Legislature(2013 - 2014)BARNES 124

04/04/2014 01:00 PM RESOURCES


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01:12:39 PM Start
01:12:54 PM SB138
03:05:24 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
- Recessed at 3:05 p.m. to 10:00 a.m. on 4/5/14 -
+= SB 138 GAS PIPELINE; AGDC; OIL & GAS PROD. TAX TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Presentation: "Gas Pipeline Issues" TELECONFERENCED
<Above Item Removed from Agenda>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 4, 2014                                                                                          
                           1:12 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Dan Saddler, Co-Chair                                                                                            
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Mike Hawker                                                                                                      
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
Representative Scott Kawasaki                                                                                                   
Representative Geran Tarr                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 138(FIN) AM                                                                            
"An  Act relating  to the  purposes,  powers, and  duties of  the                                                               
Alaska Gasline  Development Corporation; relating to  an in-state                                                               
natural gas  pipeline, an Alaska  liquefied natural  gas project,                                                               
and  associated   funds;  requiring  state  agencies   and  other                                                               
entities to expedite  reviews and actions related  to natural gas                                                               
pipelines and  projects; relating  to the authorities  and duties                                                               
of  the commissioner  of natural  resources relating  to a  North                                                               
Slope natural gas  project, oil and gas and gas  only leases, and                                                               
royalty gas  and other  gas received by  the state  including gas                                                               
received as  payment for the  production tax on gas;  relating to                                                               
the tax on oil and gas  production, on oil production, and on gas                                                               
production;  relating  to  the  duties  of  the  commissioner  of                                                               
revenue relating  to a  North Slope natural  gas project  and gas                                                               
received   as  payment   for   tax;   relating  to   confidential                                                               
information and  public record status of  information provided to                                                               
or in the custody of the  Department of Natural Resources and the                                                               
Department of  Revenue; relating to apportionment  factors of the                                                               
Alaska  Net Income  Tax  Act; amending  the  definition of  gross                                                               
value at  the 'point of production'  for gas for purposes  of the                                                               
oil  and  gas production  tax;  clarifying  that the  exploration                                                               
incentive credit, the  oil or gas producer  education credit, and                                                               
the film production  tax credit may not be taken  against the gas                                                               
production tax paid  in gas; relating to the oil  or gas producer                                                               
education  credit;  requesting  the   governor  to  establish  an                                                               
interim  advisory  board  to advise  the  governor  on  municipal                                                               
involvement in  a North  Slope natural  gas project;  relating to                                                               
the  development of  a plan  by the  Alaska Energy  Authority for                                                               
developing infrastructure  to deliver affordable energy  to areas                                                               
of the  state that will not  have direct access to  a North Slope                                                               
natural gas  pipeline and  a recommendation  of a  funding source                                                               
for  energy infrastructure  development; establishing  the Alaska                                                               
affordable energy fund; requiring  the commissioner of revenue to                                                               
develop  a  plan  and  suggest  legislation  for  municipalities,                                                               
regional  corporations, and  residents  of the  state to  acquire                                                               
ownership  interests  in  a  North  Slope  natural  gas  pipeline                                                               
project;  making  conforming  amendments; and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 138                                                                                                                  
SHORT TITLE: GAS PIPELINE; AGDC; OIL & GAS PROD. TAX                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/14       (S)       RES, FIN                                                                                               
02/07/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/07/14       (S)       Heard & Held                                                                                           
02/07/14       (S)       MINUTE(RES)                                                                                            
02/10/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/10/14       (S)       Heard & Held                                                                                           
02/10/14       (S)       MINUTE(RES)                                                                                            
02/12/14       (S)       RES WAIVED PUBLIC HEARING NOTICE, RULE                                                                 
                         23                                                                                                     
02/12/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/12/14       (S)       Heard & Held                                                                                           
02/12/14       (S)       MINUTE(RES)                                                                                            
02/13/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/13/14       (S)       Heard & Held                                                                                           
02/13/14       (S)       MINUTE(RES)                                                                                            
02/14/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/14/14       (S)       Heard & Held                                                                                           
02/14/14       (S)       MINUTE(RES)                                                                                            
02/19/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/19/14       (S)       Heard & Held                                                                                           
02/19/14       (S)       MINUTE(RES)                                                                                            
02/20/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/20/14       (S)       Heard & Held                                                                                           
02/20/14       (S)       MINUTE(RES)                                                                                            
02/21/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/21/14       (S)       Heard & Held                                                                                           
02/21/14       (S)       MINUTE(RES)                                                                                            
02/21/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/21/14       (S)       Heard & Held                                                                                           
02/21/14       (S)       MINUTE(RES)                                                                                            
02/24/14       (S)       RES RPT CS  2DP 4NR 1AM   NEW TITLE                                                                    
02/24/14       (S)       DP: GIESSEL, MCGUIRE                                                                                   
02/24/14       (S)       NR:     FRENCH,    MICCICHE,     BISHOP,                                                               
                         FAIRCLOUGH                                                                                             
02/24/14       (S)       AM: DYSON                                                                                              
02/24/14       (S)       RES AT 8:00 AM BUTROVICH 205                                                                           
02/24/14       (S)       -- MEETING CANCELED --                                                                                 
02/24/14       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/24/14       (S)       Moved CSSB 138(RES) Out of Committee                                                                   
02/24/14       (S)       MINUTE(RES)                                                                                            
02/25/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/25/14       (S)       Heard & Held                                                                                           
02/25/14       (S)       MINUTE(FIN)                                                                                            
02/25/14       (S)       FIN AT 5:00 PM SENATE FINANCE 532                                                                      
02/25/14       (S)       Heard & Held                                                                                           
02/25/14       (S)       MINUTE(FIN)                                                                                            
02/26/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/26/14       (S)       Heard & Held                                                                                           
02/26/14       (S)       MINUTE(FIN)                                                                                            
02/27/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/27/14       (S)       Heard & Held                                                                                           
02/27/14       (S)       MINUTE(FIN)                                                                                            
02/28/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/28/14       (S)       Heard & Held                                                                                           
02/28/14       (S)       MINUTE(FIN)                                                                                            
03/03/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/03/14       (S)       Heard & Held                                                                                           
03/03/14       (S)       MINUTE(FIN)                                                                                            
03/04/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/04/14       (S)       Heard & Held                                                                                           
03/04/14       (S)       MINUTE(FIN)                                                                                            
03/05/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/05/14       (S)       Heard & Held                                                                                           
03/05/14       (S)       MINUTE(FIN)                                                                                            
03/05/14       (S)       FIN AT 5:00 PM SENATE FINANCE 532                                                                      
03/05/14       (S)       Scheduled But Not Heard                                                                                
03/06/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/06/14       (S)       Heard & Held                                                                                           
03/06/14       (S)       MINUTE(FIN)                                                                                            
03/07/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/07/14       (S)       -- MEETING CANCELED --                                                                                 
03/10/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/10/14       (S)       Heard & Held                                                                                           
03/10/14       (S)       MINUTE(FIN)                                                                                            
03/10/14       (S)       FIN AT 5:00 PM SENATE FINANCE 532                                                                      
03/10/14       (S)       Heard & Held                                                                                           
03/10/14       (S)       MINUTE(FIN)                                                                                            
03/11/14       (S)       FIN AT 5:00 PM SENATE FINANCE 532                                                                      
03/11/14       (S)       Heard & Held                                                                                           
03/11/14       (S)       MINUTE(FIN)                                                                                            
03/12/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/12/14       (H)       -- MEETING CANCELED --                                                                                 
03/14/14       (S)       FIN RPT CS  6DP 1AM  NEW TITLE                                                                         
03/14/14       (S)       LETTER OF INTENT WITH FINANCE REPORT                                                                   
03/14/14       (S)       DP: KELLY, MEYER, DUNLEAVY, FAIRCLOUGH,                                                                
                        BISHOP, HOFFMAN                                                                                         
03/14/14       (S)       AM: OLSON                                                                                              
03/14/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/14/14       (S)       Moved CSSB 138(FIN) Out of Committee                                                                   
03/14/14       (S)       MINUTE(FIN)                                                                                            
03/14/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/14/14       (H)       <Pending Referral>                                                                                     
03/17/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/17/14       (H)       <Pending Referral>                                                                                     
03/18/14       (S)       TRANSMITTED TO (H)                                                                                     
03/18/14       (S)       VERSION: CSSB 138(FIN) AM                                                                              
03/19/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/19/14       (H)       RES, L&C, FIN                                                                                          
03/19/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/19/14       (H)       Heard & Held                                                                                           
03/19/14       (H)       MINUTE(RES)                                                                                            
03/21/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/21/14       (H)       Heard & Held                                                                                           
03/21/14       (H)       MINUTE(RES)                                                                                            
03/24/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/24/14       (H)       Heard & Held                                                                                           
03/24/14       (H)       MINUTE(RES)                                                                                            
03/25/14       (H)       RES AT 4:30 PM BARNES 124                                                                              
03/25/14       (H)       Heard & Held                                                                                           
03/25/14       (H)       MINUTE(RES)                                                                                            
03/26/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/26/14       (H)       Heard & Held                                                                                           
03/26/14       (H)       MINUTE(RES)                                                                                            
03/27/14       (H)       RES AT 4:30 PM BARNES 124                                                                              
03/27/14       (H)       Heard & Held                                                                                           
03/27/14       (H)       MINUTE(RES)                                                                                            
03/28/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/28/14       (H)       Heard & Held                                                                                           
03/28/14       (H)       MINUTE(RES)                                                                                            
03/31/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/31/14       (H)       Heard & Held                                                                                           
03/31/14       (H)       MINUTE(RES)                                                                                            
04/01/14       (H)       RES AT 4:30 PM BARNES 124                                                                              
04/01/14       (H)       Heard & Held                                                                                           
04/01/14       (H)       MINUTE(RES)                                                                                            
04/02/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/02/14       (H)       Heard & Held                                                                                           
04/02/14       (H)       MINUTE(RES)                                                                                            
04/03/14       (H)       RES AT 4:30 PM BARNES 124                                                                              
04/03/14       (H)       Heard & Held                                                                                           
04/03/14       (H)       MINUTE(RES)                                                                                            
04/04/14       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MICHAEL PAWLOWSKI, Deputy Commissioner                                                                                          
Office of the Commissioner                                                                                                      
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided the administration's position on                                                                
proposed amendments to CSSB 138(FIN) am.                                                                                        
                                                                                                                                
CHRISTOPHER POAG, Assistant Attorney General                                                                                    
Labor and State Affairs Section                                                                                                 
Civil Division (Juneau)                                                                                                         
Department of Law (DOL)                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  In regard to CSSB 138(FIN) am, answered                                                                  
questions related to amendments.                                                                                                
                                                                                                                                
JOE BALASH, Commissioner                                                                                                        
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided the administration's position on                                                                
proposed amendments to CSSB 138(FIN) am.                                                                                        
                                                                                                                                
SUSAN POLLARD, Assistant Attorney General                                                                                       
Oil, Gas & Mining Section                                                                                                       
Civil Division (Juneau)                                                                                                         
Department of Law (DOL)                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions related to amendments to                                                              
CSSB 138(FIN) am.                                                                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:12:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ERIC   FEIGE  called   the  House   Resources  Standing                                                             
Committee meeting to order at  1:12 p.m.  Representatives Hawker,                                                               
P.  Wilson, Tarr,  Kawasaki, Olson,  Seaton,  Saddler, and  Feige                                                               
were present at the call to order.                                                                                              
                                                                                                                                
