Legislature(2017 - 2018)BARNES 124

04/14/2017 01:00 PM House RESOURCES

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Audio Topic
01:02:21 PM Start
01:03:29 PM HB177
01:06:20 PM Presentation: Ak Gasline Development Corporation Status Update
02:24:23 PM HB211
02:56:16 PM HB201
03:11:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: AK Gasline Development Corp. TELECONFERENCED
Status Update
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
<Bill Hearing Postponed>
-- Testimony <Invitation Only> --
<Bill Hearing Postponed>
-- Testimony <Invitation Only> --
Moved CSHB 177(RES) Out of Committee
-- Testimony <Invitation Only> --
Moved CSHB 211(RES) Out of Committee
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 14, 2017                                                                                         
                           1:02 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Andy Josephson, Co-Chair                                                                                         
Representative Geran Tarr, Co-Chair                                                                                             
Representative Dean Westlake, Vice Chair                                                                                        
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
MEMBERS ABSENT                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
Representative Chris Tuck (alternate)                                                                                           
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 177                                                                                                              
"An  Act relating  to the  response to,  and control  of, aquatic                                                               
invasive  species;  establishing  the  aquatic  invasive  species                                                               
response  fund;  and relating  to  the  provision of  information                                                               
about  aquatic invasive  species to  users of  the Alaska  marine                                                               
highway system."                                                                                                                
     - MOVED CSHB 177(RES) OUT OF COMMITTEE                                                                                     
PRESENTATION: AK GASLINE DEVELOPMENT CORPORATION STATUS UPDATE                                                                  
     - HEARD                                                                                                                    
HOUSE BILL NO. 211                                                                                                              
"An Act requiring  a nonresident to be accompanied by  a guide or                                                               
resident  spouse or  relative when  hunting certain  caribou; and                                                               
providing for an effective date."                                                                                               
     - MOVED CSHB 211(RES) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 201                                                                                                              
"An  Act  relating  to  municipal  regulation  of  trapping;  and                                                               
providing for an effective date."                                                                                               
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 217                                                                                                              
"An Act relating to the Alaska Food, Drug, and Cosmetic Act;                                                                    
relating to the sale of milk, milk products, raw milk, and raw                                                                  
milk products; and providing for an effective date."                                                                            
     - BILL HEARING POSTPONED                                                                                                   
HOUSE BILL NO. 218                                                                                                              
"An Act relating to the state veterinarian and to animals and                                                                   
animal products."                                                                                                               
     - BILL HEARING POSTPONED                                                                                                   
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 177                                                                                                                  
SHORT TITLE: AQUATIC INVASIVE SPECIES                                                                                           
SPONSOR(s): REPRESENTATIVE(s) TARR                                                                                              
03/14/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/17       (H)       RES, FIN                                                                                               
04/05/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/05/17       (H)       Scheduled but Not Heard                                                                                
04/07/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/07/17       (H)       Heard & Held                                                                                           
04/07/17       (H)       MINUTE(RES)                                                                                            
04/10/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/10/17       (H)       -- MEETING CANCELED --                                                                                 
04/12/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/12/17       (H)       Scheduled but Not Heard                                                                                
04/13/17       (H)       RES AT 5:00 PM BARNES 124                                                                              
04/13/17       (H)       -- Continued from 4/12/17 --                                                                           
04/14/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
BILL: HB 211                                                                                                                  
SHORT TITLE: NONRESIDENT HUNTING REQUIREMENTS: CARIBOU                                                                          
SPONSOR(s): REPRESENTATIVE(s) WESTLAKE                                                                                          
04/05/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/05/17       (H)       RES                                                                                                    
04/12/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/12/17       (H)       Scheduled but Not Heard                                                                                
04/13/17       (H)       RES AT 5:00 PM BARNES 124                                                                              
04/13/17       (H)       -- Continued from 4/12/17 --                                                                           
04/14/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
BILL: HB 201                                                                                                                  
SHORT TITLE: MUNICIPAL REGULATION OF TRAPPING                                                                                   
SPONSOR(s): REPRESENTATIVE(s) JOSEPHSON                                                                                         
03/29/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/29/17       (H)       CRA, RES                                                                                               
04/11/17       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/11/17       (H)       Heard & Held                                                                                           
04/11/17       (H)       MINUTE(CRA)                                                                                            
04/13/17       (H)       CRA AT 8:00 AM BARNES 124                                                                              
04/13/17       (H)       Moved CSHB 201(CRA) Out of Committee                                                                   
04/13/17       (H)       MINUTE(CRA)                                                                                            
04/14/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
KEITH MEYER, President                                                                                                          
Alaska Gasline Development Corporation                                                                                          
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided a PowerPoint presentation prepared                                                              
by the Alaska Gasline Development Corporation dated 4/14/17, and                                                                
answered questions.                                                                                                             
LIEZA WILCOX, Vice President                                                                                                    
Commercial and Economics                                                                                                        
Alaska Gasline Development Corporation                                                                                          
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Participated in a PowerPoint presentation                                                                
prepared by the Alaska Gasline Development Corporation dated                                                                    
4/14/17, and answered questions.                                                                                                
BERNARD CHASTAIN, Major; Deputy Director                                                                                        
Division of Alaska Wildlife Troopers                                                                                            
Department of Public Safety                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during the hearing of HB
FORREST WOLFE, Staff                                                                                                            
Representative Dean Westlake                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Speaking   on  behalf  of  Representative                                                             
Westlake, sponsor,  answered questions  during the hearing  of HB
THOR STACEY, Lobbyist                                                                                                           
Alaska Professional Hunters Association                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing of HB
MEGAN ROWE, Staff                                                                                                               
Representative Andy Josephson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Speaking   on  behalf  of  Representative                                                           
Josephson, sponsor,  answered questions during the  hearing of HB
BERNARD CHASTAIN, Major; Deputy Director                                                                                        
Division of Alaska Wildlife Troopers                                                                                            
Department of Public Safety                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the hearing of HB
BRUCE DALE, Director                                                                                                            
Division of Wildlife Conservation                                                                                               
Alaska Department of Fish & Game                                                                                                
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:   Answered a  question during the  hearing of                                                             
HB 201.                                                                                                                         
ACTION NARRATIVE                                                                                                              
1:02:21 PM                                                                                                                    
CO-CHAIR  GERAN   TARR  called   the  House   Resources  Standing                                                             
Committee meeting  to order at  1:02 p.m.   Representatives Tarr,                                                               
Parish,  Talerico,  Rauscher,  Drummond, Johnson,  and  Josephson                                                               
were present at the call  to order.  Representatives Westlake and                                                               
Birch arrived as the meeting was in progress.                                                                                   
                 HB 177-AQUATIC INVASIVE SPECIES                                                                            
1:03:29 PM                                                                                                                    
CO-CHAIR TARR  announced that the  first order of  business would                                                               
be HOUSE BILL  NO. 177, "An Act relating to  the response to, and                                                               
control of,  aquatic invasive  species; establishing  the aquatic                                                               
invasive species response fund; and  relating to the provision of                                                               
information  about  aquatic  invasive  species to  users  of  the                                                               
Alaska marine highway system."                                                                                                  
CO-CHAIR TARR  reminded the committee  HB 177 was  amended during                                                               
the hearing  on 4/13/17 to  add an additional  prevention measure                                                               
to  share information  related to  aquatic invasive  species with                                                               
