               
with regard  to their  regulations, and  fought hard  to achieve.                                                               
The administration,  he related,  feels strongly that  AGIA needs                                                               
to  have  "must-haves".   Otherwise,  it  eliminates the  state's                                                               
negotiating position.                                                                                                           
                                                                                                                                
9:31:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  asked how  the language  on page  12, lines                                                               
24-31  of  CSHB  177(O&G)  is different  than  that  proposed  in                                                               
Amendment 13.                                                                                                                   
                                                                                                                                
COMMISSIONER  GALVIN  said that  the  [state]  wouldn't have  the                                                               
authority to  put out a  "watered down request  for applications"                                                               
if the  first one fails.   In such a situation,  the matter would                                                               
return to  the legislature to  decide whether the  criteria would                                                               
have to be changed.   The provision cited by Representative Roses                                                               
is   primarily  designed   to  address   a  situation   in  which                                                               
applications   that   qualify   are   received,   and   yet   the                                                               
commissioners   decide    not   to   proceed    with   qualifying                                                               
applications.   Amendment  13  proposes that  the  list of  "must                                                               
haves" are  recommendations and all applicants  will be evaluated                                                               
and have a shot at receiving  a license regardless of whether the                                                               
state's requirements are met.   The state should consider what is                                                               
necessary to be considered, he emphasized.                                                                                      
                                                                                                                                
9:33:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  pointed out  that language in  Amendment 13                                                               
specifies that any  applicant that meets all  of the requirements                                                               
will  receive more  consideration  than those  that  don't.   The                                                               
amendment addresses a  situation in which no  applicant meets all                                                               
the  requirements  and  allows [the  commissioners]  to  use  the                                                               
criteria in AGIA  to determine who has the best  project from the                                                               
proposals received,  without having to return  to the legislature                                                               
to  change the  criteria.   He  offered his  belief  that if  the                                                               
[state] had to  return to the state in such  a situation it would                                                               
end up where Amendment 13 proposes.                                                                                             
                                                                                                                                
COMMISSIONER GALVIN interpreted the  language, "give a preference                                                               
to"  [in  Amendment   13]  to  mean  there   are  qualifying  and                                                               
nonqualifying   applications.       He   reiterated   that   [the                                                               
administration] needs  to send  a clear  message that  either the                                                               
applicant meets the  "must-haves" or it won't be  considered.  If                                                               
a company takes the chance  to submit a noncomplying application,                                                               
then  it takes  the risk  that the  state will  receive compliant                                                               
applications with  which it  will go forward.   Either  the state                                                               
says  these are  criteria that  are  to be  met or  they must  be                                                               
reconsidered   now.     Additionally,  merely   stating  that   a                                                               
preference  will be  given to  those applications  that meet  the                                                               
"must-haves" doesn't provide any indication  as to how much of an                                                               
advantage it will mean.                                                                                                         
                                                                                                                                
COMMISSIONER GALVIN  then turned  attention to the  language that                                                               
closes the  amendment:  "may  consider applications that  fail to                                                               
meet the  requirements in AS 43.90.130 but  that address in-state                                                               
needs, financing,  access, and alternatives for  expansion of the                                                               
project."   He  opined that  the aforementioned  language doesn't                                                               
provide any  standard and  would basically open  the door  to any                                                               
application,  regardless  of  whether  the  applicant  meets  the                                                               
state's requirements.   If there is a concern  about a particular                                                               
"must-have" being  unreasonable or  an unreasonable  obstacle for                                                               
an  otherwise acceptable  offer, he  encouraged the  committee to                                                               
have  a  discussion  about  that.    However,  by  changing  this                                                               
language the  "must-haves" become "hopefuls" and  all comers will                                                               
be evaluated based on whatever they provide.                                                                                    
                                                                                                                                
9:38:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  asked  if   Commissioner  Galvin  holds  a                                                               
reasonable  expectation that  if  the language  regarding the  20                                                               
"must-haves" isn't changed,  there would be an  entity that meets                                                               
the  criteria and  becomes an  applicant.   He  further asked  if                                                               
Commissioner  Galvin believes  that changing  the criteria  would                                                               
result  in an  applicant coming  forward fulfilling  less of  the                                                               
criteria merely because the applicant could do so.                                                                              
                                                                                                                                
COMMISSIONER GALVIN replied yes to both.                                                                                        
                                                                                                                                