         SB 138-GAS PIPELINE; AGDC; OIL & GAS PROD. TAX                                                                     
                                                                                                                                
1:12:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  announced that the  only order of  business would                                                               
be CS  FOR SENATE BILL NO.  138(FIN) am, "An Act  relating to the                                                               
purposes, powers,  and duties of  the Alaska  Gasline Development                                                               
Corporation;  relating to  an in-state  natural gas  pipeline, an                                                               
Alaska  liquefied  natural  gas project,  and  associated  funds;                                                               
requiring state  agencies and other entities  to expedite reviews                                                               
and  actions  related  to natural  gas  pipelines  and  projects;                                                               
relating to  the authorities  and duties  of the  commissioner of                                                               
natural resources relating to a  North Slope natural gas project,                                                               
oil and  gas and gas only  leases, and royalty gas  and other gas                                                               
received by the  state including gas received as  payment for the                                                               
production  tax on  gas;  relating  to the  tax  on  oil and  gas                                                               
production, on  oil production, and  on gas  production; relating                                                               
to the duties of the commissioner  of revenue relating to a North                                                               
Slope natural  gas project and  gas received as payment  for tax;                                                               
relating to confidential information  and public record status of                                                               
information provided  to or in  the custody of the  Department of                                                               
Natural  Resources and  the Department  of  Revenue; relating  to                                                               
apportionment factors of the Alaska  Net Income Tax Act; amending                                                               
the definition  of gross value  at the 'point of  production' for                                                               
gas for  purposes of the  oil and gas production  tax; clarifying                                                               
that the  exploration incentive credit,  the oil or  gas producer                                                               
education credit, and  the film production tax credit  may not be                                                               
taken against  the gas  production tax paid  in gas;  relating to                                                               
the  oil  or  gas  producer   education  credit;  requesting  the                                                               
governor to  establish an  interim advisory  board to  advise the                                                               
governor on  municipal involvement in  a North Slope  natural gas                                                               
project;  relating to  the development  of a  plan by  the Alaska                                                               
Energy  Authority   for  developing  infrastructure   to  deliver                                                               
affordable  energy to  areas  of  the state  that  will not  have                                                               
direct  access  to a  North  Slope  natural  gas pipeline  and  a                                                               
recommendation  of a  funding  source  for energy  infrastructure                                                               
development;  establishing  the  Alaska affordable  energy  fund;                                                               
requiring  the commissioner  of  revenue to  develop  a plan  and                                                               
suggest  legislation for  municipalities, regional  corporations,                                                               
and residents  of the state  to acquire ownership interests  in a                                                               
North  Slope  natural  gas pipeline  project;  making  conforming                                                               
amendments; and providing for an effective date."                                                                               
                                                                                                                                
CO-CHAIR FEIGE stated today would  be the beginning of amendments                                                               
to CSSB 138(FIN) am.  He  offered appreciation to Mr. Bullock and                                                               
Ms. Nauman of  Legislative Legal and Research  Services for their                                                               
work drafting the many amendments.                                                                                              
                                                                                                                                
1:15:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE   moved  to  adopt   Amendment  1,   labeled  28-                                                               
GS2806\I.A.29, Nauman/Bullock, 4/2/14, which read:                                                                              
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "purposes, powers, and duties of the"                                                                        
                                                                                                                                
     Page 4, following line 11:                                                                                                 
          Insert a new bill section to read:                                                                                    
        "* Sec. 3. AS 31.25.020(a) is amended to read:                                                                      
          (a)  The corporation shall be governed by a board                                                                     
     of directors consisting of                                                                                                 
               (1)  five public members; and                                                                                    
               (2)  two individuals designated by the                                                                           
     governor  that  are  each  the   head  of  a  principal                                                                    
     department of  the state, except that  the commissioner                                                                    
     of natural  resources and  the commissioner  of revenue                                                                    
     may not  be designated  to serve  on the  board [UNLESS                                                                    
     THE  PROJECT  FOR  WHICH  A  LICENSE  IS  ISSUED  UNDER                                                                    
     AS 43.90 HAS  BEEN ABANDONED OR IS  NO LONGER RECEIVING                                                                    
     THE INDUCEMENTS IN  AS 43.90.110(a) OR THE COMMISSIONER                                                                    
     OF NATURAL  RESOURCES AND  THE COMMISSIONER  OF REVENUE                                                                    
     ARE  NO LONGER  SIGNATORIES ON  A VALID  CONTRACT UNDER                                                                    
     AS 43.90]."                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 14, line 3:                                                                                                           
          Delete "sec. 14"                                                                                                      
          Insert "sec. 15"                                                                                                      
                                                                                                                                
     Page 17, line 24:                                                                                                          
          Delete "sec. 17"                                                                                                      
          Insert "sec. 18"                                                                                                      
                                                                                                                                
     Page 21, line 16:                                                                                                          
          Delete "sec. 27"                                                                                                      
          Insert "sec. 28"                                                                                                      
                                                                                                                                
     Page 25, line 9:                                                                                                           
          Delete "sec. 30"                                                                                                      
          Insert "sec. 31"                                                                                                      
                                                                                                                                
     Page 31, line 18:                                                                                                          
          Delete "sec. 37"                                                                                                      
          Insert "sec. 38"                                                                                                      
                                                                                                                                
     Page 53, lines 24 - 25:                                                                                                    
          Delete "sec. 23"                                                                                                      
          Insert "sec. 24"                                                                                                      
                                                                                                                                
     Page 54, line 25:                                                                                                          
          Delete "sec. 14"                                                                                                      
          Insert "sec. 15"                                                                                                      
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "Sections 1 - 14, 16, 17, 23 - 27, 29, 30,                                                                     
     37, 39, and 55 - 61"                                                                                                       
          Insert "Sections 1 - 15, 17, 18, 24 - 28, 30, 31,                                                                     
     38, 40, and 56 - 62"                                                                                                       
                                                                                                                                
     Page 56, line 8:                                                                                                           
          Delete "Section 38"                                                                                                   
          Insert "Section 39"                                                                                                   
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
CO-CHAIR SADDLER objected [for purposes of discussion].                                                                         
                                                                                                                                
CO-CHAIR FEIGE explained Amendment 1  would delete the section in                                                               
existing law, AS 31.25.020(a), which  allows the commissioners of                                                               
natural resources  and revenue  to come back  on the  board after                                                               
those events have  occurred.  He requested  the administration to                                                               
comment on the proposed amendment.                                                                                              
                                                                                                                                
1:16:14 PM                                                                                                                    
                                                                                                                                
MICHAEL   PAWLOWSKI,   Deputy   Commissioner,   Office   of   the                                                               
Commissioner,  Department  of  Revenue (DOR),  said  Amendment  1                                                               
provides clarity that, regardless  of whether the project license                                                               
under the Alaska Gasline Inducement  Act (AGIA) is abandoned, the                                                               
commissioners  of revenue  and natural  resources are  prohibited                                                               
from  serving on  the  board of  the  Alaska Gasline  Development                                                               
Corporation  (AGDC).   The administration  conditionally supports                                                               
Amendment 1 and that support  looks forward to other actions that                                                               
retain the  caliber of  professionalism that is  had on  the AGDC                                                               
board today.   The caliber of the AGDC board,  which is appointed                                                               
by  the governor,  is extremely  important to  the administration                                                               
and  the administration  is interested  in  seeing those  members                                                               
continue to serve there.                                                                                                        
                                                                                                                                
1:17:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI inquired  whether  the commissioners  of                                                               
revenue  and  natural resources  would  be  the best  people  for                                                               
serving on  the AGDC  board, and he  further inquired  whether an                                                               
appropriate designee would be an equal.                                                                                         
                                                                                                                                
MR. PAWLOWSKI replied  that when looking at this  project and the                                                               
interrelated  roles  of  the departments,  there  are  very  good                                                               
policy benefits to having a  diversity of the cabinet represented                                                               
on the  board in  conjunction with  the private  sector expertise                                                               
that also sits  on the board.   If a diminishment is  seen in the                                                               
private sector  expertise on the board,  the administration might                                                               
view it differently,  but, today, the commissioners  of labor and                                                               
commerce are other important voices  of the administration, given                                                               
that  this project  will have  broad impacts  across the  state's                                                               
workforce,  communities,  and economy.    Other  sections in  the                                                               
legislation  create consultation  processes between  the agencies                                                               
as the  resource owner; therefore, the  administration thinks the                                                               
interests of the  Department of Revenue (DOR)  and the Department                                                               
of  Natural  Resources (DNR)  are  protected  in standing  up  as                                                               
custodians  of  the people's  resource.    The  way the  bill  is                                                               
currently constructed, the administration  does not see that same                                                               
concern, but if  some of those were to  change the administration                                                               
would take a  different view.  The  administration is comfortable                                                               
with the way it is constructed now.                                                                                             
                                                                                                                                
1:19:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON observed  Amendment 1  would add  a new                                                               
[bill] section.  She asked where in  the bill it is said how many                                                               
members are on the board.                                                                                                       
                                                                                                                                
MR. PAWLOWSKI  confirmed Amendment  1 creates  a new  section and                                                               
explained  that  existing  statute  from  HB  4  established  the                                                               
membership of  the board,  which is five  public members  and two                                                               
individuals that  are the head  of a principal department  of the                                                               
state, designated by the governor.                                                                                              
                                                                                                                                
1:20:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON noted  it is often the  commissioner or the                                                               
designee of  the commissioner.   He inquired whether it  would be                                                               
valuable here to include the term  that it could be a designee of                                                               
the commissioner.                                                                                                               
                                                                                                                                
MR. PAWLOWSKI responded that the  administration would prefer not                                                               
to see  a designee available on  this board.  He  understood that                                                               
when HB  4 was  drafted, the  intent was  that there  are certain                                                               
boards  within  the  state  where  the  level  of  engagement  is                                                               
appropriate  to  reside  in  a  commissioner;  for  example,  the                                                               
commissioner of revenue does not  have the opportunity to appoint                                                               
a  designee   to  the   board  of   the  Alaska   Permanent  Fund                                                               
Corporation.   The  Alaska Gasline  Development Corporation  is a                                                               
critical   piece  of   the  state's   effort  in   advancing  gas                                                               
development in  Alaska.  To  that end,  it makes sense  to retain                                                               
the commissioner and not enable a designee.                                                                                     
                                                                                                                                
1:22:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  related that as an  entity of the state,  AGDC is                                                               
subject to regulation  by the departments of  revenue and natural                                                               
resources.   He asked whether it  is fair to say  that by keeping                                                               
those two commissioners  off of the board, a very  bright line is                                                               
kept between the regulators and the regulated.                                                                                  
                                                                                                                                
MR.  PAWLOWSKI  answered   it  is  a  policy   concern  that  the                                                               
departments  deal   with  across  multiple  boards   or  multiple                                                               
agencies.   The  degree to  which  it is  relevant is  up to  the                                                               
committee members.   The administration sees  the professionalism                                                               
of the current AGDC board as  the key, and the diversity of voice                                                               
within the  state administration  being involved in  this project                                                               
is important.   The departments of labor and  commerce each bring                                                               
an   important   perspective   to   the  AGDC   board,   so   the                                                               
administration  sees  it  as  a   bigger  group  working  on  gas                                                               
development in Alaska rather than a narrower group.                                                                             
                                                                                                                                
1:23:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER, speaking  as  a prime  sponsor  of HB  4,                                                               
which put the AGDC board  into statute, assured committee members                                                               
that  Amendment   1  accomplishes  the  objectives   involved  in                                                               
crafting HB 4.   The objective is to preserve  a very bright line                                                               
between the  regulators and the  regulated.  Other  provisions in                                                               
CSSB 138(FIN)  am involve  cross-communications between  AGDC and                                                               
the  departments  of revenue  and  natural  resources, and  those                                                               
provisions give the proper direction  for a business relationship                                                               
rather  than a  conflicted management  relationship.   He offered                                                               
his strong support for Amendment 1.                                                                                             
                                                                                                                                
1:24:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER removed  his objection.  There  being no further                                                               
objection, Amendment 1 was adopted.                                                                                             
                                                                                                                                
1:25:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE   moved  to  adopt   Amendment  2,   labeled  28-                                                               
GS2806\I.A.17, Nauman/Bullock, 4/2/14, which read:                                                                              
                                                                                                                                
     Page 55, following line 30:                                                                                                
          Insert a new bill section to read:                                                                                    
        "*  Sec. 61.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          PRIVATE   LETTER   RULING.    Before   the   final                                                                    
     investment  decision  enabling  a natural  gas  project                                                                    
     under   this  Act,   the  Alaska   Gasline  Development                                                                    
     Corporation  (AS 31.25) shall  obtain a  private letter                                                                    
     ruling  from  chief  counsel of  the  federal  Internal                                                                    
     Revenue   Service    regarding   taxability    of   the                                                                    
     corporation  and its  activities related  to a  natural                                                                    
     gas project developed under this Act in the state."                                                                        
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
     Insert "secs. 63 and 64"                                                                                                   
                                                                                                                                
REPRESENTATIVE HAWKER objected.                                                                                                 
                                                                                                                                
