Legislature(2007 - 2008)BARNES 124
04/23/2007 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB177 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 177 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 23, 2007
1:07 p.m.
MEMBERS PRESENT
Representative Carl Gatto, Co-Chair
Representative Craig Johnson, Co-Chair
Representative Bob Roses
Representative Paul Seaton
Representative Peggy Wilson
Representative Bryce Edgmon
Representative David Guttenberg
Representative Scott Kawasaki
Representative Vic Kohring
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Anna Fairclough
COMMITTEE CALENDAR
HOUSE BILL NO. 177
"An Act relating to the Alaska Gasline Inducement Act;
establishing the Alaska Gasline Inducement Act matching
contribution fund; providing for an Alaska Gasline Inducement
Act coordinator; making conforming amendments; and providing for
an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 177
SHORT TITLE: NATURAL GAS PIPELINE PROJECT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/05/07 (H) READ THE FIRST TIME - REFERRALS
03/05/07 (H) O&G, RES, FIN
03/06/07 (H) O&G AT 3:00 PM BARNES 124
03/06/07 (H) -- MEETING CANCELED --
03/08/07 (H) O&G AT 3:00 PM BARNES 124
03/08/07 (H) -- MEETING CANCELED --
03/13/07 (H) O&G AT 3:30 PM HOUSE FINANCE 519
03/13/07 (H) Heard & Held
03/13/07 (H) MINUTE(O&G)
03/15/07 (H) O&G AT 3:00 PM BARNES 124
03/15/07 (H) Heard & Held
03/15/07 (H) MINUTE(O&G)
03/19/07 (H) O&G AT 8:30 AM CAPITOL 106
03/19/07 (H) Heard & Held
03/19/07 (H) MINUTE(O&G)
03/20/07 (H) O&G AT 3:00 PM BARNES 124
03/20/07 (H) Heard & Held
03/20/07 (H) MINUTE(O&G)
03/21/07 (H) O&G AT 5:30 PM SENATE FINANCE 532
03/21/07 (H) Heard & Held
03/21/07 (H) MINUTE(O&G)
03/22/07 (H) O&G AT 3:00 PM BARNES 124
03/22/07 (H) Heard & Held
03/22/07 (H) MINUTE(O&G)
03/23/07 (H) O&G AT 8:30 AM CAPITOL 106
03/23/07 (H) Heard & Held
03/23/07 (H) MINUTE(O&G)
03/24/07 (H) O&G AT 1:00 PM SENATE FINANCE 532
03/24/07 (H) -- Public Testimony --
03/26/07 (H) O&G AT 8:30 AM CAPITOL 106
03/26/07 (H) Heard & Held
03/26/07 (H) MINUTE(O&G)
03/27/07 (H) O&G AT 3:00 PM BARNES 124
03/28/07 (H) O&G AT 7:30 AM CAPITOL 106
03/28/07 (H) Heard & Held
03/28/07 (H) MINUTE(O&G)
03/28/07 (H) O&G AT 8:30 AM CAPITOL 106
03/28/07 (H) Heard & Held
03/28/07 (H) MINUTE(O&G)
03/29/07 (H) O&G AT 3:00 PM BARNES 124
03/29/07 (H) Heard & Held
03/29/07 (H) MINUTE(O&G)
03/30/07 (H) O&G AT 8:30 AM CAPITOL 106
03/30/07 (H) Heard & Held
03/30/07 (H) MINUTE(O&G)
03/31/07 (H) O&G AT 1:00 PM BARNES 124
03/31/07 (H) -- MEETING CANCELED --
04/02/07 (H) O&G AT 8:30 AM CAPITOL 106
04/02/07 (H) Heard & Held
04/02/07 (H) MINUTE(O&G)
04/03/07 (H) O&G AT 3:00 PM BARNES 124
04/03/07 (H) Moved CSHB 177(O&G) Out of Committee
04/03/07 (H) MINUTE(O&G)
04/04/07 (H) O&G RPT CS(O&G) NT 3DP 2NR 2AM
04/04/07 (H) DP: RAMRAS, DOOGAN, OLSON
04/04/07 (H) NR: SAMUELS, KAWASAKI
04/04/07 (H) AM: DAHLSTROM, KOHRING
04/04/07 (H) O&G AT 8:30 AM CAPITOL 106