individuals  who  register  boats  with  the  Division  of  Motor                                                               
Vehicles,  Department   of  Administration.    She   said  [state                                                               
legislation would not have jurisdiction  over owners who register                                                               
floatplanes  as]  floatplanes  are registered  with  the  Federal                                                               
Aviation Administration, U.S. Department of Transportation.                                                                     
1:05:34 PM                                                                                                                    
CO-CHAIR JOSEPHSON  moved to  report HB 177,  as amended,  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  177(RES)  was                                                               
reported from the House Resources Standing Committee.                                                                           
^PRESENTATION: AK GASLINE DEVELOPMENT CORPORATION STATUS UPDATE                                                                 
 PRESENTATION: AK GASLINE DEVELOPMENT CORPORATION STATUS UPDATE                                                             
1:06:20 PM                                                                                                                  
CO-CHAIR TARR announced that the  next order of business would be                                                               
a presentation by the Alaska Gasline Development Corporation.                                                                   
1:06:58 PM                                                                                                                    
KEITH  MEYER, President,  Alaska Gasline  Development Corporation                                                               
(AGDC),  began AGDC's  update on  the  Alaska [liquefied  natural                                                               
gas]  Project  (Alaska  LNG),  and  informed  the  committee  the                                                               
project's three main focus areas  for 2017-2018 are:  regulatory,                                                               
finance, and commercial.   Also included in  the presentation are                                                               
Alaska LNG  milestones, marketing  efforts, a  commercial update,                                                               
and upcoming activities [slide 2].   Firstly, as an update on the                                                               
"regulatory  side,"  he  said  [on 4/13/17]  the  AGDC  board  of                                                               
directors approved  AGDC's filing of  an application to  obtain a                                                               
Natural  Gas  Act  Section  3  permit  from  the  Federal  Energy                                                               
Regulatory  Commission (FERC).   In  the past  two years,  AGDC's                                                               
work  has been  directed toward  the FERC  National Environmental                                                               
Policy  Act of  1969 (NEPA)  prefiling  phase -  during which  an                                                               
applicant  interfaces   with  agencies  -  and   draft  prefiling                                                               
documents were  submitted to  FERC.  Questions  from FERC  on the                                                               
draft documents  have been addressed, and  the formal application                                                               
will be filed  [4/17/17].  Mr. Meyer said  filing the application                                                               
begins  a  formal  process  with  FERC  that  will  end  with  an                                                               
authorization  to construct  the facilities.   He  explained that                                                               
all FERC  questions have  been addressed:   2,000  questions have                                                               
been   answered,  and   some  will   be   answered  after   final                                                               
engineering.   Further, state agencies participated  in answering                                                               
FERC  questions, as  the  state,  - through  AGDC  -  is now  the                                                               
applicant.  The Department of  Natural Resources (DNR) will serve                                                               
as the  point of  contact between state  and federal  agencies as                                                               
relates  to state-  and NEPA-related  questions.   Furthermore, a                                                               
public awareness  campaign will commence 4/20/17,  beginning with                                                               
community  meetings   across  the   state  in  which   FERC  will                                                               
participate.      [AGDC]   is   also   interviewing   engineering                                                               
procurement  construction   (EPC)  contractors  to   assist  with                                                               
technical  regulatory  questions   and  capital  cost  estimates.                                                               
Lastly,  AGDC is  finalizing negotiations  on  the site  purchase                                                               
[slide 3].                                                                                                                      
1:12:10 PM                                                                                                                    
REPRESENTATIVE  PARISH  asked whether  the  land  upon which  the                                                               
pipeline  would  be  built  is  currently  owned  by  [ExxonMobil                                                               
Corporation, BP, and ConocoPhillips Alaska, Inc.]                                                                               
MR. MEYER  clarified the aforementioned  land is the site  of the                                                               
proposed  LNG  facility  in  Nikiski.   In  further  response  to                                                               
Representative Parish, he explained  AGDC, as applicant, needs to                                                               
either  own  or  control  the  land.    In  further  response  to                                                               
Representative Parish, he said AGDC  seeks to acquire the land at                                                               
a cost  of about $50 million,  but that does not  include all the                                                               
parcels of land that are needed.                                                                                                
REPRESENTATIVE  PARISH  questioned   whether  additional  parcels                                                               
would be acquired from a municipality and private owners.                                                                       
MR. MEYER said correct.                                                                                                         
REPRESENTATIVE TALERICO asked when FERC would issue its permit.                                                                 
MR. MEYER said  the FERC process would take about  18 months, but                                                               
may take less  time because of the  new [federal] administration,                                                               
and because of the amount of work previously completed.                                                                         
REPRESENTATIVE BIRCH inquired as to  whether the land purchase is                                                               
unconditional, or is subject to the project advancing.                                                                          
MR.  MEYER cautioned  that he  could  not breach  confidentiality                                                               
agreements with the  present owners; AGDC seeks an  option to buy                                                               
that  would  not  be  exercised  until  after  the  FERC  process                                                               
granting AGDC the authority to build on the land.                                                                               
REPRESENTATIVE  BIRCH  hoped  a  project  with  some  measure  of                                                               
uncertainty  would  not be  obligated  to  spend $50  million  on                                                               
MR. MEYER said, "That is the plan."                                                                                             
REPRESENTATIVE JOHNSON asked for the term of the FERC [permit].                                                                 
MR.  MEYER   said  typical  FERC  authorizations   to  build  LNG                                                               
facilities allow five  years to start construction,  but it could                                                               
be longer or shorter.                                                                                                           
REPRESENTATIVE  PARISH  asked  if [ExxonMobil,  BP,  and  Conoco-                                                               
Phillips]  spent $50  million to  acquire the  land [for  the LNG                                                               
facility in Nikiski].                                                                                                           
MR. MEYER was  unsure, however, "the concept is, if  we would buy                                                               
it, we would buy it at cost."                                                                                                   
MR.  MEYER  turned to  updates  on  finance structure:  AGDC  has                                                               
performed  preliminary   modeling  of  the   third-party  finance                                                               
structure for the project; an  investor prospectus is underway to                                                               
show  that  the  project  is   competitive  and  will  provide  a                                                               
reasonable return  on investment;  a financial  advisor selection                                                               
process  is underway  and AGDC  will also  engage an  independent                                                               
registered municipal advisor as  required by the [Dodd-Frank Wall                                                               
Street  Reform and  Consumer Protection  Act  of 2010],  retained                                                               
through  the  Department of  Revenue  (DOR).   He  explained  the                                                               
financial advisor  would assist AGDC in  structuring assumptions,                                                               
and introduce  AGDC to the  global financial community.   A chart                                                               
illustrated investor cash flow for  a $40 billion project with 25                                                               
percent -  $10 billion - in  equity.  The timeline  indicated $10                                                               
billion  spent [beginning  in  2017], a  20-year  debt life,  and                                                               
returns of over $1 billion per  year up to about $2 billion spent                                                               
by the  end of  the contract  life.   At that  point the  debt is                                                               
paid,  and  if the  tolls  remain  the  same,  cash flow  to  the                                                               
investors  increases for  the life  of the  North Slope  resource                                                               
base.   Mr. Meyer stressed  the timeline shows the  project would                                                               
garner billions  of dollars in returns;  furthermore, a long-life                                                               
asset,  once debt  is  paid, with  a cash  flow  greater than  $5                                                               
billion per  year, could  be sold or  monetized for  an estimated                                                               
$50 billion [slide 4].                                                                                                          
REPRESENTATIVE  PARISH   questioned  how  AGDC  qualifies   as  a                                                               
MR.  MEYER  answered  AGDC  qualifies  as  a  municipality  under                                                               
protections provided  by the Dodd-Frank  Act because it  is owned                                                               
by  the state,  and thus  is  required to  engage an  independent                                                               
registered  municipal  advisor.     He  further  explained  if  a                                                               
financial advisor  provides advice to  AGDC, and AGDC  is without                                                               
protection from an independent  registered municipal advisor, the                                                               
financial  advisor might  preclude itself  from participating  in                                                               
debt offerings and equity.  As  DOR already has an agreement with                                                               
an  independent registered  financial advisor,  AGDC will  modify                                                               
and participate in the existing DOR agreement.                                                                                  
1:22:45 PM                                                                                                                    