CO-CHAIR FEIGE  explained Amendment  2 would require  that before                                                               
final  investment  decision  (FID)  for  a  natural  gas  project                                                               
developed under  the act, AGDC  must get a private  letter ruling                                                               
(PLR)  from  the Internal  Revenue  Service  (IRS) regarding  the                                                               
taxability of the corporation.   It is prudent to make absolutely                                                               
sure  that when  becoming part  of  a business  entity the  state                                                               
knows exactly what the tax status of that entity is.                                                                            
                                                                                                                                
1:26:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE OLSON  understood that even a  routine IRS private                                                               
letter ruling takes 18-24 months for  something of this size.  He                                                               
inquired as  to the  approximate timeframe for  such a  ruling on                                                               
this project.                                                                                                                   
                                                                                                                                
CO-CHAIR  FEIGE said  the  requirement would  be  that a  private                                                               
letter ruling  be obtained before the  final investment decision,                                                               
and, right now, the timeline for FID is four to five years.                                                                     
                                                                                                                                
1:27:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER asked about the cost of private letter rulings.                                                                
                                                                                                                                
CO-CHAIR FEIGE replied he is unsure  what the cost is, but one of                                                               
the original ideas  during the course of  committee testimony was                                                               
to have  it due before  Front-end Engineering and  Design (FEED).                                                               
It was  stated by the tax  folks in testimony that  more and more                                                               
information is acquired  as the project goes  through the process                                                               
of  Pre-Front-End Engineering  and  Design  (Pre-FEED) and  FEED.                                                               
Typically, a considerable amount  of information must be included                                                               
in  the  application; the  more  accurate  and well  defined  the                                                               
information  in the  application, the  greater the  likelihood of                                                               
success on the private letter  ruling.  Therefore, it makes sense                                                               
to delay it as long as possible, which would be until FID.                                                                      
                                                                                                                                
1:28:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER strongly opposed  Amendment 2, pointing out                                                               
that all  facts and circumstances  must be known and  detailed as                                                               
best as possible when going  forward with a private letter ruling                                                               
request.  A  private letter ruling takes  an extraordinary amount                                                               
of  time that  involves  a legion  of  lawyers, consultants,  and                                                               
accountants.   This  mandate is  to obtain  -- not  ask for,  but                                                               
obtain.   It  is unknown  when  all the  facts and  circumstances                                                               
necessary will  be had  for having  the strongest  position going                                                               
forward to  obtain that  letter.   As was  stated by  counsel the                                                               
other evening,  the IRS is  not obligated to respond  to requests                                                               
for private letter rulings.  Every  year the IRS issues a revenue                                                               
procedure,  and the  first one  always talks  about the  types of                                                               
private letter  ruling requests that  the IRS will  be accepting.                                                               
So,  it is  not even  known  if the  IRS would  accept a  private                                                               
letter ruling request on behalf of  AGDC or this project.  To put                                                               
this  mandate  in the  bill  at  this  time  has a  potential  of                                                               
compromising forward  momentum on  this project by  introducing a                                                               
degree of  uncertainty.  He  offered his belief that  the state's                                                               
agencies and AGDC  will seek such a letter ruling  if and when it                                                               
is appropriate and  at the most appropriate time.   This level of                                                               
micromanagement  has the  ability  to unintentionally  compromise                                                               
forward motion on the project,  rather than providing clarity and                                                               
certainty to the project.                                                                                                       
                                                                                                                                
1:31:07 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE requested the administration to comment.                                                                         
                                                                                                                                
MR. PAWLOWSKI  replied Amendment 2  can be read in  multiple ways                                                               
and one  concern identified by  the administration is use  of the                                                               
words "taxability of  the corporation and" on line 8.   There are                                                               
multiple  nuances  to private  letter  rulings,  and there  might                                                               
actually  be   private  letter  rulings  relating   to  different                                                               
activities within a project.   So, taxability of the corporation,                                                               
and  calling  that out  specifically,  rather  than the  broadest                                                               
possible  directive, raises  a concern.   The  administration has                                                               
previously  testified that  this is  going to  be done  and is  a                                                               
necessary piece of the puzzle to move this project forward.                                                                     
                                                                                                                                
1:32:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI recalled it  being said in testimony that                                                               
private letter rulings take a  long time and are rarely rescinded                                                               
once made, and asking for a  ruling requires that all ducks be in                                                               
a row.  He inquired whether the  state will have all its ducks in                                                               
a row as anticipated under Amendment 2.                                                                                         
                                                                                                                                
MR. PAWLOWSKI  answered all of  the appropriate  information will                                                               
have to be in place to  make that final investment decision.  The                                                               
administration believes  these issues will need  to be clarified,                                                               
if there are  any issues.  There may not  be any issues depending                                                               
upon  the  ultimate corporate  structure,  which  is one  of  the                                                               
administration's concerns  because a  ruling may  not need  to be                                                               
sought  because it  may be  clear that  a ruling  is unnecessary.                                                               
The issue  with taxability is  that often private  letter rulings                                                               
are needed  related to financing and  the administration believes                                                               
that  all of  these  things will  be  in place  to  make a  final                                                               
investment decision.                                                                                                            
                                                                                                                                
REPRESENTATIVE KAWASAKI asked what the  harm of Amendment 2 is if                                                               
the ruling  can be had  at any  time before the  final investment                                                               
decision is made.                                                                                                               
                                                                                                                                
MR.  PAWLOWSKI responded  he is  not  talking about  harm but  is                                                               
trying to  identify unintentional  consequences as  was described                                                               
by Representative  Hawker.  The administration's  concern is that                                                               
the calling out of taxability  sends a message potentially in the                                                               
organization that may, today, be unproductive.                                                                                  
                                                                                                                                
REPRESENTATIVE  KAWASAKI  posed a  scenario  in  which a  private                                                               
letter ruling  is requested  for this project  for AGDC  to prove                                                               
that it  is an integral part  of the state, but  the project does                                                               
not go forward.  He asked  whether that would then hamper AGDC if                                                               
it were  to do  something different or  would the  private letter                                                               
ruling be  specific to the project  and the scope of  the project                                                               
that is defined.                                                                                                                
                                                                                                                                
MR. PAWLOWSKI  allowed the  aforementioned is a  good point.   He                                                               
said the  impact of a private  letter ruling sought on  one issue                                                               
that may have  impacts on another project is something  he is not                                                               
equipped to describe today, but it is a potential issue.                                                                        
                                                                                                                                
1:35:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON understood the  problem with "shall obtain"                                                               
is that there are timelines that  might not occur.  The committee                                                               
has  had a  lot of  discussion about  financing and  whether tax-                                                               
exempt bonds can  be done, he said, which is  something the state                                                               
needs  to  know, and  Amendment  2  would  put on  sideboards  or                                                               
requirements  of something  that is  very basic  to the  project.                                                               
The ramifications of taxable/nontaxable  status might well impact                                                               
what the  legislature has  to consider in  future contracts.   He                                                               
said he is less worried  about finding out the taxable/nontaxable                                                               
status than  the portion where it  says to obtain.   He therefore                                                               
offered  Amendment 1  to Amendment  2:   page 1,  line 7,  before                                                               
"obtain", insert  "attempt to".  He  said it is unknown  for sure                                                               
what the  application is with the  IRS, but this way  there is an                                                               
attempt to find  out that status before key decisions  have to be                                                               
made.  He clarified that under  Amendment 1 to Amendment 2, lines                                                               
6 and  7 would read  "the Alaska Gasline  Development Corporation                                                               
(AS 31.25) shall attempt to obtain a private letter ruling ...."                                                                
                                                                                                                                
CO-CHAIR SADDLER objected for discussion purposes.                                                                              
                                                                                                                                
1:38:08 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SADDLER  recalled  the  administration  had  previously                                                               
indicated  that the  information  that would  be  developed in  a                                                               
private letter  ruling would  be developed  by the  state anyway.                                                               
He  inquired at  what  point in  the  process the  administration                                                               
would do  this and further  inquired whether there is  some other                                                               
way outside  of a  formal application  to obtain  the information                                                               
that would be gotten through a private letter ruling.                                                                           
                                                                                                                                
MR. PAWLOWSKI deferred to Chris Poag of the Department of Law.                                                                  
                                                                                                                                
1:38:59 PM                                                                                                                    
                                                                                                                                
CHRISTOPHER  POAG, Assistant  Attorney General,  Labor and  State                                                               
Affairs  Section,  Civil  Division (Juneau),  Department  of  Law                                                               
(DOL), noted that while he is  not tax counsel he has been around                                                               
tax  issues  for the  work  he  does  for the  Alaska  Retirement                                                               
Management Board and  the Alaska Permanent Fund  Corporation.  He                                                               
recommended  consideration be  given  to Representative  Hawker's                                                               
concern that if a  point in time is reached where  the IRS is not                                                               
equipped to, or  offering, private letter rulings,  the state may                                                               
seek through  tax counsel  an alternative  letter, a  device that                                                               
has been used by the state in  other instances.  This is a policy                                                               
call,  he said,  and  he is  not attempting  to  curtail how  the                                                               
committee  decides  whether a  private  letter  ruling should  or                                                               
should not be obtained; however,  providing some flexibility that                                                               
would allow  AGDC to just get  the assurances it needs  to ensure                                                               
that there is not a  tax consequence is probably more appropriate                                                               
at this  point in time,  given the lack  of clarity on  where and                                                               
how the  state is headed.   He recommended that if  the committee                                                               
wants to make a clear point that  it would like to direct AGDC to                                                               
give  strong consideration  to seeking  a private  letter ruling,                                                               
the word  "shall" be deleted  and the words "may  if appropriate"                                                               
be  inserted.   He added  that "private  letter ruling  or advice                                                               
from  tax  counsel"  could  also  be  said.    Alternatively,  he                                                               
continued,  the   amendment  could  be  withdrawn   and  a  clear                                                               
acknowledgement be made on the  record that AGDC probably already                                                               
understands  that   the  tax   consequences  are   an  incredibly                                                               
important issue to this investment.   He clarified that these are                                                               
his thoughts and they are not legally driven.                                                                                   
                                                                                                                                
1:40:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  asked how the  information developed  through a                                                               
private letter  ruling or  advice from  tax counsel  would affect                                                               
AGDC's  ability to  participate and  would taxability  be a  deal                                                               
breaker for the state.                                                                                                          
                                                                                                                                
MR. POAG replied no, it would  mean that if AGDC sought a private                                                               
letter ruling  and the IRS said  AGDC is not an  integral part of                                                               
the state  or not  a political subdivision  and does  not qualify                                                               
for  Section  115,  then  the  income that  was  earned  on  that                                                               
investment would be taxable and taxable  at a corporate rate.  In                                                               
further  response, he  said the  same  thing would  go with  tax-                                                               
exempt bonding -  [AGDC] would still want to issue  bonds, but it                                                               
would pay a slightly different rate.                                                                                            
                                                                                                                                
1:41:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI  inquired  whether  the  private  letter                                                               
ruling  for  AGDC  is  project specific.    He  further  inquired                                                               
whether it  would be problematic  for AGDC  to move forward  on a                                                               
different project  if a private  letter ruling finds AGDC  not to                                                               
be an integral part of the state.                                                                                               
                                                                                                                                
MR. POAG said  he is unsure what is meant  by problematic, but it                                                               
would mean that [AGDC] would pay tax on the income it earned.                                                                   
                                                                                                                                
1:42:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER  posed a  scenario  in  which AGDC  as  an                                                               
entity is  challenged by the IRS  as being a taxable  entity.  He                                                               
said he believes  this possibility remote, but  asked whether the                                                               
state would vigorously defend that  position and believe it to be                                                               
completely mistaken.                                                                                                            
                                                                                                                                
MR. POAG responded  absolutely.  State tax immunity  has its core                                                               
in  the constitution  and  [DOL] feels  strongly  about that  tax                                                               
exemption that applies to the  state and its public corporations.                                                               
Income  earned  by  the  state, whether  from  a  proprietary  or                                                               
government function,  is immune  from taxation.   Congress, since                                                               
the  beginning, has  not  taxed state  entities,  so [DOL]  would                                                               
vigorously defend that.                                                                                                         
                                                                                                                                
1:43:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR commented that  the suggested language change                                                               
to  "may" or  "advice from  tax  counsel" is  more permissive  in                                                               
terms of the information that the  state might request.  She said                                                               
she is  trying to feel comfortable  with the idea that  the state                                                               
would  not make  a  decision until  such time  that  it had  that                                                               
information  and  knew whether  its  revenue  potential would  be                                                               
compromised.     She  inquired  whether,  without   any  of  that                                                               
language, Mr. Poag  would feel comfortable that  that will happen                                                               
before getting to final investment decision.                                                                                    
                                                                                                                                