04/04/07 (H) -- MEETING CANCELED --
04/05/07 (H) O&G AT 3:00 PM BARNES 124
04/05/07 (H) -- MEETING CANCELED --
04/10/07 (H) RES AT 1:00 PM BARNES 124
04/10/07 (H) Heard & Held
04/10/07 (H) MINUTE(RES)
04/11/07 (H) RES AT 1:00 PM BARNES 124
04/11/07 (H) Heard & Held
04/11/07 (H) MINUTE(RES)
04/12/07 (H) RES AT 1:00 PM BARNES 124
04/12/07 (H) Heard & Held
04/12/07 (H) MINUTE(RES)
04/13/07 (H) RES AT 1:00 PM BARNES 124
04/13/07 (H) Heard & Held
04/13/07 (H) MINUTE(RES)
04/14/07 (H) RES AT 1:00 PM BARNES 124
04/14/07 (H) Heard & Held
04/14/07 (H) MINUTE(RES)
04/16/07 (H) RES AT 1:00 PM BARNES 124
04/16/07 (H) Heard & Held
04/16/07 (H) MINUTE(RES)
04/17/07 (H) RES AT 1:00 PM BARNES 124
04/17/07 (H) Heard & Held
04/17/07 (H) MINUTE(RES)
04/18/07 (H) RES AT 1:00 PM BARNES 124
04/18/07 (H) Heard & Held
04/18/07 (H) MINUTE(RES)
04/19/07 (H) RES AT 1:00 PM BARNES 124
04/19/07 (H) Heard & Held
04/19/07 (H) MINUTE(RES)
04/20/07 (H) RES AT 1:00 PM BARNES 124
04/20/07 (H) Heard & Held
04/20/07 (H) MINUTE(RES)
04/21/07 (H) RES AT 1:00 PM BARNES 124
04/21/07 (H) Heard & Held
04/21/07 (H) MINUTE(RES)
04/23/07 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
MARCIA DAVIS, Deputy Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: During hearing of the administration's
amendments to CSHB 177(O&G), answered questions.
CODY RICE, Staff
to Representative Gatto
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 177, answered
questions.
PAT GALVIN, Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 177, answered
questions.
ACTION NARRATIVE
CO-CHAIR CARL GATTO called the House Resources Standing
Committee meeting to order at 1:07:16 PM. Representatives
Gatto, Johnson, Kawasaki, Wilson, Seaton, Roses, Guttenberg, and
Edgmon were present at the call to order. Representative
Kohring arrived as the meeting was in progress. Representative
Fairclough was also in attendance.
HB 177-NATURAL GAS PIPELINE PROJECT
1:07:25 PM
CO-CHAIR GATTO announced that the only order of business would
be HOUSE BILL NO. 177, "An Act relating to the Alaska Gasline
Inducement Act; establishing the Alaska Gasline Inducement Act
matching contribution fund; providing for an Alaska Gasline
Inducement Act coordinator; making conforming amendments; and
providing for an effective date." [Before the committee was
CSHB 177(O&G).]
1:09:51 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 1, which read [original punctuation provided]:
Page 1, line 4-5- Delete "establishing the gas utility
revolving loan fund;"
CO-CHAIR GATTO objected for discussion purposes. He noted that
Administration Amendment 1 changes the title.
1:10:09 PM
REPRESENTATIVE SEATON surmised that this is a policy call
regarding entirely eliminating the gas utility revolving loan
fund from the legislation.
CO-CHAIR GATTO responded yes. He withdrew his objection. There
being no further objections, Administration Amendment 1 was
adopted.