CO-CHAIR TARR  asked if  [AGDC's status as  a municipality]  is a                                                               
separate issue from  the "letter ruling" the state  will seek for                                                               
taxation purposes.                                                                                                              
MR. MEYER said  AGDC's status as a municipality  grants some tax-                                                               
exempt status for  income tax.  To the extent  that AGDC owns the                                                               
project,  and  for the  portion  owned  by  AGDC, there  are  tax                                                               
advantages that cannot be passed to  a third party.  However, for                                                               
the portion owned by AGDC, there  will be no federal income taxes                                                               
to pay.                                                                                                                         
REPRESENTATIVE JOHNSON  asked whether AGDC is  subject to federal                                                               
open meetings laws.                                                                                                             
MR. MEYER said all AGDC board  meetings must be public when three                                                               
or more members gather.                                                                                                         
MR. MEYER continued to commercial  issues.  [AGDC] seeks to raise                                                               
awareness about  the project  in the LNG  community as  few funds                                                               
have been spent  on marketing outside of Alaska.   In fact, media                                                               
reports  during  the  transition  period may  have  inferred  the                                                               
project was failing,  thus there is an effort  to raise awareness                                                               
and  to push  for  commercial commitments.    Currently, AGDC  is                                                               
following up on  existing prospects in Asia and  elsewhere.  Also                                                               
as  part of  raising  awareness  of the  project,  AGDC seeks  to                                                               
correct misperceptions surrounding the  project's capital cost of                                                               
less than $45 billion, the  potential for phased development, and                                                               
that the delivered price for LNG  will be very competitive in the                                                               
global arena.  Upcoming commercial  activities will include China                                                               
and   a  broader   Asia-Pacific  commercial   plan,  a   capacity                                                               
solicitation process  to ask for  commitments on the  capacity of                                                               
the pipeline  and LNG plant,  and drafting of  tolling agreements                                                               
associated with  capacity commitments [slide  5].  Slide 6  was a                                                               
timeline beginning  in the  first quarter of  2017 (Q1  2017) and                                                               
continuing to the  first quarter of 2019 (Q1 2019).   In Q1 2017,                                                               
AGDC  will  engage  an  engineering  contractor  to  support  the                                                               
regulatory  and  financing  processes and  refine  capital  cost;                                                               
however,  this is  not a  detailed  engineering effort.   On  the                                                               
timeline  at Q2  2017  was  shown the  FERC  [Sec 3  application]                                                               
filing, and he advised receipt  of the draft environmental impact                                                               
statement  (EIS) will  take  about  one year.    After a  comment                                                               
period,  the   final  EIS,  a   brief  appeal  period,   and  the                                                               
authorizing order will  be completed in Q1 2019.   Also shown was                                                               
the  timeline for  commercial/financing  indicating  AGDC is  now                                                               
engaging  an independent  registered municipal  advisor, followed                                                               
by final  investor documents, marketing to  the global community,                                                               
and exploring debt financing and  ratings, all leading to a final                                                               
investment decision  (FID) in  Q1 2019.   The  third-party equity                                                               
process  would continue  from Q3  2017  through [Q4  2018].   Mr.                                                               
Meyer  said customer  engagement began  in late  December [2016],                                                               
and  will continue  along with  capacity  solicitation during  Q3                                                               
2017 and  beyond.   He  stressed between now and  2018, AGDC will                                                               
engage with the LNG market  and with capacity holders to finalize                                                               
contracts.  By  Q1 2019 the project will be  ready for FID, after                                                               
which "some  of big dollars  then get  spent, but the  funding is                                                               
from outside sources as well."  He  noted AGDC is "doing a lot of                                                               
paperwork in [2017 and 2018] ...."                                                                                              
1:30:39 PM                                                                                                                    
MR.  MEYER returned  to the  Alaska LNG  Summit which  was hosted                                                               
with  strong  local  support  from   Prudhoe  Bay  to  the  Kenai                                                               
Peninsula.      [AGDC]   brought  23   international   guests   -                                                               
representing 14 companies - from  Asia, to the conference, and he                                                               
described  the events  sponsored  by the  major producers,  labor                                                               
organizations,   government,  and   regional  corporations,   all                                                               
speaking in  support of the  project.   Costs of the  summit were                                                               
paid by sponsors and registration  fees.  In April, AGDC attended                                                               
the Gastech exhibition and conference  in Tokyo, Japan.  Upcoming                                                               
commercial  outreach efforts  include engaging  potential Chinese                                                               
LNG buyers, preparing for the CWC  [World LNG & Gas Series (CWC)]                                                               
conference in  Beijing, China, preparing  for the  CWC conference                                                               
in Houston, Texas, and expanding commercial efforts in the Asia-                                                                
Pacific region [slide 7].                                                                                                       
1:32:53 PM                                                                                                                    
MR.  MEYER said  the visit  of Chinese  President Xi  Jinping and                                                               
fourteen  of his  cabinet members  was  an historic  event.   The                                                               
meeting in  Alaska followed President  Xi's visit  with President                                                               
Trump, where he heard positive  statements about the project from                                                               
the American president.   Mr. Meyer pointed out China  is a major                                                               
energy  consumer and  the third  largest consumer  of LNG  in the                                                               
world.  Slide 8 illustrated  Chinese LNG demand and the reduction                                                               
in its supply as LNG contracts  expire in 2016:  China has growth                                                               
in demand and contracts expiring.  He remarked:                                                                                 
      President XI ... told me "We've got 100 years of LNG                                                                      
        demand."  I told him we've got 100 years of LNG                                                                         
     supply.  So, we're a beautiful fit together.                                                                               
1:34:42 PM                                                                                                                    
REPRESENTATIVE  BIRCH  inquired  as   to  the  potential  use  of                                                               
icebreaker LNG tankers operating out of Arctic nations.                                                                         
MR. MEYER  related the Russian  Yamal LNG project will  be served                                                               
by  ships with  icebreaking  capabilities built  in  China.   The                                                               
ships  are expensive  and not  as  efficient as  others, and  the                                                               
facility located on  the Yamal Peninsula cannot  be accessed year                                                               
around.  He acknowledged icebreaker  LNG tankers are being talked                                                               
about, but an LNG plant in the  Arctic would need to be built 30-                                                               
50 miles  offshore due  to water  depth; adding  the cost  of the                                                               
facility  and the  cost of  the  ships, the  total project  costs                                                               
would increase  by $10 billion.   Mr. Meyer opined better  use of                                                               
the  money is  building  a  pipeline to  a  facility  in a  known                                                               
location.   Further, a gas  pipeline can  serve all the  State of                                                               
Alaska,   providing   fuel   to  mining   projects   and   Alaska                                                               
REPRESENTATIVE PARISH  observed the  proposed gas  pipeline route                                                               
goes under  Cook Inlet to  Nikiski, and  asked why that  route is                                                               
preferred over the Trans-Alaska Pipeline System (TAPS) route.                                                                   
MR.  MEYER said  Alaska  has many  good sites  for  an LNG  plant                                                               
including  Valdez,  Port MacKenzie,  and  Nikiski.   Nikiski  was                                                               
selected  for   a  number  of   reasons  detailed  in   the  FERC                                                               
application.    He  offered  to provide  the  specific  list  [of                                                               
REPRESENTATIVE PARISH  understood FERC  identified Valdez  as the                                                               
preferred site, as reported in the media.                                                                                       
MR. MEYER said that is an incorrect statement.                                                                                  
REPRESENTATIVE PARISH read from a document not provided.                                                                        
MR. MEYER  explained there was a  route to Valdez approved  for a                                                               
previous  project.   However,  for  Alaska  LNG, Nikiski  is  the                                                               
preferred  site,  and  FERC  did not  say  otherwise  about  this                                                               
project.   Valdez would  have been  a fine  site; in  fact, there                                                               
could  be  a  future  LNG  facility  in  Valdez  supplied  by  an                                                               
interconnect to the proposed gas  pipeline.  He added Nikiski has                                                               
good water depth, good land, and accessibility.                                                                                 
1:41:15 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER also  read from  a report  in the  media                                                               
that  FERC is  now seeking  more information  about Valdez  as an                                                               
option [document not provided.                                                                                                  
MR.  MEYER acknowledged  there is  an intervenor  [exercising the                                                               
right of an  individual to request rehearing of a  FERC order] in                                                               