MR. POAG answered he does,  saying those issues are already being                                                               
focused on,  as can be  seen.  The taxation  of the entity  is an                                                               
important part  of any  investment.   As the  facts start  to get                                                               
concrete and  the state knows  which direction it is  headed, tax                                                               
counsel will  be engaged to look  at the issues and  to highlight                                                               
if and  when and how it  is appropriate to seek  a private letter                                                               
ruling if that is the right way to go.                                                                                          
                                                                                                                                
1:44:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER removed his objection.  There being no further                                                                 
objection, Amendment 1 to Amendment 2 was adopted.                                                                              
                                                                                                                                
CO-CHAIR FEIGE set aside Amendment 2, as amended, saying it will                                                                
be worked on further and will perhaps be brought back later.                                                                    
                                                                                                                                
1:45:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE moved to adopt Amendment 3, labeled 28-                                                                          
GS2806\I.A.11, Bullock, 4/1/14, which read:                                                                                     
                                                                                                                                
     Page 4, following line 11:                                                                                                 
          Insert a new bill section to read:                                                                                    
       "* Sec. 3. AS 31.25.020 is amended by adding a new                                                                   
     subsection to read:                                                                                                        
          (e)  A public member appointed by the governor                                                                        
     under (b)  of this  section shall be  a citizen  of the                                                                    
     United States.  Notwithstanding AS 39.05.100,  a person                                                                    
     appointed under (b) of this  section is not required to                                                                    
     be or have been a registered  voter in the state and is                                                                    
     not required to reside in the state."                                                                                      
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 14, line 3:                                                                                                           
          Delete "sec. 14"                                                                                                      
          Insert "sec. 15"                                                                                                      
                                                                                                                                
     Page 17, line 24:                                                                                                          
          Delete "sec. 17"                                                                                                      
          Insert "sec. 18"                                                                                                      
                                                                                                                                
     Page 21, line 16:                                                                                                          
          Delete "sec. 27"                                                                                                      
          Insert "sec. 28"                                                                                                      
                                                                                                                                
     Page 25, line 9:                                                                                                           
          Delete "sec. 30"                                                                                                      
          Insert "sec. 31"                                                                                                      
                                                                                                                                
     Page 31, line 18:                                                                                                          
          Delete "sec. 37"                                                                                                      
          Insert "sec. 38"                                                                                                      
                                                                                                                                
     Page 53, lines 24 - 25:                                                                                                    
          Delete "sec. 23"                                                                                                      
          Insert "sec. 24"                                                                                                      
                                                                                                                                
     Page 54, line 25:                                                                                                          
          Delete "sec. 14"                                                                                                      
          Insert "sec. 15"                                                                                                      
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "Sections 1 - 14, 16, 17, 23 - 27, 29, 30,                                                                     
     37, 39, and 55 - 61"                                                                                                       
          Insert "Sections 1 - 15, 17, 18, 24 - 28, 30, 31,                                                                     
     38, 40, and 56 - 62"                                                                                                       
                                                                                                                                
     Page 56, line 8:                                                                                                           
          Delete "Section 38"                                                                                                   
          Insert "Section 39"                                                                                                   
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
REPRESENTATIVE TARR objected.                                                                                                   
                                                                                                                                
CO-CHAIR FEIGE addressed Amendment  3, stating much attention has                                                               
been  paid to  who  sits on  the  board  of AGDC.    He said  the                                                               
amendment clarifies  that any  U.S. citizen may  sit on  the AGDC                                                               
board.   This significant  investment by  the state  requires the                                                               
absolute  very best  minds  and people  that can  be  put on  the                                                               
board.   Requiring  that  members  of the  AGDC  board be  Alaska                                                               
residents exclusively limits the pool of expertise.                                                                             
                                                                                                                                
REPRESENTATIVE TARR  said her  objection to  Amendment 3  at this                                                               
time is  because a separate  piece of legislation  was introduced                                                               
today to  address this matter,  the issue is time  sensitive, and                                                               
not wanting to put pressure on  the rest of the legislation given                                                               
the confirmation hearings coming up next week.                                                                                  
                                                                                                                                
1:48:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  supported  Amendment 3,  noting it  is                                                               
very important  for this  project to  have the  best that  can be                                                               
had.   The people in  Alaska are wonderful,  but if they  are not                                                               
the best  for this  situation then  the state  must get  the best                                                               
that it possibly can.                                                                                                           
                                                                                                                                
CO-CHAIR  SADDLER   supported  Amendment  3,  pointing   out  the                                                               
governor  would still  have  the option  to  appoint an  Alaskan.                                                               
State law requires  it be Alaska citizens for  the most continual                                                               
ordinary run of  business, but construction of  a $40-$60 billion                                                               
natural gas  pipeline project is  not the normal run  of business                                                               
and  it  is important  the  state  open  itself to  the  broadest                                                               
possible realm of potential candidates throughout the nation.                                                                   
                                                                                                                                
REPRESENTATIVE HAWKER supported Amendment 3,  saying it is a very                                                               
workable fix  to what  was an  oversight in  the passage  of last                                                               
year's HB  4, which  he sponsored.   The amendment  would provide                                                               
statutory clarification for  the sponsors' intent in  HB 4, which                                                               
was stated in testimony in one committee.                                                                                       
                                                                                                                                
1:50:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KAWASAKI  opposed   Amendment   3,  stating   he                                                               
understands  the need  for  getting the  best  expertise to  move                                                               
forward a  project, especially one  as large as this,  and having                                                               
good staff  at AGDC  means something.   However,  he said,  it is                                                               
known that  this is because of  one person and one  issue, and it                                                               
is  insulting to  think that  the experience  is not  had in  the                                                               
state and that the state must  shop around outside.  If that same                                                               
logic  were used  for members  of the  legislature, some  members                                                               
would not be  here.  This person could be  hired as a consultant.                                                               
When it comes  to high level decisions on  policy, Alaskans would                                                               
do a better job of  representing Alaskans' interest at the table.                                                               
A degree  in engineering  is not  needed to  do that;  the person                                                               
needs to  be qualified and have  talents and there are  people in                                                               
the state who  have those talents.  This  person will potentially                                                               
be negotiating  such things as  eminent domain and  state takings                                                               
of  public lands  and  an  outsider should  not  be making  those                                                               
decisions.  If a person is  counsel or staff to AGDC on contract,                                                               
that person's advice should be taken  and heeded, but it is up to                                                               
the policy board of AGDC to make those final decisions.                                                                         
                                                                                                                                
REPRESENTATIVE OLSON  supported Amendment  3, recounting  that he                                                               
made the argument  yesterday in another committee  that the state                                                               
has been  using the best and  brightest all the way  through this                                                               
process and some of those people,  such as the consultants in the                                                               
room today, are  world class but not from Alaska.   The gentleman                                                               
being talked about  is world class and will be  reimbursed $400 a                                                               
day  for his  time, so  this gentleman  is truly  offering to  do                                                               
public  service.   To  the  best of  his  knowledge  no one  with                                                               
experience comparable  to this gentleman's  has put forth  his or                                                               
her name,  so in  addition to supporting  this amendment  he will                                                               
support this particular gentleman next week.                                                                                    
                                                                                                                                
1:53:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said he supported Amendment  3, noting his                                                               
comments are  not related  to any specific  person and  he agrees                                                               
that a  broad field is needed.   The appointment by  the governor                                                               
for this  particular expertise is  broader than, say,  the normal                                                               
commissioner who is dealing specifically  with Alaskan issues all                                                               
the  time.    While  a   piece  of  legislation  containing  this                                                               
provision was  introduced in  the House, he  has been  assured by                                                               
the sponsor  of that  legislation and the  person that  makes the                                                               
assignments that there is agreement  to offer that same idea here                                                               
in this legislation and the bill  will not be pulled from another                                                               
committee, as  that is not  done without concurrence of  both the                                                               
committee chair and the sponsor.                                                                                                
                                                                                                                                
CO-CHAIR FEIGE  stated there is no  effort to pull the  bill from                                                               
another committee; it is an amendment that stands alone.                                                                        
                                                                                                                                
1:55:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON said eminent  domain is  another reason                                                               
she supports  Amendment 3  as she would  rather have  an unbiased                                                               
person helping make those decisions  than an Alaskan because many                                                               
times Alaskans  are a  bit biased depending  on where  they live.                                                               
Someone  from  outside the  state  would  have a  refreshing  and                                                               
unclouded view.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  TARR   said  she   thinks  the  other   piece  of                                                               
legislation will have to be  dealt with because legislators would                                                               
be prohibited  from appointing this individual  next Friday since                                                               
the bill before the committee will not have become law by then.                                                                 
                                                                                                                                
CO-CHAIR  SADDLER  commented  that  this  is  a  law  of  general                                                               
applicability, a law for any  individual, and he is uncomfortable                                                               
with talking about an individual.                                                                                               
                                                                                                                                
REPRESENTATIVE KAWASAKI continued his  opposition to Amendment 3,                                                               
remarking that  if the best is  wanted then why is  the amendment                                                               
restricting  the public  member  to  being a  U.S.  citizen.   He                                                               
pointed  out  that the  legislature's  consultants  are not  U.S.                                                               
citizens.                                                                                                                       
                                                                                                                                
CO-CHAIR  FEIGE  responded  it  would require  a  change  to  the                                                               
state's constitution.                                                                                                           
                                                                                                                                
1:57:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR maintained her objection to Amendment 3.                                                                    
                                                                                                                                
A  roll call  vote  was taken.    Representatives Hawker,  Olson,                                                               
Seaton,  P.  Wilson,  Saddler,  and   Feige  voted  in  favor  of                                                               
Amendment  3.   Representatives Tarr  and Kawasaki  voted against                                                               
it.  Therefore, Amendment 3 was adopted by a vote of 6-2.                                                                       
                                                                                                                                
1:58:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER moved  to adopt  Amendment 4,  labeled 28-                                                               
GS2806\I.A.48, Nauman/Bullock, 4/2/14, which read:                                                                              
                                                                                                                                
     Page 9, line 2, following "fund":                                                                                          
          Insert "of the state"                                                                                                 
                                                                                                                                
CO-CHAIR SADDLER objected.                                                                                                      
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:00:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER explained Amendment  4 addresses a response                                                               
he  received to  the  question  asked of  tax  counsel, Manley  &                                                               
Brautigam, [on 4/1/14]  about how the state  could posture itself                                                               
in statute to give the greatest  possible advantage if and when a                                                               
private letter ruling  is pursued.  The section  of statute where                                                               
"of the state"  would be added provides that  the commissioner of                                                               
revenue  direct   where  the  net   revenue  received   from  the                                                               
corporation  is to  go.   He  allowed that  saying  "fund of  the                                                               
state" rather  than just an  open-ended fund  is a tax  geek nit,                                                               
but said it is exactly as recommended by tax counsel.                                                                           
                                                                                                                                
CO-CHAIR  FEIGE requested  the administration's  comments on  the                                                               
amendment.                                                                                                                      
                                                                                                                                
MR. PAWLOWSKI  supported Amendment  4, saying  the administration                                                               
thinks the amendment is an important one.                                                                                       
                                                                                                                                
2:02:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER removed  his objection.  There  being no further                                                               
objection, Amendment 4 was adopted.                                                                                             
                                                                                                                                
2:03:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE   moved  to  adopt   Amendment  5,   labeled  28-                                                               
GS2806\I.A.13, Nauman/Bullock, 4/2/14, which read:                                                                              
                                                                                                                                
     Page 13, line 14, following "revenue":                                                                                 
          Insert "and the Alaska Gasline Development                                                                        
     Corporation (AS 31.25)"                                                                                                
                                                                                                                                
     Page 15, line 8, following "revenue":                                                                                      
          Insert "and the Alaska Gasline Development                                                                            
     Corporation (AS 31.25)"                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER objected.                                                                                                      
                                                                                                                                
CO-CHAIR FEIGE explained that under  Amendment 5, the language in                                                               
the  bill  on  page  13,  line   14,  would  in  part  read,  "in                                                           
consultation  with the  commissioner  of revenue  and the  Alaska                                                           
Gasline Development  Corporation (AS 31.25), participate".   This                                                           
would ensure there is plenty  of consultation between DNR and DOR                                                               
as well  as between  AGDC and  the departments  of the  state, he                                                               
said.  It also seeks to  clarify that the consultation will go in                                                               
both directions  in the  production of  the agreements  that will                                                               
come back at some point towards the end of Pre-FEED.                                                                            
                                                                                                                                