1:10:44 PM
CO-CHAIR GATTO [moved that the committee adopt] Administration
Amendment 2, which seems to be merely a grammatical correction.
Administration Amendment 2 read:
Page 1, line 12, replace the second "of" with "in"
There being no objection, Administration Amendment 2 was
adopted.
1:10:58 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 3, which read [original punctuation provided]:
Page 2, line 3 - replace "from the" with "of"
Page 2, line 5 - insert "state" after "encourages" and
delete "in the state"
Section 43.90.110 Natural gas pipeline project
construction inducement
Page 2 Line 16 - Page 3, line 8 - Revise (1) and (2)
as follows:
(1) subject to appropriate, state matching
contributions in an [a total] amount not to exceed
$500,000, paid in total to the licensee over a [during
the] five-year period; the payment period may be
extended by the commissioners under an amendment or
modification of the project plan under AS 43.90.210;
the payment period commences on the date of the
issuance of the license; [immediately following the
date the license is awarded;] payments under this
paragraph shall be made according to the following:
(A) on or before the close of the first binding
open season, the state shall match [contribute the
amount of] the licensee's qualified expenditures at
the [a] level specified in the license; however the
state's matching contribution may not be more than
[exceed] 50 percent of the qualified expenditures
incurred before the close [end] of the first binding
open season;
(B) after the close of the first binding season,
the state shall match [may contribute an amount for]
the licensee's qualified expenditures at a [the] level
specific in the license; however, the state's matching
contribution may not be greater than 80 percent of the
qualified expenditures incurred after the close of the
first open season;
(C) [a] qualified expenditures are [is a] costs
that are [is] incurred after the license is issued
under this chapter, [is incurred] by the licensee or
the licensee's designated affiliate, and are [is]
directly and reasonably related to obtaining a
certificate or amended certificate of public
convenience and necessity from the Federal Energy
Regulatory Commission or the Regulatory Commission of
Alaska, as appropriate, for development of the
project; [but] in this subparagraph, "qualified
expenditures" does not include overhead costs,
litigation costs [the cost of an] assets or work
product predating the issuance of the license,
[acquired by the licensee before the license is
issued] or civil or criminal penalties, [criminal
penalties] or fines; and
(2) the benefit of an Alaska Gasline Inducement Act
coordinator who has the authority prescribed in AS
43.90.250.[; and]
Page 2, line 9 - Insert "(a)" between "project." and
"The".
Page 2, line 12 -Insert "(b)Nothing in this section
precludes a person's pursuing a gas pipeline
independently from this chapter."
1:11:20 PM
REPRESENTATIVE SEATON said that he doesn't understand the change
to page 2, line 3, specified in Administration Amendment 3.
MARCIA DAVIS, Deputy Commissioner, Department of Revenue,
explained that the change to page 2, line 3, specified in
Administration Amendment 3 is merely a grammatical change. She
mentioned that this is a small change that will also drive CSHB
177(O&G) closer to the language of the Senate companion
legislation. The change specified in Administration Amendment 3
to page 2, line 5, is a similar change.
1:13:17 PM
MS. DAVIS, in response to Representative Seaton, confirmed that
the term "appropriate" in paragraph (1) of Administration
Amendment 3 is a typographical error and should be the term
"appropriation".
REPRESENTATIVE SEATON moved that the committee adopt an
amendment to Administration Amendment 3 such that the term
"appropriate" in paragraph (1) is replaced with "appropriation".
There being no objection, the amendment to Administration
Amendment 1 was adopted.
1:14:39 PM
MS. DAVIS specified that all of Administration Amendment 3, as
amended, save lines 11-13 of the written amendment, are changes
to conform to the Senate companion legislation. The changes
specified on lines 11-13 of the written amendment is a change
that was adopted on the Senate side that the administration
recommends be included in the HB 177. This change would provide
some flexibility to allow the payment period to be extended.