the FERC process who is requesting  FERC to approve Valdez as the                                                               
preferred site.  In further  response to Representative Rauscher,                                                               
he  explained  AGDC  will  have  to  respond  to  the  motion  to                                                               
intervene  and provide  further details  that support  Nikiski as                                                               
the preferred  site.   He advised, "...  the intervention  ... is                                                               
maybe going to cost  us, you know, a month or  two - changing the                                                               
site would cost us years."                                                                                                      
REPRESENTATIVE  PARISH questioned  whether Cook  Inlet is  a good                                                               
place to run a subaquatic gas pipeline.                                                                                         
MR. MEYER  said it is  "a perfectly  good place" for  an offshore                                                               
REPRESENTATIVE PARISH  recalled gas has  been lost in  Cook Inlet                                                               
recently due  to breaks  in subaquatic  pipelines.   He expressed                                                               
reservations about  running another  pipeline, and asked  for the                                                               
expected lifespan of the proposed pipeline.                                                                                     
MR.  MEYER  stated   a  pipeline  can  last  forever   if  it  is                                                               
maintained.  The proposed pipeline  traversing Cook Inlet will be                                                               
constructed of thick steel and coated with concrete.                                                                            
CO-CHAIR TARR  suggested the committee refer  to videos presented                                                               
at previous  Alaska LNG updates  where the  aforementioned topics                                                               
have been discussed in great  length.  She requested AGDC provide                                                               
the committee FERC filing information  on the location selection,                                                               
noting  there  have  been  steps   by  the  Alaska  congressional                                                               
delegation  related to  land acquisition  in the  Denali National                                                               
Park and Preserve  area, and there are safety  concerns about two                                                               
pipelines terminating in Valdez.                                                                                                
1:47:11 PM                                                                                                                    
LIEZA WILCOX,  Vice President,  Commercial and  Economics, Alaska                                                               
Gasline  Development Corporation,  DCCED,  directed attention  to                                                               
slide  10,  which  was  a graph  of  the  anticipated  production                                                               
profile of volumes of gas for  the first 30 years of the project,                                                               
from  2024 to  2054.    As illustrated  on  slide 10,  discovered                                                               
resource  on the  North Slope  located  in the  Prudhoe Bay  Unit                                                               
(PBU), the Point  Thomson Unit (PTU), and other  fields totals 35                                                               
trillion cubic  feet (Tcf),  an amount  sufficient to  supply the                                                               
proposed Alaska  LNG pipeline  at close  to 100  percent capacity                                                               
for at least 20 years.  She  said this is an advantage Alaska can                                                               
offer  customers  because the  gas  is  in  production and  is  a                                                               
resource ready to  be exported.  Also shown was  a portion of the                                                               
over   200  Tcf   estimated  as   a   "yet-to-find"  resource   -                                                               
undiscovered and technically recoverable  - estimated by analysis                                                               
of the resource  base and seismic data.   Ms. Wilcox acknowledged                                                               
currently,  worldwide  LNG  supply appears  to  be  oversupplied;                                                               
further,  a large  number  of projects  have  been developed  and                                                               
appear "to have overshot a bit  for the, for the amount of demand                                                               
that's available."   However, she said the market  is expected to                                                               
catch up to  demand because LNG remains a  popular energy source,                                                               
especially  in  Asia.    Slide   11  illustrated  an  LNG  demand                                                               
projection by  BP that showed a  large rise in demand  from Asia,                                                               
and  a second  LNG demand  projection by  Royal Dutch  Shell that                                                               
showed  the  world LNG  market  balance.    She pointed  out  the                                                               
existing gas capacity begins to  drop around [2020] and [projects                                                               
in development  range to  over 300 metric  tons per  annum (MTPA)                                                               
and the  demand forecast rises  to 500  MTPA in 2030].   Proposed                                                               
projects in competition  with Alaska LNG are  located as follows:                                                               
U.S. Gulf  Coast, supplied by  inexpensive shale gas;  Canada and                                                               
the Pacific  Northwest, challenged  by permitting,  taxation, and                                                               
regulatory issues; Russian Arctic,  facilitated by icebreaker LNG                                                               
tankers;  East Africa;  Australia, expansion  projects challenged                                                               
by cost  overruns due to  "floating LNG."   As far as  price, she                                                               
said U.S.  Gulf Coast  supply "appears to  be driving  the market                                                               
price setting in, in the states."                                                                                               
1:53:13 PM                                                                                                                    
REPRESENTATIVE PARISH inquired as to  the impact on the world gas                                                               
supply  of the  completion  of  projects such  as  those in  East                                                               
MS.  WILCOX  advised each  project  in  its initial  stage  tends                                                               
toward producing 10-15 million tons  per year, and Alaska LNG can                                                               
produce  "up to  20, with  the  three trains";  however, after  a                                                               
project is built there are  expansion possibilities, and over 100                                                               
Tcf  of resource  have been  discovered  in East  Africa.   Total                                                               
impact would depend  on when the gas gets to  market and what the                                                               
market can absorb.  Slide  12 illustrated long-term LNG contracts                                                               
and demand in  Japan, Korea, Taiwan, and China.   She pointed out                                                               
Japan, Korea, Taiwan, and China  are strategically positioned for                                                               
LNG from  Alaska, and in the  mid-2020s there will be  decline in                                                               
their  current   long-term  contracts,  which  will   present  an                                                               
opportunity for LNG from Alaska that did not exist 15 years ago.                                                                
REPRESENTATIVE  PARISH  observed  the  information  presented  on                                                               
decline and  supply is not  indicative of actual  reduced supply,                                                               
but  of  reduced  contracted  supply,   thus  if  all  [expiring]                                                               
contracts  are  renewed,  there  would   be  a  "much  less  rosy                                                               
MS.  WILCOX agreed,  noting  the outlook  presented  on slide  11                                                               
indicated the  supply capacity declines  at a lower rate  than do                                                               
contracts.  Further,  some contracts will be  renewed, and others                                                               
will be  filled by competitors.   She said, "We're looking  at it                                                               
as  the,  as the  double  opportunity  to  not just  provide  new                                                               
capacity  to the  market,  but potentially  replace  some of  the                                                               
current capacity."                                                                                                              
1:57:07 PM                                                                                                                    
REPRESENTATIVE  WESTLAKE,  regarding   the  second  bullet  point                                                               
[found  on slide  12:    Existing contracts  expire  in the  same                                                               
timeframe as a projected global  shortfall in LNG supply.], asked                                                               
whether AGDC  could address the concern  about fierce competition                                                               
for the world gas market.                                                                                                       
MS. WILCOX advised  the way to address competition  is with early                                                               
and consistent  project momentum  and contracting.   [AGDC] seeks                                                               
to  complete  commercial  contracting   and  paperwork  prior  to                                                               
spending the  funds that are  required to construct  the project.                                                               
For  example,  for a  project  planning  to  sell  a lot  of  its                                                               
[capacity] on [the spot market], there is a much higher risk.                                                                   
MS.  WILCOX  directed attention  to  slide  13, illustrating  the                                                               
project's capital structure.  Alaska  LNG is an approximately $40                                                               
billion  project with  a traditional  U.S.  gas pipeline  capital                                                               
structure.   The project would require  approximately $10 billion                                                               
in  equity -  25 percent  of the  total investment  - that  would                                                               
garner  an estimated  8 percent  return.   After  the project  is                                                               
contracted, the  remaining $30 billion for  construction would be                                                               
raised  from  debt,  modeled  with a  5  percent  interest  rate,                                                               
leaving  the Alaska  LNG  total  cost of  $40  billion with  5.75                                                               
percent  cost of  capital.   She  stressed lowering  the cost  of                                                               
capital  under the  finance structure  is key  to lowering  total                                                               
cost for  all parties  and making  the project  more competitive.                                                               
Returning to investor economics,  she restated investor cash flow                                                               
will be  25 percent  with an  8 percent  return.   Investors will                                                               
have expenditures  at the front  end and  will repay debt  for 20                                                               
years,  during which  the  cash flow  will be  lower.   After  20                                                               
years,  investors  will  earn an  estimated  10  percent  return,                                                               
assuming the project  still has a supply of gas,  and after 2045,                                                               
the  return  will increase  significantly.    During the  20-year                                                               
contract period,  approximately 25 Tcf  of gas will  be produced,                                                               