2:05:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   inquired  whether  the  intent   of  the                                                               
language on  lines 17-18,  "a North  Slope natural  gas project",                                                           
means  any  project and  does  not  specifically relate  to  [the                                                               
Alaska LNG Project].                                                                                                            
                                                                                                                                
CO-CHAIR  FEIGE  believed  the   way  "North  Slope  natural  gas                                                               
project" is  defined includes both  the [Alaska LNG  Project] and                                                               
the Alaska Stand-Alone Pipeline (ASAP).                                                                                         
                                                                                                                                
CO-CHAIR FEIGE, responding  to Representative Kawasaki, confirmed                                                               
that  Section  14  deals  with  the  powers  and  duties  of  the                                                               
commissioner of revenue.                                                                                                        
                                                                                                                                
2:06:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HAWKER   endorsed  having   cross  communications                                                               
between all  of the agencies and  that it is spelled  out clearly                                                               
in  statute,  but  requested  comment on  Amendment  5  from  the                                                               
administration.                                                                                                                 
                                                                                                                                
JOE BALASH, Commissioner, Department  of Natural Resources (DNR),                                                               
offered  the  administration's  support  for the  spirit  of  the                                                               
amendment,  but said  the administration  has  crafted a  similar                                                               
amendment  that   is  more  narrowly  tailored   to  achieve  the                                                               
objective that is  appropriate here.  The  burden of consultation                                                               
on  AGDC with  the  two departments  is narrow  and  AGDC is  not                                                               
obligated to  consult with [the administration]  on all contracts                                                               
or activities that  AGDC engages in or enters into.   Engaging in                                                               
consultation  with   AGDC  needs   to  be  for   the  appropriate                                                               
contracts,  and basically  that  is for  the infrastructure,  the                                                               
midstream  services,   liquefaction  services,   and  potentially                                                               
marketing if  AGDC engages in  marketing activities for  the LNG.                                                               
The administration prefers the amendment  that it has provided to                                                               
the committee because it is more prescriptive and more specific.                                                                
                                                                                                                                
2:08:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE responded  that  [the administration's]  language                                                               
has not yet come back from the drafter.                                                                                         
                                                                                                                                
MR.  PAWLOWSKI  said  the   administration  believes  the  intent                                                               
underlying the conversation about consultation is important.                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR  FEIGE set  aside Amendment  5, reserving  the right  to                                                               
bring it  back or  to offer  the administration's  amendment that                                                               
deals with a similar problem.                                                                                                   
                                                                                                                                
The committee took another brief at-ease.                                                                                       
                                                                                                                                
2:11:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  drew attention  to  the  amendments labeled  28-                                                               
GS2806\I.A.49,  Nauman/Bullock,   4/2/14,  and  28-GS2806\I.A.79,                                                               
Nauman/Bullock,  4/4/14  [text  provided  at   the  end  of  this                                                               
document].  He requested Mr.  Pawlowski to relate the concern had                                                               
by the commissioner of revenue.                                                                                                 
                                                                                                                                
MR. PAWLOWSKI turned  to page 54 of CSSB  138(FIN) am, explaining                                                               
that Section 60  requires the Department of Revenue  to develop a                                                               
plan for municipalities, regional  corporations, and residents to                                                               
participate  in  the  ownership  of a  North  Slope  natural  gas                                                               
pipeline.   Regarding  28-GS2806\I.A.49 (.49),  he said  DOR sees                                                               
some good  additions to  the study  that would  be called  for in                                                               
this  section;  they  could   be  characterized  as  buyer-beware                                                               
options.   The amendment captures potentially  significant issues                                                               
to individual Alaskans, municipalities,  and other investors in a                                                               
natural gas project; for example,  the income tax consequences to                                                               
the holder of that investment.   Amendment 28-GS2806\I.A.79 (.79)                                                               
would require a  study to be done on the  financing options.  For                                                               
the efficiency  of needing  only a single  contract, he  said the                                                               
department would  encourage the  committee to  consider combining                                                               
amendments .49  and .79 and put  them under Section 60  such that                                                               
it  is one  report delivered  to the  legislature, rather  than a                                                               
series.  This way, DOR is  not looking at multiple contracts with                                                               
multiple engagements all around the  concepts of financing, be if                                                               
for  the  state,  individuals, municipalities,  or  corporations.                                                               
Regarding the  reporting requirements proposed in  amendment .79,                                                               
he  said  the  commissioner  of revenue  would  request  that  an                                                               
interim report come  back to the legislature in  January 2015 and                                                               
a subsequent  follow-up report when the  contracts are submitted.                                                               
This  recognizes that  more information  will  be developed  over                                                               
time and  the full range and  suite of options, as  called for in                                                               
the amendments, need  to be delivered to the  legislature so that                                                               
members  have information  and DOR  continues  to do  work.   The                                                               
department  is  trying  to  consolidate   the  efficient  use  of                                                               
resources  to do  the study,  but the  increased [work]  will add                                                               
something  to  DOR's  fiscal  note,   which  is  currently  being                                                               
analyzed.                                                                                                                       
                                                                                                                                
2:15:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER, sponsor of amendment  .49, said he is very                                                               
amenable to DOR's proposal.                                                                                                     
                                                                                                                                
CO-CHAIR  FEIGE, responding  to Representative  Seaton, confirmed                                                               
amendments .49  and .79  will be sent  back to  Legislative Legal                                                               
and Research Services to be combined into one new amendment.                                                                    
                                                                                                                                
REPRESENTATIVE  TARR inquired  whether  28-GS2806\I.A.32, by  Co-                                                               
Chair Saddler  and about legislative briefings,  is something the                                                               
committee may also want to consider at this time.                                                                               
                                                                                                                                
CO-CHAIR FEIGE  replied he  will bring  it up  separately because                                                               
amendments .49 and  .79 are both about financial  analysis by the                                                               
Department of Revenue so it makes sense to combine them.                                                                        
                                                                                                                                
CO-CHAIR  SADDLER, regarding  amendments  .49 and  .79, said  the                                                               
idea is intriguing, but comes  with challenges and questions.  It                                                               
is appropriate  to ask and  answer these questions  before people                                                               
get their  expectations up and  their checkbooks out.   Given the                                                               
complexity,  the idea  of an  interim report  followed by  a more                                                               
detailed report is appropriate.                                                                                                 
                                                                                                                                
CO-CHAIR FEIGE  inquired whether DOR  has an idea on  a timeframe                                                               
for the interim and final reports.                                                                                              
                                                                                                                                
MR. PAWLOWSKI drew  attention to amendment .79, page  1, line 18,                                                               
which provides the expectation that  "the report described in (a)                                                               
of this  section" is "available  to the legislature on  the first                                                               
day  of the  First  Regular Session  of  the Twenty-Ninth  Alaska                                                               
State  Legislature."   He  said  that  seems appropriate  for  an                                                               
interim report that is starting  to identify the range of options                                                               
so that members can start  to consider the suite of opportunities                                                               
available  to  the  state  on  a  financing  side.    The  report                                                               
currently existing in  Section 60, and in which DOR  would ask to                                                               
put both  amendments .49 and .79,  is for when the  contracts are                                                               
submitted to the  legislature, which would be the  latter part of                                                               
2015.   That would be  the more  appropriate place for  the final                                                               
report, recognizing  that a final  report in this stage  would be                                                               
an identification of the range  of financing options.  During the                                                               
FEED  process, those  will narrow  as options  get taken  off the                                                               
table  in  this Pre-FEED  stage.    So,  it is  methodical  steps                                                               
towards resolution as DOR does more detailed due diligence.                                                                     
                                                                                                                                
CO-CHAIR FEIGE set aside amendments .49 and .79.                                                                                
                                                                                                                                
2:19:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE, for  discussion purposes,  brought attention  to                                                               
the  amendments labeled  28-GS2806\I.A.18,  Nauman, 4/2/14  (.18)                                                               
and  28-GS2806\I.A.54,  Nauman/Bullock,  4/2/14 (.54)  [text  for                                                               
both  amendments provided  at  the  end of  this  document].   In                                                               
reviewing CSSB 138(FIN) am, he  explained, it was determined that                                                               
some of  the proposed changes  would have impacts on  other parts                                                               
of the  state besides  the North Slope.   Under  current statute,                                                               
certain exemptions  on Cook Inlet oil  and gas expire at  the end                                                               
of 2021.  Under CSSB 138(FIN)  am, the new provisions would begin                                                               
at the start of 2022.  Thus, there  is a question as to the exact                                                               
issues and how  best to resolve them.  He  asked Mr. Pawlowski to                                                               
provide suggestions.                                                                                                            
                                                                                                                                
2:21:09 PM                                                                                                                    
                                                                                                                                
MR.  PAWLOWSKI noted  amendment 28-GS2806\I.A.18  (.18), page  2,                                                               
line 1, lays out two reports  for the Oil and Gas Competitiveness                                                               
Review Board, which was established last  session by SB 21 and is                                                               
located within  the Department  of Revenue.   The board  would be                                                               
charged  with  making  written findings  and  recommendations  in                                                               
subparagraph  (A) before  the date  of  January 31,  2015 and  in                                                               
subparagraph   (B)  before   the  date   of  January   31,  2021.                                                               
Subparagraph (B), sub-subparagraph (iii),  describes "a review of                                                               
the current effectiveness  and future value of  any provisions of                                                               
the state's  oil and gas tax  laws that are expiring  in the next                                                               
five years."  He said looking  ahead to the expiration of some of                                                               
the incentives  and ceilings that  currently exist in  Cook Inlet                                                               
is good  guidance and  DOR sees  this as  an opportunity  to come                                                               
back to the  legislature with comprehensive review  of the issues                                                               
related to the Cook Inlet oil  and gas tax regime.  Amendment .54                                                               
identifies the  important issues of competitiveness,  tax regime,                                                               
and incentive  regime within Cook  Inlet, which are  broader than                                                               
the Oil and Gas Competitiveness  Review Board.  For example, page                                                               
1,  lines  16-18,  talks  about  unique  economic  circumstances,                                                               
clearly identifies the  reduction in gross value at  the point of                                                               
production as a  mechanism to achieve the replacement  of the tax                                                               
ceilings, and  looks at  the effect specifically  in the  area of                                                               
Cook  Inlet.    Amendments  .18  and  .54  are  seen  by  DOR  as                                                               
complementary, with some valuable language  in.54, as well as the                                                               
date.   Being conscious of  the reports  and burdens that  DOR is                                                               
looking at,  DOR likes the date  in amendment .54 of  January 15,                                                               
2017,  whereas the  date in  amendment .18  of January  31, 2015,                                                               
does not  provide enough time to  do a credible review  and bring                                                               
forth recommendations to the  legislature, public, and interested                                                               
parties.   Mr.  Pawlowski requested  that the  committee consider                                                               
combining amendments .18  and .54 into one  amendment, saying .54                                                               
gives the  Oil and Gas  Competitiveness Review  Board appropriate                                                               
direction with which to advance this issue.                                                                                     
                                                                                                                                
2:24:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE understood  Mr.  Pawlowski to  be saying  January                                                               
2017 is the preferred date  for the additional report requirement                                                               
for the review board.                                                                                                           
                                                                                                                                
MR. PAWLOWSKI confirmed the aforementioned  as correct, but added                                                               
also with the  unique language that is included  in amendment .54                                                               
because there  are unique circumstances  in the Cook  Inlet basin                                                               
that need to be considered.                                                                                                     
                                                                                                                                
2:25:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HAWKER  inquired   whether  the   Oil  and   Gas                                                               
Competitiveness Review Board has yet been constituted.                                                                          
                                                                                                                                
MR. PAWLOWSKI responded it has not yet been appointed.                                                                          
                                                                                                                                
REPRESENTATIVE HAWKER  said he is a  bit uncomfortable commending                                                               
a very  important study and very  important issue when, if  it is                                                               
unaddressed, will  result in a  likely massive increase  in taxes                                                               
and utility  rates and a  very chilling effect on  the successful                                                               
enhancement that has been achieved  in Cook Inlet development and                                                               
production without having a better  feeling as to who, what, how,                                                               
and  why that  review board  might  be constituted.   He  queried                                                               
whether Mr. Pawlowski can allay his anxiety in this regard.                                                                     
                                                                                                                                