REPRESENTATIVE ROSES asked, "If you  feel strongly that you think                                                               
somebody is  going to come  in with the  20, why would  any other                                                               
bidder that also might think somebody's  going to come in with 20                                                               
not include the 20?"                                                                                                            
                                                                                                                                
COMMISSIONER GALVIN clarified that if  the language remains as it                                                               
is,  he wouldn't  expect  an applicant  to fail  to  meet the  20                                                               
"must-haves"  simply to  make a  statement.   If the  language is                                                               
changed  per   Amendment  13,  then   an  applicant   would  have                                                               
significantly less  risk of meeting  the 20 "must-haves"  so long                                                               
as they  could make their  case that  one of the  criteria really                                                               
wasn't a  "must-have."  Commissioner Galvin  reiterated, "We feel                                                               
strongly our  'must-have' list  is something  that the  state has                                                               
every right  to ask for  and also is commercially  reasonable and                                                               
shouldn't   preclude    anybody   who   would    participate   to                                                               
participate."                                                                                                                   
                                                                                                                                
9:40:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  said not having  worked for a  company that                                                               
has built  a pipeline or  a gas or oil  company, he is  unable to                                                               
specify  which  criteria are  "must-haves."    Furthermore, in  a                                                               
situation  in which  no applicant  comes  in with  the 20  "must-                                                               
haves" [Amendment 13] provides some  flexibility for the state by                                                               
allowing  the commissioners  the  ability to  choose between  the                                                               
applicants without rejecting them all.                                                                                          
                                                                                                                                
COMMISSIONER GALVIN  added that  the state  will know  by October                                                               
whether there  were any  applications at which  time the  list of                                                               
"must-haves"  can   be  assessed   to  identify  if   there's  an                                                               
unreasonable barrier  to applicants.   Commissioner  Galvin again                                                               
stated, "We're  fairly confident that  if we have  companies that                                                               
legitimately  want to  build  a pipeline  that's  an open  access                                                               
pipeline,  which is  what  the state  wants to  get  out of  this                                                               
process,   that  they   should  be   able  to   meet  all   those                                                               
requirements.  ... The question  becomes whether AGIA is going to                                                               
work  or  not."    He further  related  that  the  administration                                                               
believes there  are an appropriate  balance of inducements  and a                                                               
reasonably  commercial set  of "must-haves"  that won't  preclude                                                               
entry.   Therefore,  the administration  would like  to have  the                                                               
opportunity to give the aforementioned  a chance because doing so                                                               
provides the  best opportunity to  get the highest value  for the                                                               
state.                                                                                                                          
                                                                                                                                
9:43:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON expressed  concern  with  Amendment 13  in                                                               
that  it makes  the bid  terms merely  a preference,  although it                                                               
doesn't specify  how much  of a  preference will  be given  to an                                                               
applicant that  fulfills the  bid terms.   The problem  with this                                                               
amendment would really arise  during legislative approval because                                                               
the  legislature, he  opined, would  have  to review  all of  the                                                               
proposals and determine the evaluation  for those that don't meet                                                               
the  "must-haves."    The  "must  haves,"  he  pointed  out,  are                                                               
centered   around   the   maximization  of   exploration.      He                                                               
acknowledged that the problematic  "must-haves" are the rolled-in                                                               
rates,  the 70:30,  the  three-year open  season,  and having  to                                                               
proceed with  certificate.  Representative  Seaton said  that the                                                               
crux of  AGIA seems to be  whether there will be  inducements and                                                               
bid terms or whether the state will entertain all applications.                                                                 
                                                                                                                                
The committee took an at-ease from 9:46:21 PM to 9:50:17 PM.                                                                
                                                                                                                                
9:50:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON related  his  understanding  that an  applicant                                                               
with all 20 "must-haves" remains  the winner even under Amendment                                                               
13.  He interpreted Amendment  13 as giving the commissioners the                                                               
ability  to make  a decision  and providing  the legislature  the                                                               
ability to review  the contracts.  Amendment 13,  he opined, will                                                               
result in [more applicants] for  evaluation.  He stated that it's                                                               
his  responsibility  to  his  constituents  to  ensure  that  all                                                               
proposals are reviewed and evaluated,  which this amendment does.                                                               
The amendment  doesn't preclude the commissioners  from rejecting                                                               
applicants, but merely  allows the review of  proposals "that may                                                               
not dot  an 'i'  or cross a  't'."  He  opined that  Amendment 13                                                               
will make it harder on the administration and the legislature.                                                                  
                                                                                                                                