and 10  percent of  the potential  yet-to-find resources  will be                                                               
required  to  continue operations  for  an  additional 25  years.                                                               
Also  after  2045,  the  asset  value of  the  project  could  be                                                               
recovered through sale [slide 14].                                                                                              
MS. WILCOX explained slide 15  depicts potential cash flow to the                                                               
state over the same timeline,  should the state invest 25 percent                                                               
equity into  the project.   Again,  there would  be an  8 percent                                                               
return for  the contracted period,  and 10 percent over  the life                                                               
of the project,  however, the state may  earn additional upstream                                                               
cash in the form of revenue in  kind (RIK), tax as gas (TAG), and                                                               
payment in  lieu of  tax (PILT), which  would increase  the state                                                               
return to  13 percent  during the initial  period and  15 percent                                                               
over the  life of  the project.   Alaskans would  further benefit                                                               
from state ownership  through a lower cost  of energy, industrial                                                               
development, and jobs.                                                                                                          
2:04:00 PM                                                                                                                    
REPRESENTATIVE  PARISH asked  whether AGDC  is able  to establish                                                               
PILT on federal land because it is considered a municipality.                                                                   
MS. WILCOX  explained PILT  is under consideration  by AGDC  as a                                                               
substitute for  property tax assessed  along the  pipeline route.                                                               
A  portion would  be  paid  to the  affected  communities, and  a                                                               
portion to  the state general  fund (GF) and thereby  benefit the                                                               
overall state economy.                                                                                                          
MR. MEYER further  explained AGDC would pay  PILT to communities,                                                               
which  is   an  expense   to  the   project;  from   the  state's                                                               
perspective,  it is  assumed PILT  would total  $500 million  per                                                               
year to the state and communities.                                                                                              
CO-CHAIR  TARR clarified  Senate  Bill 138  [passed  in the  29th                                                               
Alaska State  Legislature] created a municipal  advisory group to                                                               
address this  topic.  She  recalled in order to  avoid litigation                                                               
that has  been brought  related to  the amount  of taxes  paid to                                                               
municipalities for  TAPS, Alaska LNG  seeks to negotiate  PILT so                                                               
that regular  annual payments would  accrue for  better municipal                                                               
planning.  With  state ownership of Alaska LNG, PILT  would go to                                                               
local  municipal  governments to  compensate  for  the impact  of                                                               
MS. WILCOX continued  to the competitiveness of  the project, and                                                               
provided a  graph representing  a forecast of  a range  of prices                                                               
for LNG delivered  to Asia.  The lowest price  shown on the graph                                                               
was  the  current  Henry  Hub  index  price  that  is  an  almost                                                               
historical low  plus $5 for  Gulf Coast facilities  and shipping.                                                               
She  said few  new projects  can  be built  on the  basis of  the                                                               
current Henry Hub  price, which is low because the  LNG market is                                                               
currently oversupplied  and overbuilt.   Other forecasts  are for                                                               
prices that  are tied to oil,  and the highest forecast  was from                                                               
the U.S. Energy Information Administration  (EIA), base Henry Hub                                                               
plus $5.   Although the  exact price of  gas in 2025  is unknown,                                                               
the forecasts  are "the perceptions  that we're competing  with -                                                               
at the moment  - for what the  market price is."   Also shown was                                                               
Alaska  LNG toll  plus shipping  costs.   She said,  "We perceive                                                               
these numbers to be within the  range of reasonable, for gas that                                                               
is already  being produced ...  and being reinjected and  the gas                                                               
that, that doesn't  have, doesn't carry exploration  risks.  And,                                                               
therefore, the project can be competitive."                                                                                     
2:09:13 PM                                                                                                                    
MS. WILCOX  informed the  committee one  of AGDC's  primary focus                                                               
areas during the next two years  will be to improve the project's                                                               
competitiveness   by   lowering  infrastructure   costs   through                                                               
financing,  and   by  the   validation  of   current  engineering                                                               
estimates.   Slide 17  compared the cost  estimates for  a three-                                                               
train system  and a two-train  system:  a two-train  system could                                                               
be built for  about 75 percent less cost  including two-thirds of                                                               
the capacity  of the  gas treatment plant  and two-thirds  of the                                                               
capacity of the  LNG, with the same pipeline.   Also under review                                                               
are contingency and owners costs.   Also on slide 17 were further                                                               
details  on  owners costs,  which  she  said would  be  validated                                                               
and/or challenged by the EPC contractor.                                                                                        
REPRESENTATIVE DRUMMOND inquired  as to what would  cause AGDC to                                                               
expand the project from two trains to three trains.                                                                             
MS. WILCOX  answered, "It  would be  more demand,  so, so  if the                                                               
market is oversupplied,  ... then you would try  to start smaller                                                               
and expand, which is how most  LNG projects are run."  In further                                                               
response to Representative Drummond,  she affirmed that expansion                                                               
could occur while the project was operational.                                                                                  
MS. WILCOX  advised AGDC, in  its role as the  project developer,                                                               
will bring many parties together  for the success of the project,                                                               
including potential investors,  potential upstream and downstream                                                               
tollers,  and project  support to  provide tools  to [lower]  the                                                               
cost of the  project related to financing  and construction terms                                                               
[slide 18].  She reviewed the following points [slide 19]:                                                                      
   • Alaska LNG is needed by the Asian market and by Alaska as a                                                                
     cash flow opportunity in the future                                                                                        
   • Alaska LNG is competitive                                                                                                  
   • Alaska LNG is achievable through its project finance                                                                       
MR. MEYER  restated AGDC's upcoming  activities [slide 20).   Not                                                               
previously  stated  is  AGDC's  intent  to  continue  to  advance                                                               
potential   U.S.  government   support  from   the  new   federal                                                               
2:14:19 PM                                                                                                                    
REPRESENTATIVE RAUSCHER returned  attention to earlier discussion                                                               
related to [LNG  facilities located in the Arctic]  that cost $10                                                               
billion, and asked why an LNG  facility has to be built offshore,                                                               
and for the source of the data.                                                                                                 
MR.  MEYER said  he  speculated  the cost  of  the project  would                                                               
increase by $10  billion if the LNG facility  was built offshore.                                                               
He expressed his  understanding that the beach  along Prudhoe Bay                                                               
is shallow thus to reach a  water depth sufficient for ships, the                                                               
facility  would need  to be  35-40  miles offshore.   He  related                                                               
artificial channels fill quickly with silt.                                                                                     
REPRESENTATIVE RAUSCHER suggested the gas  could be piped to Nome                                                               
for shipping.                                                                                                                   
MR. MEYER said shipping from the  West Coast is "challenged."  He                                                               
opined  the proposed  project routing  serves Alaska,  the mining                                                               
industry, and Alaska communities.                                                                                               
REPRESENTATIVE  WESTLAKE  questioned  whether  the  project  plan                                                               
includes take-off points.                                                                                                       
MR.  MEYER said  there would  be  at least  five take-off  points                                                               
because instate demand is a key reason to build the project.                                                                    
[CO-CHAIR TARR passed the gavel to Co-Chair Josephson.]                                                                         
2:17:27 PM                                                                                                                    
The committee took an at-ease from 2:18 p.m. to 2:24 p.m.                                                                       
        HB 211-NONRESIDENT HUNTING REQUIREMENTS: CARIBOU                                                                    
2:24:23 PM                                                                                                                    
CO-CHAIR  JOSEPHSON announced  that  the next  order of  business                                                               
would be HOUSE  BILL NO. 211, "An Act requiring  a nonresident to                                                               
be accompanied  by a  guide or resident  spouse or  relative when                                                               
hunting certain caribou; and providing for an effective date."                                                                  
2:25:09 PM                                                                                                                    
REPRESENTATIVE WESTLAKE read from  the Alaska State Constitution,                                                               
Article 8, section 2 as follows:                                                                                                
     The  legislature  shall  provide for  the  utilization,                                                                    