MR.  PAWLOWSKI  replied  the  composition  of  the  Oil  and  Gas                                                               
Competitiveness Review  Board, as  developed last  year, provides                                                               
the opportunity  for the  right type of  people to  be appointed.                                                               
While he has  not been engaged with the  governor's office around                                                               
specific  appointments to  this  board, other  people have  been.                                                               
The important thing is the 2017  date of the report called for in                                                               
amendment .54.   The review  board with the broad  perspective is                                                               
an appropriate  place for  this, he  said, adding  he understands                                                               
the  concern that  the board  has not  yet been  appointed.   The                                                               
expiring  tax ceilings  and maintenance  of positive  momentum in                                                               
Cook  Inlet are  seen by  DOR as  a critical  issue that  must be                                                               
dealt with in the longer term and done in a deliberative way.                                                                   
                                                                                                                                
2:27:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   drew  attention   to  the   language  in                                                               
amendment  .54,  line 18,  which  states  "could be  achieved  by                                                               
authorizing  a  reduction   in  gross  value  at   the  point  of                                                               
production."  Noting  the state is currently using  tax rates and                                                               
royalty modifications,  he asked what  would be looked at  by the                                                               
report in  regard to authorizing  a reduction in the  gross value                                                               
at the point of production.                                                                                                     
                                                                                                                                
MR.  PAWLOWSKI answered  the  gross value  reduction  (GVR) is  a                                                               
mechanism of taking a unified  system and mathematically reducing                                                               
that  effective tax  rate and  the curve,  while maintaining  the                                                               
shape of  the curve.   A useful  tool in  differentiating between                                                               
specific  tax treatments  of resources,  this was  done in  SB 21                                                               
around  specifically  new geologic  oil  and  also an  additional                                                               
differentiation around  units with  a higher  royalty rate.   The                                                               
same mechanism  could be used in  Cook Inlet, or any  basin, with                                                               
just  a  very  simple  gross   value  reduction  built  into  the                                                               
architecture  of the  existing  system.   It is  seen  by DOR  as                                                               
mathematically  a  good  approach  to   look  at  and  provide  a                                                               
recommendation.                                                                                                                 
                                                                                                                                
2:29:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON understood the  report would have the other                                                               
components and would  look at it from other aspects  as well.  He                                                               
inquired  whether  reduction  of  gross value  at  the  point  of                                                               
production would  be an  additional component  or the  only thing                                                               
that is analyzed.                                                                                                               
                                                                                                                                
MR. PAWLOWSKI deferred to the  sponsor of amendment .54, but said                                                               
his reading  is that the  study must  also take into  account, as                                                               
written   on  page   1,  lines   16-17,   "the  unique   economic                                                               
circumstance of  each producing  area south  of 68  degrees North                                                               
latitude" and  focus on the  gross value  reduction as a  tool to                                                               
achieve the  type of  differentiation within  the basins  that is                                                               
now done with tax ceilings.                                                                                                     
                                                                                                                                
2:30:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON believed  it is talking about  these two in                                                               
combination  and  said  he  wants  to ensure  that  what  DOR  is                                                               
anticipating  is not  supplanting amendment  .18, which  looks at                                                               
tax  rates and  other things,  with only  a report  based on  the                                                               
reduction of gross value at the point of production.                                                                            
                                                                                                                                
CO-CHAIR FEIGE  responded amendment .18 only  adds one particular                                                               
paragraph at the  end.  It basically adds to  the subjects of the                                                               
report due at the end of January 2015.                                                                                          
                                                                                                                                
REPRESENTATIVE  SEATON understood  that is  a review  of the  tax                                                               
structure and rates.                                                                                                            
                                                                                                                                
CO-CHAIR FEIGE replied correct.                                                                                                 
                                                                                                                                
REPRESENTATIVE  SEATON reiterated  he wants  to ensure  that when                                                               
the amendments  are combined those  tax structures and  rates are                                                               
not totally being supplanted by  only looking at reduction in the                                                               
gross value at the point of production.                                                                                         
                                                                                                                                
CO-CHAIR FEIGE answered he plans  to set aside amendments .18 and                                                               
.54 so the combination language can be worked on.                                                                               
                                                                                                                                
2:31:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  related that  a number  of utility  contracts are                                                               
expiring in 2018 and what is  trying to be done is give certainty                                                               
to those  explorers and  utility companies as  to what  their tax                                                               
situation is  going to  be in  the years beyond  2018.   He asked                                                               
whether getting a  report by January 15, 2017, is  enough time to                                                               
give them certainty.                                                                                                            
                                                                                                                                
MR. PAWLOWSKI responded the tax  ceilings in the Cook Inlet basin                                                               
expire  in 2022;  so,  DOR  believes January  15  2017, gives  an                                                               
appropriate  amount  of  time  to  pass  recommendations  to  the                                                               
legislature.  These  would just be recommendations  because it is                                                               
the legislature's  role to enact  tax policy, and there  would be                                                               
suitable time for the legislature to act.                                                                                       
                                                                                                                                
2:33:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  asked how DOR would  take the definition                                                               
for unique economic circumstance.                                                                                               
                                                                                                                                
MR.  PAWLOWSKI  deferred to  the  sponsor  of the  amendment  for                                                               
clarification,  but he  said his  initial interpretation  is that                                                               
there are  unique economic circumstances in,  for example, Middle                                                               
Earth, which  has a very  different producing  economic situation                                                               
because there is no infrastructure at  this point for some of the                                                               
basins.   While the  tax ceilings in  Middle Earth  were extended                                                               
beyond 2022, it  would be important to consider any  work in Cook                                                               
Inlet as a  potential model to fit into those.   The direction in                                                               
amendment .54  is for areas  south of 68 degrees  North latitude,                                                               
which he read as inclusive, so  when he thinks of unique economic                                                               
circumstances  he  is  thinking  about  different  infrastructure                                                               
support in producing basins.                                                                                                    
                                                                                                                                
REPRESENTATIVE   KAWASAKI   understood   Mr.  Pawlowski   to   be                                                               
qualifying  unique as  unique  in the  state,  not compared  with                                                               
other producing basins or similarly situated producing areas.                                                                   
                                                                                                                                
MR. PAWLOWSKI  answered DOR engages  with consultants to  look at                                                               
multiple different  producing basins.  Every  basin is different,                                                               
but there are  similarities that DOR will draw from.   He said he                                                               
does  not  want  to put  it  that  DOR  will  not look  at  other                                                               
analogous basins around  the world, but DOR will look  at what is                                                               
unique about each  place.  Interesting about Middle  Earth is the                                                               
lack of infrastructure  and very little investment in  pipe.  The                                                               
area where the Chair is from  may be very different than the area                                                               
where another  representative is from.   He said he  takes unique                                                               
to  mean  DOR  should  pay  special attention  to  what  is  very                                                               
different and  specific about  the location  being worked  on and                                                               
will look broadly at other analogous areas.                                                                                     
                                                                                                                                
2:35:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI  observed  amendment  .54  includes  the                                                               
language  "the   department  shall   deliver  a  report   to  the                                                               
legislature  that  includes  the  results  of  the  study  and  a                                                               
proposal" [page 1,  lines 19-20].  He inquired  what "a proposal"                                                               
means to Mr. Pawlowski.                                                                                                         
                                                                                                                                
MR. PAWLOWSKI responded  it is solely the  legislature's power to                                                               
set  tax rates.    He said  he  reads this  language  as being  a                                                               
requirement for the  Department of Revenue to  commission a study                                                               
and to then bring a  proposal forward, either through legislation                                                               
or recommendations in  a report, using the tool of  a gross value                                                               
reduction.  In  that proposal would be a number,  but without the                                                               
study he cannot predict today what that number would be.                                                                        
                                                                                                                                
REPRESENTATIVE KAWASAKI queried  whether "a proposal" potentially                                                               
means legislation in the future.                                                                                                
                                                                                                                                
MR.  PAWLOWSKI  believed it  would  be  either legislation  or  a                                                               
recommendation in a report that  a member of any legislative body                                                               
could pick  up and  choose to introduce  on his or  her own.   No                                                               
change  to the  tax rate,  extension of  the ceilings,  or actual                                                               
change  can be  done without  legislation, so  what is  done with                                                               
that  study  and  report  is  up to  future  members,  or  future                                                               
governor, or department head.                                                                                                   
                                                                                                                                
REPRESENTATIVE  KAWASAKI said  he shares  [Representative Tarr's]                                                               
concern about dealing specifically with  using the gross value at                                                               
the  point  of production  as  a  means to  potentially  increase                                                               
production of oil.  He expressed his  hope that it is part of the                                                               
matrix and not limited to only that.                                                                                            
                                                                                                                                
2:38:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  set aside amendments .18  and .54 so they  can be                                                               
combined into one amendment.                                                                                                    
                                                                                                                                
2:38:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SADDLER  moved  to  adopt   Amendment  6,  labeled  28-                                                               
GS2806\I.A.32, Nauman/Bullock, 4/2/14, which read:                                                                              
                                                                                                                                
     Page 55, following line 30:                                                                                                
     Insert a new bill section to read:                                                                                         
         "* Sec. 61. The uncodified law of the State of                                                                     
     Alaska is amended by adding a new section to read:                                                                         
          LEGISLATIVE BRIEFINGS. Before the first flow of                                                                       
         gas in an Alaska liquefied natural gas project                                                                         
     developed under  this Act, the  parties to  the project                                                                    
     shall,  at least  once each  calendar quarter,  provide                                                                    
     briefings   to   interested  legislators,   legislative                                                                    
     staff, and  legislative consultants on the  progress of                                                                    
     an  Alaska  liquefied  natural  gas  project  developed                                                                    
     under  the authority  of this  Act.   A briefing  under                                                                    
     this section  must be accompanied  by a  written report                                                                    
     of the amount  of money the state may be  liable to pay                                                                    
     a  third  party  if  an Alaska  liquefied  natural  gas                                                                    
     project is terminated  before the first flow  of gas in                                                                    
     the project."                                                                                                              
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
2:39:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  explained the Heads of  Agreement promises that                                                               
during Pre-FEED the project parties  shall provide regular Alaska                                                               
LNG  Project briefings  and updates  to  the administration,  the                                                               
legislature, and  the public.   He said  he hopes  alignment with                                                               
this is sufficiently strong to enshrine  it in statute.  It needs                                                               
to  be  ensured that  the  public  is informed,  transparency  is                                                               
maintained, and that TransCanada's  development costs are kept up                                                               
with, given  the state may at  some point be liable  to reimburse                                                               
these costs.   The Heads  of Agreement only covers  the Pre-FEED,                                                               
and there are going to be  certain times in this project timeline                                                               
where, if the  agreement is terminated, the state is  going to be                                                               
required to  reimburse TransCanada [for  its costs] plus  the 7.1                                                               
percent  allowance for  funds used  during construction  (AFUDC).                                                               
Amendment 6 would ensure that  at least quarterly the legislature                                                               
and  the  public are  updated  on  how  the  tab is  running  for                                                               
development costs and  the amount of money the state  could be on                                                               
the  hook for  should the  project falter  or should  TransCanada                                                               
terminate  its  involvement.     Amendment  6  does  not  require                                                               
disclosure  of any  proprietary information  or information  that                                                               
would interfere with  or supplant the ability  of legislatures to                                                               
meet  to  be   privy  to  certain  information   under  a  signed                                                               
confidentiality agreement  or an  executive session.   Responding                                                               
to Representative  Seaton, Co-Chair Saddler confirmed  the report                                                               
to  the  legislature  would  not   need  to  be  given  when  the                                                               
legislature is in session.                                                                                                      
                                                                                                                                
2:40:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE asked  whether  the  language on  line  6 of  the                                                               
amendment, "the parties  to the project shall,"  implies that DNR                                                               
or that all of the parties must give a briefing.                                                                                
                                                                                                                                
COMMISSIONER BALASH replied DNR reads  "the parties" as being all                                                               
of  the parties,  not  a  singular entity.    Depending upon  the                                                               
particular phase  the project  is in, and  whether it  is talking                                                               
about  the project  sponsors  per se,  DNR and  DOR  will not  be                                                               
necessarily  signatories  to   the  equity  agreements  directly.                                                               
Those would  be signed by  the private  parties as well  as AGDC.                                                               
So, this would be imposing on  those private parties, but that is                                                               
appropriate  as they  will be  the project  sponsors and  able to                                                               
inform the legislature and the public of the activities.                                                                        
                                                                                                                                