9:52:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO pointed out that  Amendment 13 specifies that "the                                                               
commissioners  shall give  a preference  to  an application  that                                                               
meets all the  requirements".  If that's the  case, the remainder                                                               
of the language  proposed in the amendment isn't  necessary.  The                                                               
only reason to have the remainder  of the language, he opined, is                                                               
to defeat the earlier language.   He interpreted the amendment to                                                               
mean that  preference may be  given, but it isn't  a requirement.                                                               
He  emphasized that  Amendment 13  is  deeply concerning  because                                                               
it's a significant change.                                                                                                      
                                                                                                                                
9:53:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON   said  he  would  consider   an  amendment  to                                                               
Amendment  13  that  would  refer  to  "considerable  preference"                                                               
rather than just "preference".                                                                                                  
                                                                                                                                
CO-CHAIR GATTO asked  if there was objection to  the amendment to                                                               
Amendment 13  [as specified  above].   There being  no objection,                                                               
the amendment to Amendment 13 was adopted.                                                                                      
                                                                                                                                
9:53:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO [maintained  his  objection  and] announced  that                                                               
before the committee is Amendment 13, as amended.                                                                               
A roll  call vote was  taken.  Representatives Roses  and Johnson                                                               
voted  in favor  of Amendment  13, as  amended.   Representatives                                                               
Seaton,  Guttenberg, Edgmon,  Kawasaki, Wilson,  and Gatto  voted                                                               
against it.   Therefore, Amendment  13, as amended, failed  to be                                                               
adopted by a vote of 2-6.                                                                                                       
                                                                                                                                
9:54:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES moved that  the committee adopt Amendment 8,                                                               
which read [original punctuation provided]:                                                                                     
                                                                                                                                
     Pg. 9, Line 14                                                                                                             
                                                                                                                                
          Delete "shall"                                                                                                      
          Insert "may"                                                                                                        
                                                                                                                                
CO-CHAIR GATTO and REPRESENTATIVE KAWASAKI objected.                                                                            
                                                                                                                                
REPRESENTATIVE ROSES  explained that  changing the  language from                                                               
"shall"   to  "may"   allows   the   commissioners  to   consider                                                               
applications that don't  meet all 20 "must-haves"  rather than go                                                               
through a reapplication process.                                                                                                
                                                                                                                                
9:55:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  pointed out that passage  of Amendment 8                                                               
would eliminate the "must-haves."                                                                                               
                                                                                                                                
REPRESENTATIVE ROSES  suggested that when  the state gets  to the                                                               
point of desperation to pass  this legislation in order to obtain                                                               
a gasline, the criteria may be adjusted very quickly.                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON characterized  the amendment  as resulting                                                               
in a  subjective in  or out  selection process.   He  opined that                                                               
Amendment 8 takes this down the wrong path.                                                                                     
                                                                                                                                
9:59:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO suggested  that there  are many  "must-haves" [of                                                               
which]  20 are  essential criteria  that  must be  met while  the                                                               
remainder will be considered.                                                                                                   
                                                                                                                                
COMMISSIONER GALVIN suggested  that the state isn't  at the point                                                               
of desperation  and the state  should maintain a  strong position                                                               
that  these  are  "must-haves."   The  aforementioned  should  be                                                               
maintained until  the state  is shown  that it's  an unreasonable                                                               
position to hold.  He opined  that it's not inappropriate for the                                                               
state to  take nine  months to determine  whether to  become more                                                               
accommodating.  Although he recognized  that this amendment would                                                               
provide the commissioners more authority,  he emphasized the need                                                               
for  the state  to  speak clearly  through  this legislation  and                                                               
through the  authority granted to  the administration  that these                                                               
are the "must-haves"  to be considered for  the inducements being                                                               
offered.                                                                                                                        
                                                                                                                                
10:01:42 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  WILSON characterized  the ["must-have"]  language                                                               
as stipulating  who is driving  the train.   She opined  that the                                                               
state should be in charge unlike in the previous administration.                                                                
                                                                                                                                
CO-CHAIR GATTO stated his opposition to Amendment 8.                                                                            
                                                                                                                                