     development, and conservation  of all natural resources                                                                    
     belonging to the state, including  land and waters, for                                                                    
     the maximum benefit of its people.                                                                                         
RESPRESENTATIVE  WESTLAKE said  maximizing benefits  for Alaskans                                                               
should not  be limited to  oil [resources].   He pointed  out the                                                               
wealth from out-of-state  hunters with a guide  is not disruptive                                                               
to migration patterns.  Furthermore,  a transporter bringing in a                                                               
hunter from out-of-state,  or not, suffers no  repercussions if a                                                               
violation  is  committed  by  a   client,  but  if  a  hunter  is                                                               
accompanied by a big game guide,  the guide has a vested interest                                                               
in ensuring Alaska laws are obeyed.                                                                                             
CO-CHAIR JOSEPHSON  asked for clarification on  why the Porcupine                                                               
Caribou Herd, [with  a herd size of] 200,000, is  included in the                                                               
provisions of the bill.                                                                                                         
REPRESENTATIVE WESTLAKE explained the  legislation applies to the                                                               
caribou that cross over from Canada.                                                                                            
CO-CHAIR  JOSEPHSON  recalled   previous  testimony  [during  the                                                               
hearing of  HB 211 on  4/13/17] from Mr. Barrette  that mandatory                                                               
guiding  should  not be  used  as  a  tool to  limit  nonresident                                                               
REPRESENTATIVE  WESTLAKE  agreed,  and  explained  why  the  bill                                                               
requires mandatory guiding as follows:                                                                                          
     It  goes back  to sustainable  yield, exactly  what the                                                                    
     Board  of  Game  [Alaska  Department  of  Fish  &  Game                                                                    
     (ADFG)] was created for.   You have big game guides out                                                                    
     there   [and]   it   behooves    them   to,   to   have                                                                    
     sustainability   built  into   whatever  they   may  be                                                                    
     hunting, so,  unlike [Mr. Barrette], where  he's saying                                                                    
     I'm using it  to exclude people, I'm using  it so their                                                                    
     children,  the clients'  children, and  their children,                                                                    
     and  so  forth,  will  be   able  to  hunt  from  these                                                                    
     magnificent  herds that  are traveling  across America,                                                                    
     the last ones  that we have out here.   [The bill] is a                                                                    
     safeguard for sustaining these  herds, rather than what                                                                    
     we  have  now, with  transporters  being  able to  take                                                                    
     someone in,  and being disruptive to  herd migrations -                                                                    
     the herd patterns.  This, it just makes sense.                                                                             
CO-CHAIR JOSEPHSON  directed attention  to the  bill on  [page 1,                                                               
lines 10-14, which read:                                                                                                        
     *Sec. 2. AS 16.05.407(b) is amended to read:                                                                               
          (d) A nonresident who violates  (a) or (g) of this                                                                
     section,  or who  fails to  furnish an  affidavit under                                                                    
     (b) of  this section,  is guilty  of a  misdemeanor and                                                                    
     upon conviction  is punishable by imprisonment  for not                                                                    
     more  than one  year, or  by a  fine of  not more  than                                                                    
     $5,000, or by both.                                                                                                        
CO-CHAIR JOSEPHSON  asked whether the foregoing  section would be                                                               
consistent  with   the  efforts  of  the   Division  of  Wildlife                                                               
Troopers, Department of  Public Safety (DPS), in  proposed HB 129                                                               
and in  Senate Bill 91 [passed  in the first session  of the 30th                                                               
Alaska State Legislature],  which are to move  provisions into AS                                                               
12.55 "in sort of a generic [class] A misdemeanor sort of way."                                                                 
2:29:29 PM                                                                                                                    
BERNARD CHASTAIN, Major,  Deputy Director, Headquarters, Division                                                               
of  Alaska  Wildlife Troopers,  DPS,  clarified  the question  is                                                               
related   to  the   penalties   associated   with  AS   16.05.407                                                               
subsections (b)  and (d).   He informed the  committee [companion                                                               
bills SB 60 and HB 129]  propose to align penalties within Alaska                                                               
Statues Title 16, and standardizes  the penalties within as class                                                               
A misdemeanors.   Currently, AS 16.05.407 is not  included in the                                                               
provisions of proposed  HB 129 or SB 60;  however, amendments are                                                               
forthcoming which would  align AS 16.05.407 penalties  to a class                                                               
A misdemeanor,  and thereby change  the penalties proposed  in HB
CO-CHAIR JOSEPHSON said,  "... but you're O.K. with  this sort of                                                               
continuing  with  the  status  quo, in  terms  of  its  language,                                                               
pending any further reform of, through HB 129."                                                                                 
MAJOR CHASTAIN  clarified the change  in the language [in  HB 211                                                               
on page 1, lines 10-14] simply  adds "or (g)" and does not change                                                               
the  penalties.     Other  [proposed]  bills   would  change  the                                                               
REPRESENTATIVE TALERICO  said he is  struggling with the  idea of                                                               
the bill  because the state  has established a  regulatory agency                                                               
via  the  Board of  Game  (BOG),  ADFG,  to deal  with  proposals                                                               
[related  to  wildlife].    He questioned  whether  BOG  has  the                                                               
ability  to  enact the  restriction  directed  by the  bill,  and                                                               
thereby   keep   the   restriction   "somewhat   flexible";   the                                                               
legislature enacts  statutes, which  are not  very flexible.   He                                                               
asked  whether the  bill removes  authority from  a state  agency                                                               
structured to provide [wildlife] management.                                                                                    
REPRESENTATIVE  WESTLAKE   responded  the  bill   addresses  user                                                               
conflict.   The  problem is:   There  are many  conflicts between                                                               
those who  pay transporters  and those who  use the  resource for                                                               
subsistence, which  seem to be  "never-ending."  In GMU  23, [the                                                               
sizes of] caribou  herds have dropped.  He read  as follows [from                                                               
a document not identified]:                                                                                                     
      Leading up to game management unit 23's closure, all                                                                      
       [caribou] harvesting declined ... except nonguided                                                                       
REPRESENTATIVER WESTLAKE  concluded from  the foregoing  that the                                                               
subsistence harvest declined, the  resident harvest declined, the                                                               
guided nonresident  harvest declined,  and the only  increase was                                                               
to the nonresident unguided harvest;  therefore, the only ones to                                                               
lose were the local folks.                                                                                                      
2:34:03 PM                                                                                                                    
FORREST  WOLFE, staff  to  Representative  Dean Westlake,  Alaska                                                               
State Legislature,  in response to Representative  Talerico, said                                                               
enactment of  a guide  requirement has  to be  in statute  as BOG                                                               
does not have the authority to do so.                                                                                           
CO-CHAIR JOSEPHSON  recalled the  executive director  of Resident                                                               
Hunters of  Alaska, testifying  in opposition  to the  bill, also                                                               
stated [the restriction] had to done legislatively.                                                                             
REPRESENTATIVE  BIRCH  said,  "...  it  sounds  to  me  like  the                                                               
unguided nonresident hunters are better hunters, is that right?"                                                                
REPRESENTATIVE WESTLAKE  agreed, and  explained, "You can  be the                                                               
best hunter  out there if  you go  over there [and]  disrupt that                                                               
pattern  that they're  trying to  go through  when they're,  when                                                               
they're  migrating either  north to  south in  this instance,  or                                                               
else south to  north ...."  Speaking as a  Native hunter, he said                                                               
Native  hunters never  bother the  front herds.   He  related his                                                               
experience of  watching caribou come  over a mountain to  a river                                                               
followed   by  a   second  group   following   the  same   track.                                                               
Representative Westlake  stressed the  importance of  letting the                                                               
pilot  herds travel  the migratory  path without  disruption, and                                                               
said, "So,  sometimes at the  end of the  day, we get  less game,                                                               
but the caribou stay on that route ...."                                                                                        
REPRESENTATIVE  BIRCH  asked whether  a  hunt  can be  structured                                                               
around a time that does not disrupt the migration pattern.                                                                      
REPRESENTATIVE WESTLAKE  suggested a  summer hunt  would probably                                                               
MR.  WOLFE,  in  response   to  Representative  Birch's  previous                                                               
question, said guides  are regulated as to the  number of clients                                                               
they  can   take  per   season  to   the  hunting   grounds,  and                                                               
transporters are not.  He  advised nonguided nonresidents may not                                                               
be better hunters, but there may be more of them.                                                                               