1:15:11 PM
REPRESENTATIVE SEATON, referring to subparagraphs (A) and (B) of
Administration Amendment 3, as amended, related his
understanding that the language specifying that the state
"shall" match the qualified expenditures would only occur "if
the licensee has requested in its proposal for license for
matching money, this doesn't require the match be taken."
MS. DAVIS confirmed that is correct.
1:16:00 PM
CO-CHAIR JOHNSON inquired as to the reasons the payment period
would be extended.
MS. DAVIS explained that there is a hard deadline of 36 months
for the initiation of open season, thereafter there is no hard
deadline for the initiation of the Federal Energy Regulatory
Commission (FERC) certification process. However, the
legislation does specify a hard deadline of five years for the
dispersal of the matching funds. The desire, she related, is to
ensure that there is an intelligent expenditure of funds and
that the applicant doesn't feel the need to accelerate some of
the expenditures in order to come in under the five-year
deadline. There may be expenditures that occur after the five
years and may be more in step with the manner in which FERC
certification occurred. Ms. Davis said that the administration
didn't believe that any delay of the matching fund would hurt
the state, but there is the desire for intelligent decision
making with regard to the applicant's expenditures.
1:17:28 PM
CO-CHAIR JOHNSON commented that he didn't know if he
conceptually agreed that the state should give another unlimited
period of time for an applicant to continue to a second or third
open season. This would extend the second open season beyond
five years.
MS. DAVIS pointed out that the funds aren't tied to the open
season but rather to the FERC certification process. Therefore,
there could be multiple open seasons with the five-year period.
The five-year deadline is a straight deadline regardless of the
point at which the applicant is in the FERC certification
process.
CO-CHAIR JOHNSON said he would like to qualify that statement by
referring to "successful open season."
1:19:33 PM
REPRESENTATIVE GUTTENBERG, referring to the language inserted on
page 2, line 12, as specified in Administration Amendment 3, as
amended, asked, "Doesn't that go without saying?"
MS. DAVIS stated that it's a matter of federal law and that this
language was added in the Senate companion legislation in order
to quell the producers' concerns that this was an exclusive
arrangement and process.
1:20:33 PM
REPRESENTATIVE ROSES inquired as to how one would pursue a gas
pipeline independently from the contract.
MS. DAVIS explained that one would essentially apply for their
right-of-ways, their permitting processes, and apply to the RCA
and FERC where appropriate.
REPRESENTATIVE ROSES related his understanding that there is no
mechanism in place to proceed with the state other than AGIA.
MS. DAVIS replied no, and pointed out that part of the mechanism
for obtaining permitting for a pipeline is to apply to the
Department of Natural Resources (DNR) for rights-of-way for
which they have the exclusive province for issuing and deal with
the Department of Environmental Conservation (DEC) for
environmental permitting. Therefore, a pipeline builder would
deal with the state for all of its permitting and various
administrative jurisdictional areas. The state would be engaged
in issuing permits and authorizing the various activities on
state land and the areas for which the state exercises police
powers. Ms. Davis pointed out that there would be consequences
if the state preferentially issued a tax rebate, preferentially
provided a royalty benefit, or provided an outright monetary
grant. Although the state could do the aforementioned, there
would be consequences under AGIA for supporting a competing
pipeline project with the AGIA licensee.
1:22:36 PM
REPRESENTATIVE ROSES surmised, "You would only be precluded up
until a point in which you issued or selected, according to
AGIA, a licensee. Prior to the assignment or the awarding of a
licensee, that would not preclude the state from making those
kinds of inducements, would it?"
MS. DAVIS said that's correct.
1:22:59 PM
CO-CHAIR GATTO related his understanding that such would be the
case with any pipeline.
MS. DAVIS said that's correct, adding that essentially any
pipeline can be built in the state. She reiterated that
consequences for building a competing pipeline are set forth in
AGIA. The legislation defines a competing pipeline as one that
delivers gas of greater than 500 million cubic feet a day.