10:02:49 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE ROSES said that if  the objective is to obtain the                                                               
maximum number of  applicants to move forward with  a project for                                                               
consideration, Amendment  8 would  be helpful.   However,  if the                                                               
objective  is to  "squeeze the  producers so  that if  they don't                                                               
come forward if somebody comes  forward with a proposal, that you                                                               
can then  threaten to take  away their leases" or  impose tariffs                                                               
or taxes, then  the "must-haves" will achieve that.   He stressed                                                               
that   he  wasn't   sure  that   prescriptive  criteria   without                                                               
flexibility results  in receiving an  application.  If  the state                                                               
is  confident  there will  be  applicants  with the  prescriptive                                                               
requirements,  then  it  should   maintain  confidence  with  the                                                               
suggested change  in Amendment 8.   If the state  isn't confident                                                               
and  is  trying  to  leverage  an entity  to  force  them  to  do                                                               
something they haven't in the  past, leaving "shall" will achieve                                                               
that.                                                                                                                           
                                                                                                                                
A roll  call vote was  taken.  Representatives Roses  and Johnson                                                               
voted  in  favor of  Amendment  8.   Representatives  Guttenberg,                                                               
Edgmon,  Kawasaki, Wilson,  Seaton, and  Gatto voted  against it.                                                               
Therefore, Amendment 8 failed to be adopted by a vote of 2-6.                                                                   
                                                                                                                                
10:05:45 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  JOHNSON moved  that the  committee adopt  Amendment 14,                                                               
labeled 25-GH1060\M.21, Cook, 4/23/07, which read:                                                                              
                                                                                                                                
     Page 10, line 2, following "applicant.":                                                                                   
          Insert "However, the commissioner shall first                                                                         
     make  the  information  available  to  the  legislature                                                                    
     under AS 43.90.170(d)."                                                                                                    
                                                                                                                                
     Page 12, following line 6:                                                                                                 
          Insert "(d) After the evaluation of each                                                                              
     application  under   this  section,   a  copy   of  the                                                                    
     application, evaluation, and  all information submitted                                                                    
     by  the  applicant, including  proprietary  information                                                                    
     and trade secrets, shall be  submitted to each house of                                                                    
     the legislature  for its review. The  legislature shall                                                                    
     maintain  the confidentiality  of information  that the                                                                    
     applicant  claims  is  proprietary or  a  trade  secret                                                                    
     under AS 43.90.150."                                                                                                       
                                                                                                                                
     Reletter the following subsection accordingly.                                                                             
                                                                                                                                
CO-CHAIR GATTO objected.                                                                                                        
                                                                                                                                
CO-CHAIR  JOHNSON   explained  that   Amendment  14   allows  the                                                               
legislature to review the winning and  the losing bid, so long as                                                               
each individual legislator signs a confidentiality agreement.                                                                   
                                                                                                                                
CO-CHAIR GATTO maintained his objection.                                                                                        
                                                                                                                                
10:06:41 PM                                                                                                                   
                                                                                                                                
COMMISSIONER   GALVIN    reminded   the   committee    that   the                                                               
administration has  previously stated that  rejected applications                                                               
would be available  to the public, recognizing that  there may be                                                               
confidential information that must be  addressed.  He stated that                                                               
the administration  has no objection  to providing a  vehicle for                                                               
the   legislature  to   review   that  confidential   information                                                               
consistent   with  other   confidential   information  from   the                                                               
qualifying applications.   Therefore, the  administration doesn't                                                               
object to Amendment 14, he said.                                                                                                
                                                                                                                                
A  roll call  vote  was taken.    Representatives Seaton,  Roses,                                                               
Johnson,   and   Wilson  voted   in   favor   of  Amendment   14.                                                               
Representatives  Guttenberg, Edgmon,  Kawasaki,  and Gatto  voted                                                               
against it.   Therefore, Amendment 14  failed to be adopted  by a                                                               
vote of 4-4.                                                                                                                    
                                                                                                                                
The committee took an at-ease from 10:09 p.m. to 10:10 p.m.                                                                     
                                                                                                                                
10:10:45 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  GATTO  moved that  the  committee  adopt Amendment  15,                                                               
labeled 25-GH1060\M.12, Bullock, 4/21/07, which read:                                                                           
                                                                                                                                
     Page 5, following line 11:                                                                                                 
     Insert a new subparagraph to read:                                                                                         
               "(E)  if the project proposed by the                                                                             
     applicant requires  the discovery of additional  gas, a                                                                    
     timeline for  the discovery and development  of new gas                                                                    
     reserves and  a cost  estimate for the  exploration and                                                                    
     development;"                                                                                                              
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
10:10:57 PM                                                                                                                   
                                                                                                                                