2:42:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  inquired  whether   the  aforementioned  is  the                                                               
sponsor's intention.                                                                                                            
                                                                                                                                
CO-CHAIR SADDLER  answered that,  to the extent  DNR and  DOR are                                                               
going to  be involved,  he would  like to  have the  reports from                                                               
them.  He requested Mr. Balash to restate his point.                                                                            
                                                                                                                                
COMMISSIONER BALASH  responded "the  parties" generally  were all                                                               
of  the parties  to  the Heads  of  Agreement, including  private                                                               
parties as well as the agencies.   As things move forward and the                                                               
venture agreements are signed and  executed, DNR and DOR will not                                                               
likely  be parties  to those  agreements.   As the  joint venture                                                               
organization  comes  together,  DNR  or DOR  staff  will  not  be                                                               
seconded  to that  organization,  but employees  of  each of  the                                                               
other parties  will be.   If  the intent is  for the  agencies to                                                               
report, then he would recommend stating it in that manner.                                                                      
                                                                                                                                
CO-CHAIR SADDLER understood that at  a certain point the interest                                                               
of the  state will be  picked up by AGDC  and AGDC will  become a                                                               
party for  that purpose.   It would  be his intention,  after DNR                                                               
and DOR step back, to  have the responsibilities seconded to AGDC                                                               
so AGDC would become one of the parties that must report.                                                                       
                                                                                                                                
COMMISSIONER BALASH said that is correct.                                                                                       
                                                                                                                                
2:43:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HAWKER  asked whether  Amendment 6  would restrict                                                               
the ability  of any legislative committee  from at-will convening                                                               
a  committee and  requesting the  same  sort of  briefings as  is                                                               
attempted to be codified in the amendment.                                                                                      
                                                                                                                                
CO-CHAIR SADDLER replied  no, that is not his  reading or intent.                                                               
He  further said  it  is  envisioned that  there  might be  other                                                               
confidential briefings to legislative committees.                                                                               
                                                                                                                                
REPRESENTATIVE  SEATON  inquired  whether  TransCanada  would  be                                                               
considered one  of the parties  on behalf of  the state or  as an                                                               
entity  making expenditures.   He  said  he wants  to ensure  the                                                               
report will be inclusive of the information that is desired.                                                                    
                                                                                                                                
MR. PAWLOWSKI allowed that is a  good point and said direction of                                                               
who does  the written report is  important.  He said  he looks at                                                               
the  amendment as  having two  separate concepts  -- the  project                                                               
providing updates and  a written report being  provided about the                                                               
amount  of  money  the  state  may  be  obligated  to  pay.    He                                                               
recommended that  DNR be  the one developing  the report  for the                                                               
legislature, given  it would be  the lead in this  negotiation of                                                               
contracts.  Given that the  agreement between DNR and TransCanada                                                               
would  be   that  of   shipper/transporter  developed   under  AS                                                               
38.05.020(b)(10) and (11), it may  be appropriate to get specific                                                               
about  exactly  the  relationship   and  the  expenses  that  are                                                               
obligated under  those contracts.   He offered  to work  with the                                                               
amendment sponsor to come up with additional language.                                                                          
                                                                                                                                
2:46:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  asked whether  the  sponsor  is asking  for  the                                                               
quarterly reports to  be delivered from the  unified project with                                                               
all  parties  as  signatories or  individual  reports  from  each                                                               
party.                                                                                                                          
                                                                                                                                
CO-CHAIR SADDLER answered his intent is for a collective report.                                                                
                                                                                                                                
REPRESENTATIVE TARR  inquired whether  amendments to  Amendment 6                                                               
will be made now.                                                                                                               
                                                                                                                                
CO-CHAIR SADDLER  responded he will  take the amendment  back and                                                               
work on the changes.                                                                                                            
                                                                                                                                
REPRESENTATIVE HAWKER drew attention to  the language on [line 7]                                                               
of "interested"  legislators, legislative staff,  and legislative                                                               
consultants.    He  asked  whether   the  intent  is  for  public                                                               
briefings or for executive session confidential briefings.                                                                      
                                                                                                                                
CO-CHAIR SADDLER replied the briefings would be public.                                                                         
                                                                                                                                
REPRESENTATIVE HAWKER commented the amendment seems redundant to                                                                
the power that legislative committees already have.                                                                             
                                                                                                                                
2:48:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE set aside Amendment 6.                                                                                           
                                                                                                                                
2:49:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER moved to adopt Amendment 7, labeled 28-                                                                        
GS2806\I.A.46, Bullock, 4/2/14, which read:                                                                                     
                                                                                                                                
     Page 53, following line 14:                                                                                                
     Insert a new bill section to read:                                                                                         
        "*  Sec. 58.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          AGREEMENTS   AND   CONTRACTS   RELATING   TO   THE                                                                    
     TRANSPORTATION  OF NATURAL  GAS.  (a)  An agreement  or                                                                    
     contract entered into by the  state or an agency of the                                                                    
     state  for the  transportation of  natural gas  may not                                                                    
     allow the transporter to have  an option to participate                                                                    
     in  an   in-state  natural  gas  pipeline   project  as                                                                    
     described in AS 31.25.005(4).                                                                                              
          (b)  In this section,                                                                                                 
               (1)  "Alaska liquefied natural gas project"                                                                      
     has the  meaning given  in AS 31.25.390(7),  enacted by                                                                    
     sec. 12 of this Act;                                                                                                       
               (2)  "transporter" means a person providing                                                                      
     gas   treatment  plant   processing  and   natural  gas                                                                    
     transportation  services in  natural gas  pipelines and                                                                    
     gas  transmission  lines  that  are  components  of  an                                                                    
     Alaska liquefied natural gas project."                                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
2:50:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER, to address Amendment  7, explained that Section                                                               
9 of  the MOU provides TransCanada  with what he calls  the "back                                                               
in  provision"  or  what  has  been termed  the  right  of  first                                                               
refusal.   Under this  provision, if  the state's  agreement with                                                               
TransCanada is  terminated and the state  pursues a substantially                                                               
similar project  within five years,  TransCanada must  be offered                                                               
the opportunity to come back into  the deal.  The MOU states that                                                               
this "back  in provision" would  only apply to something  that is                                                               
substantially  similar to  the full-bore  Alaska LNG  Project, he                                                               
said,  but there  is  not a  clear  definition of  "substantially                                                               
similar."  The  committee has heard that there is  no bright line                                                               
definition that  delineates what  is a  small diameter  ASAP line                                                               
and  what   is  a  substantially  similar   Alaska  LNG  Project,                                                               
particularly if the  constraints of AGIA are lost  as is proposed                                                               
in the  bill.  While optimistic  that a large diameter  line will                                                               
be  built, and  that the  Heads  of Agreement  and Memorandum  of                                                               
Understanding provide  a good shot  at getting there, he  said it                                                               
must be ensured  that the clear backup plan will  not get hung up                                                               
or  confused.   However, should  the Alaska  LNG Project  falter,                                                               
there needs  to be a  way to go  forward with a  smaller diameter                                                               
plan, a backup  option, that includes a clean  break between what                                                               
TransCanada would or would not be allowed to back into.                                                                         
                                                                                                                                
2:51:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI  requested clarification  of  "codified"                                                               
and "uncodified" law and the full impacts of the bill.                                                                          
                                                                                                                                
MR. PAWLOWSKI deferred to the Department of Law for an answer.                                                                  
                                                                                                                                
SUSAN  POLLARD, Assistant  Attorney  General, Oil,  Gas &  Mining                                                               
Section, Civil Division (Juneau),  Department of Law (DOL), spoke                                                               
to the  difference between uncodified  law and something  that is                                                               
in statute,  noting that  quite a few  amendments here  are being                                                               
placed in uncodified  law.  She explained that  when something is                                                               
of short-term  duration, such  as one  contract that  will happen                                                               
and that will not be a  law of general applicability, the drafter                                                               
will put it in uncodified law because  it is not going to need to                                                               
be  adhered  to  five  years  from now  when  the  situation  has                                                               
changed.  Sometimes there is  the belief that uncodified law does                                                               
not  have  to be  complied  with,  but  that is  not  necessarily                                                               
accurate.  It will  still be in the statute books  and it must be                                                               
paid attention  to.  When  it is there,  but there for  a limited                                                               
duration, it is not like it can just be ignored.                                                                                
                                                                                                                                
2:53:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON requested a restatement of Amendment 7.                                                                
                                                                                                                                
CO-CHAIR   SADDLER   explained   Amendment   7   would   prohibit                                                               
TransCanada from exercising its right  of first refusal, or "back                                                               
in provision"  as he terms  it, to  a project described  as ASAP,                                                               
the  smaller in-state  line, should  the large  diameter line  be                                                               
terminated.                                                                                                                     
                                                                                                                                
CO-CHAIR FEIGE surmised  the sponsor's reasoning is  that ASAP is                                                               
not a substantially similar project to the Alaska LNG Project.                                                                  
                                                                                                                                
CO-CHAIR SADDLER responded the reason  for Amendment 7 is that it                                                               
is not  clearly delineated whether ASAP  is substantially similar                                                               
and it is not  clear when it might change from  one or the other.                                                               
Amendment 7 would establish a  bright line that TransCanada would                                                               
not have  the right to join  the ASAP line as  described under AS                                                               
31.25.005(4); it would keep the state's backup plan clean.                                                                      
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:55:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE clarified  that  AS 31.25.005(4)  is  new and  is                                                               
included in CSSB 138(FIN) am, page 3, line 4.                                                                                   
                                                                                                                                
REPRESENTATIVE HAWKER  understood Amendment 7 would  deny, in any                                                               
one of the contracts that would  be executed under passage of the                                                               
bill, the five-year period in  which TransCanada can come back in                                                               
and participate  in another project  in the state of  Alaska that                                                               
is substantially similar.   In the amendment, page  1, lines 7-8,                                                               
state that the  transporter, TransCanada in this  case, would not                                                               
be  allowed to  have  an  option to  participate  in an  in-state                                                               
natural  gas pipeline  project as  described in  AS 31.25.005(4).                                                               
Directing attention to  the bill, page 3, lines  4-11, he pointed                                                               
out  that the  language is  carryover  language from  HB 4,  last                                                               
year's  original  AGDC  legislation,  which  talks  about  moving                                                               
forward a  natural gas  pipeline in  accordance with  the project                                                               
plan  under   House  Bill  369   while  AGDC  was   a  subsidiary                                                               
corporation of  Alaska Housing Finance  Corporation (AHFC).   The                                                               
words  "with  modifications" allowed  AGDC  to  move forward  but                                                               
modify that  original project  plan as determined  by AGDC  to be                                                               
appropriate.   Some  of those  modifications  came into  fruition                                                               
under the  7/1/11 project plan  as AGDC  moved into its  own Pre-                                                               
FEED process;  a project is modified  as it evolves into  what it                                                               
is  going to  become.   Bringing attention  to subsection  (b) of                                                               
Amendment  7, Representative  Hawker noted  it defines  an Alaska                                                               
liquefied natural  gas project  and asked  where the  language is                                                               
that is relevant to this section.   The prohibition is against an                                                               
in-state   natural   gas   pipeline   project   defined   in   AS                                                               
31.25.005(4),  but  the  words   "Alaska  liquefied  natural  gas                                                               
project"  are not  seen in  that  paragraph or  in the  paragraph                                                               
describing the prohibition.                                                                                                     
                                                                                                                                
CO-CHAIR SADDLER  responded it  is an  artifact of  bill drafting                                                               
requiring a definition  of transporter.  It  is easier understood                                                               
if (b)(2)  of the amendment is  taken first.  It  is necessary to                                                               
define transporter as done in the  amendment, page 1, line 7, and                                                               
then go to (b)(1).  The transporter  is defined as a party in the                                                               
Alaska liquefied  natural gas project  and the project  in (b)(1)                                                               
is defined as AS 31.25.390(7).                                                                                                  
                                                                                                                                