2:37:16 PM                                                                                                                    
REPRESENTATIVE PARISH inquired  as to the economic  impact to the                                                               
region of a guided hunt as opposed to a nonguided hunt.                                                                         
2:37:56 PM                                                                                                                    
THOR STACEY,  Lobbyist, Alaska Professional  Hunters Association,                                                               
disclosed he has  a guide concession located  in the northeastern                                                               
portion of  the Arctic National  Wildlife Refuge (ANWR),  thus he                                                               
may have  a personal  financial interest in  some aspects  of the                                                               
bill.  In  response to Representative Parish, he  said the Alaska                                                               
Professional Hunters Association  (APHA) commissioned an economic                                                               
report in  2013, and a second  report with a partner  in 2017, to                                                               
review the economic impacts  associated with visiting nonresident                                                               
hunters who  are accompanied by  hunting guides.  Mr.  Stacey was                                                               
unaware  of a  study  that documents  the transporter  industry's                                                               
direct  economic  benefit, or  per  animal  most recent  economic                                                               
study  that   the  average  guided   hunt  in  Alaska   is  worth                                                               
approximately $16,500,  calculated from a total  of $87.5 million                                                               
of total  economic output,  from approximately  3,300 nonresident                                                               
hunters accompanied by guides.   Mr. Stacey assumed there is more                                                               
value-added benefit  for a  guided hunting trip,  but he  did not                                                               
have  documentation on  the value  of  a transported  nonresident                                                               
guided  hunt.   Furthermore,  in  response  to a  question  posed                                                               
[4/13/17], approximately  90 percent of active  registered guides                                                               
in Alaska are Alaska residents.                                                                                                 
2:40:32 PM                                                                                                                    
REPRESENTATIVE PARISH questioned how  the number of active guides                                                               
in the region compares with the number of transporters.                                                                         
MR.  STACEY   said  hunting  guides  contract   the  services  of                                                               
transporters, and  a nonresident  accompanied by a  hunting guide                                                               
may also contract  the services of a transporter, such  as an air                                                               
taxi.   He pointed out the  central portion of the  affected area                                                               
to  the west  is  federal land,  and except  for  Bureau of  Land                                                               
Management  (BLM), U.S.  Department of  the Interior  (DOI) land,                                                               
there is  a fixed number  of hunting guide  concessions permitted                                                               
on land managed  by the National Park Service, DOI,  and the U.S.                                                               
Fish  and Wildlife  Service, DOI.   In  addition, from  the Kavik                                                               
River east -  the area of the Central Arctic  and Porcupine herds                                                               
-  the land  is similarly  restricted.   Because there  is not  a                                                               
restrictive   program  affecting   transporters,   there  is   an                                                               
unlimited number  of transporters  operating within any  of these                                                               
lands.    One area  not  reported  in  studies of  reductions  in                                                               
harvest  and  opportunity is  the  "transporter  component."   He                                                               
related the  demand for hunting a  caribou is good -  worldwide -                                                               
and the demand  for transported access to hunting  areas is high;                                                               
thus an "uptick"  in harvest represents a larger  uptick in total                                                               
hunter  effort, because  not every  hunter  gets a  caribou:   an                                                               
uptick in  harvest and a  declining herd represents  more hunters                                                               
in the field.                                                                                                                   
2:43:19 PM                                                                                                                    
REPRESENTATIVE PARISH inquired  as to what sanctions  APHA has in                                                               
place for guides who may disrupt a migrating caribou herd.                                                                      
MR. STACEY said  APHA is a nongovernmental entity with  a code of                                                               
conduct and ethical guidelines to  which members adhere.  He said                                                               
he was  unaware of any governmental  or nongovernmental sanctions                                                               
against a  guide who  disrupts the migration  of a  caribou herd.                                                               
However,  the perception  of disruptions,  founded or  unfounded,                                                               
may  have resulted  in  the closure  of GMU  23  to all  nonlocal                                                               
hunters.    In  further  response to  Representative  Parish,  he                                                               
opined the  bill is  not designed  to cap  [the number  of visits                                                               
and]  the decline  of  the  herd, in  fact,  caribou herds  could                                                               
experience  many environmental  and  human causes  for a  serious                                                               
decline;  the  state  BOG  process   is  confined  by  the  state                                                               
constitutional mandate for sustained  harvest, with a subsistence                                                               
priority,  and on  federal land,  state  and federal  subsistence                                                               
absolute amounts  are set.  However,  APHA does not see  the bill                                                               
as  necessary for  the  conservation of  the  herd, but  instead,                                                               
human-on-human conflict is the "discussion on the table."                                                                       
REPRESENTATIVE PARISH  referred to information from  the Division                                                               
of  Wildlife  Conservation, ADFG,  reporting  that  last year  82                                                               
percent   of  nonresident   hunters   were   unguided,  and   350                                                               
nonresident hunters  per year hunt  unguided.  For  the Teshekpuk                                                               
and Western Arctic  herds, approximately 2,326, or  77 percent of                                                               
nonresidents, are  unguided.   He asked  what percentage  [of the                                                               
unguided  nonresident hunters]  could  be  "absorbed into  guided                                                               
MR.  STACEY advised  not  all could  be  absorbed through  guided                                                               
hunts  because  that would  be  beyond  the capacity  of  hunting                                                               
guides.  Furthermore, the number  of guided hunts is also limited                                                               
by  economics because  guided hunts  cost more.   He  assured the                                                               
committee  that the  current number  of permitted  hunting guides                                                               
could  not  accompany the  same  number  of nonresident  unguided                                                               
hunts that now occur.                                                                                                           
REPRESENTATIVE  PARISH  questioned  whether guides  could  double                                                               
their capacity next year.                                                                                                       
2:48:17 PM                                                                                                                    
MR.  STACEY  expressed  doubt that  the  guiding  industry  could                                                               
double its capacity within a year.                                                                                              
REPRESENTATIVE PARISH posited that if  guides were able to double                                                               
their  capacity, there  would  be  a 50  percent  decline in  the                                                               
number  of  nonresidents  hunting, unless  they  had  [qualified]                                                               
relatives in the area.                                                                                                          
CO-CHAIR  JOSEPHSON clarified  nonresidents  could  hunt if  they                                                               
have relatives in the state with a second degree of kindred.                                                                    
MR. STACEY remarked:                                                                                                            
     Currently,  zero  nonresidents hunters  could  actually                                                                    
     hunt in the  unit 23 portion of the  area discussed, so                                                                    
     any opening  would represent a significant  increase of                                                                    
     opportunity that  would theoretically,  obviously, come                                                                    
     with a  caveat .... that Alaska  residents, everyone in                                                                    
     this  room, that  doesn't live  within the  area, would                                                                    
     once again be  allowed to hunt there. ...  It's hard to                                                                    
     ascertain  the  downrange  of facts,  especially  where                                                                    
     federal management and federal  boards and other things                                                                    
     are involved, so ... it's a complex problem.                                                                               
CO-CHAIR JOSEPHSON  asked whether guides can  combine hunting for                                                               
caribou and sheep in the same trip.                                                                                             
MR. STACEY said that is common practice.                                                                                        
2:51:20 PM                                                                                                                    
REPRESENTATIVE DRUMMOND  moved to adopt [Amendment  1, identified                                                               
as 30-LS0700\J.2, Bullard, 4/12/17].                                                                                            
2:51:27 PM                                                                                                                    
CO-CHAIR TARR objected for discussion purposes.                                                                                 
REPRESENTATIVE WESTLAKE  explained Amendment  1 would  correct an                                                               
oversight  that  omitted  the Teshekpuk  Caribou  Herd  from  the                                                               
caribou herds protected  in the bill.  As an  aside, he noted the                                                               
local hunters have already scaled  down their subsistence hunting                                                               
of this herd.                                                                                                                   
2:52:33 PM                                                                                                                    
CO-CHAIR  TARR removed  her objection.   There  being no  further                                                               
objection, Amendment 1 was adopted.                                                                                             