MR.  RICE stated  that Amendments  15, 16,  and 17,  were drafted                                                               
based  on  information provided  to  the  committee by  the  Port                                                               
Authority regarding  specific concerns  it had with  the process.                                                               
The  amendments  were drafted  for  the  purposes of  discussion.                                                               
However,  after some  discussion,  Co-Chair  Gatto was  concerned                                                               
that  Amendment 15  seems to  be predicated  on the  concept that                                                               
this will be  an integrated shipper upstream and  midstream.  The                                                               
concept  of  a  midstream  project applicant  being  required  to                                                               
produce  a  timeline  for discovery  of  gas  isn't  particularly                                                               
appropriate.  The  purpose of the amendment, he  clarified, is to                                                               
allow the  committee to  make the  policy decision  about whether                                                               
the aforementioned is appropriate or not.                                                                                       
                                                                                                                                
CO-CHAIR  GATTO  directed  attention  to a  memorandum  from  the                                                               
drafter, Don  Bullock.  The  third paragraph refers  to Amendment                                                               
15, labeled M.12, as follows:   "requires the applicant proposing                                                               
the project to  speculate about availability of gas  on the North                                                               
Slope.  Most of the  existing language ... requires the applicant                                                               
to submit information for which  the potential pipeline developer                                                               
will  have first-hand  knowledge.   The  amendment M.12  requires                                                               
speculation about what and when some  third party may act and how                                                               
much that third party might spend."                                                                                             
                                                                                                                                
10:13:50 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   ROSES  questioned   whether  the   amendment  is                                                               
necessary.   He  highlighted  that a  project  would be  adjusted                                                               
based on  the open season  for discovery, and  therefore somebody                                                               
will have to "pay or play."                                                                                                     
                                                                                                                                
CO-CHAIR  GATTO  pointed  out  that   the  project  asks  for  an                                                               
applicant to discover additional gas.   To specify a timeline for                                                               
discovery appears  to place  a hurdle  that no  one can  meet, he                                                               
opined.                                                                                                                         
                                                                                                                                
10:14:53 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  recalled  that  even  last  year  the                                                               
legislature  was told  that  there wasn't  enough  gas, but  that                                                               
there would be and there would  be a timeline for discovery and a                                                               
timeline for development.   He opined that if  there isn't enough                                                               
of gas, then  [the applicant] should specify how it  will get it,                                                               
explore  for  it,  and  a  timeline.    He  further  opined  that                                                               
requiring a timeline for the  development of additional gas could                                                               
be helpful.  He recalled that  one of the difficulties [under the                                                               
previous  administration's  proposal]  was  that  there  were  no                                                               
timelines.   In conclusion,  Representative Guttenberg  said that                                                               
Amendment 15 makes sense.                                                                                                       
                                                                                                                                
10:17:18 PM                                                                                                                   
                                                                                                                                
CO-CHAIR JOHNSON  inquired as to  how TransCanada  or MidAmerican                                                               
could reasonably be  expected to do what's  proposed in Amendment                                                               
15.  Co-Chair Johnson characterized it as speculation.                                                                          
                                                                                                                                
REPRESENTATIVE SEATON noted his  agreement with Co-Chair Johnson.                                                               
He  then  highlighted   that  AGIA  is  a  pipeline   not  a  gas                                                               
development  act,  and therefore  he  suggested  focusing on  the                                                               
pipeline.    To  require  this  timeline  would  almost  preclude                                                               
applications  from  an entity  that  didn't  have the  geological                                                               
knowledge of those reserves, he opined.                                                                                         
                                                                                                                                
10:18:22 PM                                                                                                                   
                                                                                                                                
COMMISSIONER   GALVIN,  in   discussion  with   various  parties,                                                               
surmised that Amendment  15 would create an  additional hurdle on                                                               
a larger capacity project that  a lower capacity project wouldn't                                                               
have to  meet.  However,  given the previous testimony  perhaps a                                                               
low  capacity project  will  likely have  to  go through  "these"                                                               
since there's no certainty with  any particular off-take.  Still,                                                               
Amendment 15  doesn't fit  the AGIA  model in  regard to  type of                                                               
information that will be available  to all of the applicants that                                                               
it's trying to attract.                                                                                                         
                                                                                                                                