1:23:41 PM
CO-CHAIR GATTO, after ascertaining there were no objections to
Administration Amendment 3, as amended, announced that
Administration Amendment 3, as amended, was adopted.
1:24:17 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 4, which read [original punctuation provided]:
Page 2, line 13 - Delete "(a)"
There being no objection, Administration Amendment 4 was
adopted.
1:25:03 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 5, which read [original punctuation provided]:
Page 3, line 9-14 - Delete subsection (3) and
subsection (b).
MS. DAVIS explained that [paragraph] (3) is being deleted
because the benefits of the qualified job training has been
moved to a later section in the legislation and isn't an
exclusive inducement. Subsection (b) has been addressed in the
[provisions] addressing the right of the commissioners to issue
regulations.
1:25:51 PM
REPRESENTATIVE GUTTENBERG related his desire to have a committee
substitute (CS) that incorporates these amendments for the
committee to review prior to it moving out of committee.
CO-CHAIR GATTO related his understanding that the amendments
will be adopted and the CS will be presented in the House
Finance Committee.
REPRESENTATIVE GUTTENBERG surmised then that once all the
amendments are dispensed with, the motion will be to report the
legislation, as amended, from committee without the committee
seeing that amended legislation. He reiterated his desire to
have the amended legislation in a CS for the committee to review
prior to moving the legislation from committee.
1:26:37 PM
CO-CHAIR GATTO inquired as the time required for the committee
to have a CS that incorporates the amendments. He noted that
the House Finance Committee would like to have the legislation
on Friday in order to take it up that day.
MS. DAVIS said that one of the challenges is working with the
legislative attorneys who work in a certain Word format. She
said she can work in a Word format to create a document that has
the changes without the numbering down the margin. She offered
to check with Legislative Legal and Research Services in order
to coordinate and facilitate getting the committee a CS.
1:28:24 PM
CO-CHAIR GATTO returned the committee's attention to
Administration Amendment 5.
REPRESENTATIVE SEATON inquired as to why the language on page 3,
lines 12-14 of CSHB 177(O&G) is being deleted.
MS. DAVIS explained that later in the legislation there is a
general authorizing provision that allows the commissioners to
enact all regulations necessary for the implementation of the
chapter. Therefore, the drafter felt it appropriate to
eliminate the special regulation for each section and maintain
the general authorizing authority at the back of the chapter.
In response to Representative Guttenberg, Ms. Davis confirmed
that the language in paragraph (3) on page 3, lines 9-12 of CSHB
177(O&G) is located elsewhere in the legislation.
CO-CHAIR GATTO noted that there has been a substantial amount of
re-ordering in order to mesh HB 177 and SB 104.
CO-CHAIR GATTO, after ascertaining that there were no
objections, announced that Administration Amendment 5 was
adopted.
1:29:57 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 6, which read [original punctuation provided]:
Sec. 43.90.120. Request for applications for the
license.
Page 3, Line 16, insert after "license"-"under this
chapter"
Page 3, Line 18-20, Revise to read: "The commissioners
may use independent contractors [,including technical
advisors] to advise [them] in developing the
provisions for the application for a license and in
evaluating [the] applications received under this
chapter.
Section 43.90.130. Application requirements
Page 3, line 25 - Delete first sentence and replace
with:
"An application for a license must be consistent with
the terms of the request for applications under AS
43.90.120 and must"
Page 3, line 28, replace "file the application" with
"be filed"
MS. DAVIS characterized Administration Amendment 4 as a
conforming amendment.
1:31:09 PM
REPRESENTATIVE GUTTENBERG requested an explanation of the
language change of "shall" to "must" in the new language for the
first sentence on page 3, line 25.
MS. DAVIS informed the committee that the change was made by the
drafter to comport with standard drafting protocols. Ms. Davis
related her understanding that there is no difference in the
meaning of "must" versus "shall".