2:53:08 PM                                                                                                                    
CO-CHAIR  TARR  moved  to  report  HB 211,  as  amended,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  211(RES)  was                                                               
reported from the House Resources Standing Committee.                                                                           
The committee took an at-ease from 2:53 p.m. to 2:56 p.m.                                                                       
            HB 201-MUNICIPAL REGULATION OF TRAPPING                                                                         
2:56:16 PM                                                                                                                    
CO-CHAIR  JOSEPHSON announced  that the  final order  of business                                                               
would  be HOUSE  BILL  NO.  201, "An  Act  relating to  municipal                                                               
regulation of trapping; and providing for an effective date."                                                                   
Before the committee was CSHB 201 (CRA).                                                                                        
2:56:45 PM                                                                                                                    
MEGAN ROWE, staff to Representative  Andy Josephson, Alaska State                                                               
Legislature, sponsor,  informed the  committee the purpose  of HB
201  is to  allow  municipalities to  regulate  trapping for  the                                                               
specific  purpose of  preventing injury  to persons  or property,                                                               
including  domestic  animals.     In  the  process  of  committee                                                               
deliberations  on HB  40 -  which  proposed a  state-wide ban  on                                                               
trapping  within  two hundred  feet  of  certain public  areas  -                                                               
public  testimony  and  testimony   from  members  of  the  House                                                               
Resources  Standing Committee  was  heard that  this  is a  local                                                               
issue better  met by  "more narrowly  tailored ordinances  at the                                                               
municipal level."   Thus, the  bill would  specifically authorize                                                               
municipalities to  enact ordinances,  and "clear  up any  kind of                                                               
legal confusion over whether they are able to under state law."                                                                 
REPRESENTATIVE   BIRCH    expressed   his    understanding   that                                                               
communities such  as the  Matanuska-Susitna (Mat-Su)  Borough and                                                               
the  Municipality   of  Anchorage  are  establishing   laws,  and                                                               
questioned whether  there was any  confusion, or a need  for more                                                               
MS. ROWE  explained the confusion  stems from arguments  that the                                                               
state has plenary  control over the management of  game, which is                                                               
a principle derived from the  state constitution and in Title 29,                                                               
which  specifies  municipalities  can  only  indirectly  regulate                                                               
game.    In  fact,  testimony  before  the  House  Community  and                                                               
Regional  Affairs  Standing  Committee  (CRA)  presented  by  the                                                               
Department  of Law  advised  municipalities  should not  regulate                                                               
trapping.   The  bill would  prevent the  state from  challenging                                                               
municipalities' regulations  related to  trapping.   For example,                                                               
the Municipality  of Skagway has  disallowed trapping  within its                                                               
boundaries; however,  the Board of Game  (BOG), Alaska Department                                                               
of  Fish &  Game,  allows  trapping there,  which  has created  a                                                               
conflict between  the municipality  and BOG.   She restated  if a                                                               
municipality  seeks  to  regulate  trapping for  the  health  and                                                               
safety of  its residents, and  to prevent damage to  animals, the                                                               
bill  would  allow it  to  do  so,  without  a challenge  to  its                                                               
regulations by the state.   Ms. Rowe said about 15 municipalities                                                               
already   have  related   regulations  that   require  clarifying                                                               
REPRESENTATIVE BIRCH restated  his understanding that regulations                                                               
in  the   Matanuska-Susitna  Borough  and  the   Municipality  of                                                               
Anchorage are serving their purpose.                                                                                            
MS. ROWE referred  to documents included in  the committee packet                                                               
[a  memorandum   addressed  to  the   Matanuska-Susitna  (Mat-Su)                                                               
Borough  mayor  and  assembly members  from  the  Mat-Su  Borough                                                               
Attorney's Office,  dated 12/17/13,  and a document  addressed to                                                               
Lynn Mitchell CPA, from the  Law Office of Kneeland Taylor, dated                                                               
2/3/17] and  said the  documents outline  two different  sides of                                                               
the issue.   She also  directed attention to a  document included                                                               
in  the  committee packet  [addressed  to  the Alaska  boards  of                                                               
fisheries  and  game,  ADFG,  from the  Office  of  the  Attorney                                                               
General,  File  No.  166-486-82,  dated  11/19/82]  which  stated                                                               
municipalities cannot  regulate game  and trapping  directly, but                                                               
can do  so with a  merely incidental  effect.  She  concluded the                                                               
question  remains undefined.   The  bill would  ensure that  when                                                               
municipalities  are regulating  for  the purposes  of health  and                                                               
safety,  and  protecting  property,   the  regulations  would  be                                                               
constitutional under state law.                                                                                                 
3:02:36 PM                                                                                                                    
CO-CHAIR   JOSEPHSON  clarified   that   eight   or  nine   local                                                               
governments  have attempted  to regulate  trapping, and  the bill                                                               
limits authority to  "within the borders that  ... represent that                                                               
municipality, trapping  could be regulated."   He posited  that a                                                               
pro-trapping stance may  be:  Banning trapping in  a borough over                                                               
the size of  some states is "unthinkable."  However,  in the case                                                               
of public  safety and competing  interests, there may be  a local                                                               
desire to regulate trapping in some way.                                                                                        
REPRESENTATIVE  PARISH opined  the  bill  would prevent  eventual                                                               
litigation between the state and municipalities in this regard.                                                                 
MS. ROWE agreed, although she  questioned whether the state would                                                               
have  reason to  challenge ordinances  unless a  greater conflict                                                               
CO-CHAIR  JOSEPHSON advised  the bill  is very  flexible in  that                                                               
local governments can  exempt trappers as well.   He recalled CRA                                                               
added subsection (d) to the bill  [on page 2, lines 13-15,] which                                                               
          (d)   A  municipality may  not enact  an ordinance                                                                    
     under   this   section   that   eliminates   reasonable                                                                    
     opportunities for  subsistence trapping of  game within                                                                    
     its boundaries.                                                                                                            
REPRESENTATIVE TALERICO  expressed his  belief that  the Division                                                               
of   Wildlife  Troopers,   DPS,   does   not  enforce   municipal                                                               
3:06:51 PM                                                                                                                    
BERNARD CHASTAIN, Major,  Deputy Director, Headquarters, Division                                                               
of Alaska  Wildlife Troopers, DPS, responded  the Alaska Wildlife                                                               
Troopers  do not  enforce municipal  or  borough code,  therefore                                                               
enforcement of  any regulations  created by  municipalities under                                                               
the  proposed bill  would have  to  be done  by police  agencies,                                                               
borough code  enforcement officers,  or those given  authority to                                                               
do so by the municipality or borough.                                                                                           
CO-CHAIR JOSEPHSON concluded an  ordinance or regulation would be                                                               
enforced as strongly as determined  by the funding and the desire                                                               
of the local government.                                                                                                        
MAJOR CHASTAIN  said, "That  would be  our interpretation  of it,                                                               
because we  do not enforce  that regulation.   It would be  up to                                                               
the  municipality  or  the  borough   to  decide  what  level  of                                                               
enforcement they want to put on that regulation."                                                                               
CO-CHAIR  JOSEPHSON  asked  for Major  Chastain's  opinion  about                                                               
whether BOG  tries to  honor and comply  with ordinances  on this                                                               
MAJOR CHASTAIN advised there are  regulations put in place by BOG                                                               
that  specifically restrict  trapping in  certain trail  areas in                                                               
response to proposals brought before BOG.                                                                                       
3:09:51 PM                                                                                                                    
BRUCE DALE,  director, Division  of Wildlife  Conservation, ADFG,                                                               
added  BOG  looks at  every  local  situation on  a  case-by-case                                                               
basis.  [BOG] has "mimicked"  or "mirrored" local ordinances, for                                                               
example, Anchorage  had a certain  restriction in place,  and BOG                                                               
subsequently  banned   all  trapping   in  the   Municipality  of                                                               
Anchorage.   In  other areas,  BOG  has created  areas closed  to                                                               
trapping in the absence of a local ordinance.                                                                                   
[HB 201 was held over.]                                                                                                         
3:11:51 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:12 p.m.                                                                 

Document Name Date/Time Subjects
AGDC House Resources Committee Presentation 4.14.17.pdf HRES 4/14/2017 1:00:00 PM
HB201 Supporting Document - Legal Memos re MatSu Trapping 2013.pdf HRES 4/14/2017 1:00:00 PM
HB 201