A  roll  call  vote  was taken.    Representatives  Kawasaki  and                                                               
Guttenberg  voted  in favor  of  Amendment  15.   Representatives                                                               
Edgmon, Wilson,  Seaton, Roses, Johnson, and  Gatto voted against                                                               
it.   Therefore, Amendment 15 failed  to be adopted by  a vote of                                                               
2-6.                                                                                                                            
                                                                                                                                
10:20:40 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  GATTO  moved that  the  committee  adopt Amendment  16,                                                               
labeled 25-GH1060\M.13, Bullock, 4/21/07, which read:                                                                           
                                                                                                                                
     Page 5, following line 11:                                                                                                 
     Insert a new subparagraph to read:                                                                                         
               "(E)  an analysis of how the proposed                                                                            
     project may affect  the production of oil  on the North                                                                    
     Slope, including  the effect on the  rate of production                                                                    
     and the affect  on the total volume of oil  that may be                                                                    
     produced;"                                                                                                                 
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
10:20:44 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GUTTENBERG related his  belief that [Amendment 16]                                                               
encompasses something that AOGCC would  be asked to do.  However,                                                               
he  surmised that  the  applicants  are being  asked  to do  [the                                                               
analysis as specified  in Amendment 16].  He  questioned how this                                                               
could be received from the applicants.                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON maintained his objection.                                                                                      
                                                                                                                                
A roll  call vote  was taken.   Representative Kawasaki  voted in                                                               
favor of  Amendment 16.   Representatives Wilson,  Seaton, Roses,                                                               
Guttenberg,  Edgmon,   Gatto,  and  Johnson  voted   against  it.                                                               
Therefore, Amendment 16 failed to be adopted by a vote of 1-7.                                                                  
                                                                                                                                
10:22:43 PM                                                                                                                   
                                                                                                                                
CO-CHAIR  GATTO  moved that  the  committee  adopt Amendment  17,                                                               
labeled 25-GH1060\M.14, Bullock, 4/21/07, which read:                                                                           
                                                                                                                                
     Page 8, following line 30:                                                                                                 
     Insert a new paragraph to read:                                                                                            
               "(19)  state whether the project will make                                                                       
       gas liquids available in the state for value-added                                                                       
     processing;"                                                                                                               
                                                                                                                                
     Renumber the following paragraphs accordingly.                                                                             
                                                                                                                                
CO-CHAIR JOHNSON objected.                                                                                                      
                                                                                                                                
REPRESENTATIVE   GUTTENBERG   related  his   understanding   that                                                               
Amendment 17  adds another criteria, but  doesn't specify whether                                                               
gas liquids will be made available in the state.                                                                                
                                                                                                                                
10:23:18 PM                                                                                                                   
                                                                                                                                
COMMISSIONER GALVIN clarified that  Amendment 17 is a "must-have"                                                               
in terms  of information.   He then reiterated that  the question                                                               
of whether the  gas will be made available is  a question for the                                                               
owner of the gas and the  liquids not the pipeline.  The pipeline                                                               
only provides a service for  shipping the product.  Therefore, it                                                               
isn't  appropriate  to ask  the  pipeline  whether it  will  sell                                                               
liquids since it doesn't have the authority to do so.                                                                           
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  suggested  that  the  origin  of  the                                                               
amendment  may  have  been  from  the  thought  that  the  entire                                                               
upstream  and  midstream  are  from  the  same  entity.    Again,                                                               
Representative Guttenberg  pointed out that there  is no criteria                                                               
for saying yes or no, the information merely has to be provided.                                                                
                                                                                                                                
COMMISSIONER GALVIN commented that it's  more a matter of whether                                                               
the applicant would have the information to provide.                                                                            
                                                                                                                                
A  roll  call  vote  was taken.  Representatives  Wilson,  Roses,                                                               
Seaton, Edgmon,  Kawasaki, Guttenberg,  Johnson, and  Gatto voted                                                               
against  Amendment 17.    Therefore, Amendment  17  failed to  be                                                               
adopted by a vote of 0-8.                                                                                                       
                                                                                                                                
10:25:51 PM                                                                                                                   
                                                                                                                                
A  discussion  ensued  during   which  the  committee  ultimately                                                               
decided that  it would address  the CS incorporating  the changes                                                               
tomorrow.                                                                                                                       
                                                                                                                                
[HB 177 was held over.]                                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing  Committee meeting  was adjourned  at 10:29:34                                                             
PM.                                                                                                                           

Document Name Date/Time Subjects