REPRESENTATIVE SEATON related his understanding that "shall" is
an order for somebody to do something while "must" refers to an
application including something.
There being no objection, Administration Amendment 6 was
adopted.
1:32:34 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 7, which read [original punctuation provided]:
Page 3, lines 22-24 - Delete the rest of the sentence
after "chapter"
MS. DAVIS said that Administration Amendment 7 relates to the
adoption of regulations and there is a provision in the
legislation that requires applicants to waive their appeal
rights, both appeal against an award and the decision not to
award. Therefore, these provisions aren't necessary.
1:33:18 PM
REPRESENTATIVE GUTTENBERG asked if there are any changes in the
way in which protest and appeal procedures are provided.
MS. DAVIS explained that in this case, because there was a
policy change to remove the right of appeal to protest the
application, the award of licenses, the provision [deleted in
Administration Amendment 7] no longer has a function. In other
words, she explained that there is no need to adopt or
incorporate analogous provisions to the procurement code because
there won't be authorized an administrative appeal of the award
of licenses. In further response to Representative Guttenberg,
Ms. Davis said that she would expand on the new procedure, which
is found in the application requirements.
There being no objection, Administration Amendment 7 was
adopted.
REPRESENTATIVE ROSES mentioned that although he didn't object to
Administration Amendment 7, he reserves the right to reconsider
Administration Amendment 7 once the committee reviews the
provision where the language appears.
1:35:57 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 8, which read [original punctuation provided]:
Page 4, line 12 - Insert "how the applicant will
implement practices for controlling carbon emissions
from natural gas systems as established by the United
States Environmental Protection Agency" between
"engineering," and "and"
Page 4, line 12 - Delete "complying" and insert "how
the applicant will comply"
There being no objection, Administration Amendment 8 was
adopted.
1:36:41 PM
CO-CHAIR GATTO moved that the committee adopt Administration
Amendment 9, which read [original punctuation provided]:
Page 4, line 1, insert semi-colon after "pipeline" and
delete remainder of subsection (A)
Page 4, line 3, delete "the location of" and add "s"
to end of "receipt"
Page 4, line 6, after "points" and before semi-colon,
add "unless the application proposes specific in-state
delivery points"
Page 4, line 8-9, revise (C) to read "an analysis
demonstrating the project's economic and technical
viability [of the project] as required in the request
for application;
Page 4, line 9-14 revise (D) to read "an economically
and technically viable work plan, timeline and
associated budget for developing the proposed project,
including how the applicant will perform [and work
associated with the project that includes] field work,
environmental studies, design, and engineering, how
the applicant will implement practices for controlling
carbon emissions from natural gas systems as
established by the United States Environmental
Protection Agency, and how the applicant will comply
[and complying] with all applicable state, federal,
and international regulatory requirements that affect
the proposed project; the [applicant shall provide]
work plan must address the following:
Page 4, line 16: revise to read "...a [detailed]
description in detail of the ..."
Page 4, line 17 - add semi-colon after "Canada"
Page 4, line 20 - add semi-colons after "agencies" and
"services", insert "and" after "agencies;"
Page 4, line 24 - insert "marine" after "the"
Page 4, line 24-26 - Delete from "pipeline" to "of"
Page 4, line 28 - delete "and" after "services;" then
insert "by third parties" after "services;"
Page 4, line 29 - delete "that" and insert "propose"
after "would"
Page 4, line 29-31 - delete "including" through
"terms"
Page 4, line 31 delete "a" and replace "party" with
"parties"
1:37:12 PM
CO-CHAIR GATTO asked if there is another location in the
legislation where the over the top route is addressed.
MS. DAVIS said that she will have to double check that.
1:38:37 PM
CO-CHAIR JOHNSON opined that he wasn't sure about the deletion
proposed in Administration Amendment 9. He mentioned the
possibility of bifurcating the amendment.