3:01:51 PM                                                                                                                    
                                                                                                                                
COMMISSIONER BALASH said he  would appreciate further explanation                                                               
of intent from the sponsor in  regard to line 8 of the amendment,                                                               
which describes  the ASAP project  as originally planned  in 2011                                                               
but  then modified.    He asked  whether modified  is  up to  the                                                               
present date  or as it  continues to be  modified over time.   He                                                               
said he  is concerned  that the  AGDC board  in the  future might                                                               
further  modify  the  ASAP  plan  to  be  substantially  similar;                                                               
therefore, he  is trying to  get his arms around  this particular                                                               
reference  and what  is being  said.   Is the  legislature saying                                                               
that  [the state's]  agreements cannot  include options  on them?                                                               
[The administration]  has had conversations with  TransCanada and                                                               
AGDC,  and  AGDC and  TransCanada  have  had conversations,  that                                                               
TransCanada is  not particularly  interested in  participating in                                                               
ASAP.   TransCanada is not  part of the builder,  owner, operator                                                               
process that has  been going on.   If a stake could  be driven in                                                               
the ground  on this reference  in AS 31.25.005(4) to  ASAP today,                                                               
it is an easy no-harm no-foul approach.                                                                                         
                                                                                                                                
CO-CHAIR SADDLER replied  there seems to be a  lingering trail in                                                               
the bill  on page 3,  line 6,  and the word  "modifications" such                                                               
that  what  he  is  trying  to address  here  could  continue  to                                                               
transmogrify over  time.   Therefore, at this  time, he  does not                                                               
know  how to  re-craft  the amendment  to cut  off  that line  of                                                               
development.                                                                                                                    
                                                                                                                                
3:04:19 PM                                                                                                                    
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR FEIGE said discussion of Amendment 7 will be continued                                                                 
on April 5, 2014.                                                                                                               
                                                                                                                                
[CSSB 138(FIN) am was held over.]                                                                                               
                                                                                                                                
3:05:24 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The House Resources Standing Committee was recessed at 3:05 p.m.                                                                
to be continued at 10:00 a.m. on 4/5/14.                                                                                        
                                                                                                                                
                                                                                                                                
Following is the text for amendments labeled 28-GS2806\I.A.49,                                                                  
28-GS2806\I.A.79, 28-GS2806\I.A.18, and 28-GS2806\I.A.54:                                                                       
                                                                                                                                
                                                                                                                                
Amendment [by Representative Hawker], labeled 28-GS2806\I.A.49,                                                             
                     Nauman/Bullock, 4/2/14                                                                                 
                                                                                                                                
     Page 54, line 28:                                                                                                          
          Delete "of"                                                                                                           
          Insert "and analysis by"                                                                                              
                                                                                                                                
     Page 55, line 21:                                                                                                          
          Delete "and"                                                                                                          
                                                                                                                                
     Page 55, line 23, following "interest":                                                                                    
          Insert ";                                                                                                             
               (8)  whether the ownership interest held by                                                                      
       a municipality, regional corporation, or resident                                                                        
     would be subject to project assessments;                                                                                   
               (9)  how cash calls for the project and the                                                                      
     expansion of the project would be managed;                                                                                 
               (10)  the income tax consequences to the                                                                         
     holder of  an ownership interest, including  the timing                                                                    
     and  recognition of  income  related  to the  ownership                                                                    
     interest, including  differentiating income  related to                                                                    
     the ownership  interest from  the receipt  of dividends                                                                    
     or other distributions;                                                                                                    
               (11)  the risk that the receipt of a benefit                                                                     
       from the project by a person other than the state                                                                        
     would  make income  received from  the  project by  the                                                                    
     state subject to federal income tax; and                                                                                   
               (12)  constitutional issues that may be                                                                          
     implicated  by  restricting ownership  interests  under                                                                    
     the plan to residents and municipalities in the state"                                                                     
                                                                                                                                
     Page 55, following line 24:                                                                                                
          Insert a new paragraph to read:                                                                                       
               "(1)  "municipality" means a municipality in                                                                     
     the state;"                                                                                                                
                                                                                                                                
     Renumber the following paragraphs accordingly.                                                                             
                                                                                                                                
                                                                                                                                
  Amendment by Representative Feige, labeled 28-GS2806\I.A.79,                                                              
                     Nauman/Bullock, 4/4/14                                                                                 
                                                                                                                                
     Page 2, line 5, following "credit;":                                                                                     
          Insert "requiring the commissioner of revenue to                                                                    
     provide  a  report  to  the  legislature  on  financing                                                                  
     options  for state  ownership  and  participation in  a                                                                  
     North Slope natural gas project;"                                                                                        
                                                                                                                                
     Page 53, following line 14:                                                                                                
          Insert a new bill section to read:                                                                                    
        "*  Sec. 58.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          IDENTIFICATION OF AND REPORT ON FINANCING OPTIONS                                                                     
     FOR STATE OWNERSHIP AND PARTICIPATION  IN A NORTH SLOPE                                                                    
     NATURAL GAS  PROJECT. (a)  The commissioner  of revenue                                                                    
     shall  identify  and report  to  the  legislature on  a                                                                    
     range of financing options for  state acquisition of an                                                                    
     ownership interest  and participation in a  North Slope                                                                    
     natural  gas   project.  The  report  must   include  a                                                                    
     description  of the  risk associated  with each  option                                                                    
     and the effect  of each option on  the bonding capacity                                                                    
     and  bond  rating of  the  state.  In this  subsection,                                                                    
     "North  Slope  natural  gas project"  has  the  meaning                                                                    
     given in  AS 38.05.965, as amended  by sec. 23  of this                                                                    
     Act.                                                                                                                       
          (b)  The commissioner shall make the report                                                                           
     described  in  (a) of  this  section  available to  the                                                                    
     legislature  on  the first  day  of  the First  Regular                                                                    
     Session of the Twenty-Ninth Alaska State Legislature."                                                                     
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
                                                                                                                                
  Amendment by Representative Feige, labeled 28-GS2806\I.A.18,                                                              
                         Nauman, 4/2/14                                                                                     
                                                                                                                                
     Page 2, line 14, following "projects;":                                                                                  
          Insert "relating to the duties of the Oil and Gas                                                                   
     Competitiveness Review Board;"                                                                                           
                                                                                                                                
     Page 53, following line 13:                                                                                                
     Insert a new bill section to read:                                                                                         
        "* Sec. 57. AS 43.98.050 is amended to read:                                                                        
          Sec. 43.98.050. Duties. The duties of the board                                                                     
     include the following:                                                                                                     
               (1)  establish and maintain a salient                                                                            
     collection  of  information  related  to  oil  and  gas                                                                    
     exploration, development,  and production in  the state                                                                    
     and related  to tax  structures, rates, and  credits in                                                                    
     other regions with oil and gas resources;                                                                                  
               (2)  review historical, current, and                                                                             
     potential levels  of investment in the  state's oil and                                                                    
     gas sector;                                                                                                                
               (3)  identify factors that affect investment                                                                     
     in   oil   and   gas  exploration,   development,   and                                                                    
     production  in  the  state,  including  tax  structure,                                                                    
     rates,     and    credits;     royalty    requirements;                                                                    
     infrastructure; workforce  availability; and regulatory                                                                    
     requirements;                                                                                                              
               (4)  review the competitive position of the                                                                      
     state  to attract  and maintain  investment in  the oil                                                                    
     and  gas  sector  in  the  state  as  compared  to  the                                                                    
     competitive position of other  regions with oil and gas                                                                    
     resources;                                                                                                                 
               (5)  in order to facilitate the work of the                                                                      
     board,   establish  procedures   to  accept   and  keep                                                                    
     confidential  information  that  is beneficial  to  the                                                                    
     work of the  board, including the creation  of a secure                                                                    
     data room  and confidentiality agreements to  be signed                                                                    
     by   individuals   having    access   to   confidential                                                                    
     information;                                                                                                               
               (6)        make    written    findings    and                                                                    
     recommendations to the Alaska State Legislature before                                                                     
               (A)  January 31, 2015,  or as soon thereafter                                                                    
     as practicable, regarding                                                                                                  
               (i)    changes   to  the  state's  regulatory                                                                    
     environment  and  permitting  structure that  would  be                                                                    
     conducive  to  encouraging increased  investment  while                                                                    
     protecting  the interests  of the  people of  the state                                                                    
     and the environment;                                                                                                       
               (ii)  the status of  the oil and gas industry                                                                    
     labor  pool  in  the  state and  the  effectiveness  of                                                                    
     workforce development efforts by the state;                                                                                
               (iii) the  status of  the oil-and-gas-related                                                                    
     infrastructure  of the  state, including  a description                                                                    
     of infrastructure deficiencies; [AND]                                                                                      
               (iv)    the  competitiveness of  the  state's                                                                    
     fiscal oil  and gas tax  regime when compared  to other                                                                    
     regions of the world; and                                                                                              
               (v)  a review  of the  state's tax  structure                                                                
     and rates on  oil and gas produced  from deposits south                                                                
     of 68 degrees North latitude;                                                                                          
               (B)  January 31, 2021,  or as soon thereafter                                                                    
     as practicable, regarding                                                                                                  
               (i)   changes  to the  state's fiscal  regime                                                                    
     that would be conducive  to increased and ongoing long-                                                                    
     term investment  in and development of  the state's oil                                                                    
     and gas resources;                                                                                                         
               (ii)   alternative  means for  increasing the                                                                    
     state's ability  to attract and maintain  investment in                                                                    
     and development  of the state's oil  and gas resources;                                                                    
     and                                                                                                                        
               (iii)  a review  of the current effectiveness                                                                    
     and future value  of any provisions of  the state's oil                                                                    
     and gas  tax laws  that are expiring  in the  next five                                                                    
     years."                                                                                                                    
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                
                                                                                                                                
 Amendment by Representative Hawker, labeled 28-GS2806\I.A.54,                                                              
                     Nauman/Bullock, 4/2/14                                                                                 
                                                                                                                                
     Page 2, line 14, following "project;":                                                                                   
          Insert "requiring the Department of Revenue to                                                                      
     deliver  a report  and  recommendations  relating to  a                                                                  
     reduction in gross value at  the point of production or                                                                  
     creation of other incentives for  production of oil and                                                                  
     gas in the state south of the North Slope;"                                                                              
                                                                                                                                
     Page 55, following line 30:                                                                                                
     Insert a new bill section to read:                                                                                         
        "*  Sec. 61.  The  uncodified law  of  the State  of                                                                
     Alaska is amended by adding a new section to read:                                                                         
          STUDY AND REPORT ON OIL AND GAS PRODUCTION                                                                            
     INCENTIVES. The  Department of Revenue shall  study the                                                                    
     effect of providing  a reduction in the  gross value at                                                                    
     the point  of production  for oil  and gas  produced in                                                                    
     the state  south of 68  degrees North latitude  that is                                                                    
     similar to  the reduction in  gross value at  the point                                                                    
     of production  in AS 43.55.160(f)  and (g),  as amended                                                                    
     by  secs. 48  and 49  of  this Act,  for certain  areas                                                                    
     north  of 68  degrees  North latitude.  The study  must                                                                    
     take into  account the unique economic  circumstance of                                                                    
     each  producing   area  south   of  68   degrees  North                                                                    
     latitude, and  estimate the additional  production that                                                                    
     could be  achieved by authorizing a  reduction in gross                                                                    
     value at  the point  of production.  Before January 15,                                                                    
     2017,  the department  shall deliver  a  report to  the                                                                    
     legislature that includes the  results of the study and                                                                    
     a  proposal to  create  an incentive  for  oil and  gas                                                                    
     production south  of 68 degrees  North latitude  in the                                                                    
     form of a reduction in the  gross value at the point of                                                                    
     production or by other means."                                                                                             
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 56, line 6:                                                                                                           
          Delete "61"                                                                                                           
          Insert "62"                                                                                                           
                                                                                                                                
     Page 56, line 9:                                                                                                           
          Delete "secs. 62 and 63"                                                                                              
          Insert "secs. 63 and 64"                                                                                              
                                                                                                                                

Document Name Date/Time Subjects
I.A.3 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.7 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.11.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.13.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.17.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.18Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.22Wilson 1DOC.PDF HRES 4/4/2014 1:00:00 PM
SB 138
I.A.25.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.27.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.28.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.29 Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.31.Saddler.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.32.Saddler.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.37.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.38.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.39.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.40.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.41.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.42.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.44TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.45.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.46.Saddler.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.48Hawker Amendment-Fund of State.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.49Hawker Amendment-AK Ownership.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.50 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.51 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.52 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.54Hawker Amendment-Cook Inlet Plan.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.55.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.56 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.58Wilson 2 DOC.PDF HRES 4/4/2014 1:00:00 PM
SB 138
I.A.61.TARR.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.62 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.63.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.64.KAWASAKI.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.65 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.66 SEATON.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.67.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.69.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138
I.A.79.Feige.pdf HRES 4/4/2014 1:00:00 PM
SB 138