CO-CHAIR GATTO announced that the committee will review
Administration Amendment 9 and address it once there is an
answer regarding whether the over the top route is addressed
elsewhere in the legislation.
The committee took an at-ease from 1:39:21 PM to 2:02:35 PM.
2:02:38 PM
CO-CHAIR GATTO suggested that from this point on the committee
will stop voting on the administration's amendments and have the
drafter incorporate the administration's amendments into a CS
for review. The committee would then turn to the member's
amendments and take those up and vote on them. Therefore, he
explained that the committee would review Administration
Amendment 9, but won't vote on it because it will be in the CS
for the committee to consider.
2:06:05 PM
REPRESENTATIVE WILSON pointed out that the portion of
Administration Amendment 9 deleting from "pipeline" to "of" on
page 4, lines 24-26, should actually delete from "pipeline"
through "of".
MS. DAVIS noted her agreement.
CO-CHAIR GATTO announced that the committee will address the
members' amendments at 6:00 p.m.
2:07:52 PM
REPRESENTATIVE ROSES agreed with the proposed approach, but
opined that he didn't know if it's appropriate to continue to
review the administration's amendments without them in the
context of the CS. Therefore, he related his preference to
suspend addressing the administration's amendments until the CS
is before the committee.
MS. DAVIS interjected that there are large chunks that have a
substantive rationale that she could review in order to perhaps
save the committee some time.
CO-CHAIR GATTO stated his agreement.
2:09:13 PM
REPRESENTATIVE SEATON indicated that perhaps the
administration's amendments that are policy calls could be
discussed.
CO-CHAIR GATTO asked if the Senate deleted the over the top
route.
MS. DAVIS answered that the provision wasn't included in the
Senate legislation. She offered her guess that the over the top
route language was added in the House Special Committee on Oil
and Gas.
REPRESENTATIVE EDGMON confirmed that the language was added in
the House Special Committee on Oil and Gas.
2:11:25 PM
CO-CHAIR JOHNSON moved to divide Administration Amendment 9 such
that Administration Amendment 9A would read [original
punctuation provided]:
Page 4, line 1, insert semi-colon after "pipeline" and
delete remainder of subsection (A)
Administration Amendment 9B would read, with technical changes
noted during the meeting, [original punctuation provided]:
Page 4, line 3, delete "the location of' and add "s"
to end of "receipt"
Page 4, line 6, after "points" and before semi-colon,
add "unless the application proposes specific in-state
delivery points"
Page 4, line 8-9, revise (C) to read "an analysis
demonstrating the project's economic and technical
viability [of the project] as required in the request
for application;
Page 4, line 9-14 revise (D) to read "an economically
and technically viable work plan, timeline and
associated budget for developing the proposed project,
including how the applicant will perform [and work
associated with the project that includes] field work,
environmental studies, design, and engineering, how
the applicant will implement practices for controlling
carbon emissions from natural gas systems as
established by the United States Environmental
Protection Agency, and how the applicant will comply
[and complying] with all applicable state, federal,
and international regulatory requirements that affect
the proposed project; the [applicant shall provide]
work plan must address the following:
Page 4, line 16: revise to read"...a [detailed]
description in detail of the ..."
Page 4, line 17 - add semi-colon after "Canada"
Page 4, line 20 - add semi-colons after "agencies" and
"services", insert "and" after "agencies;"
Page 4, line 24 - insert "marine" after "the"
Page 4, line 24-26 - Delete from "pipeline" to "of"
Page 4, line 28 - delete "and" after "services;" then
insert "by third parties" after "services;"
Page 4, line 29 - delete "that" and insert "propose"
after "would"
Page 4, line 29-31 - delete "including" through
"terms"
Page 4, line 31 delete "a" and replace "party" with
"parties"
2:12:23 PM
CO-CHAIR GATTO, upon determining there was no objection,
announced that Administration Amendment 9 was divided as
specified above. He then announced that before the committee
was Administration Amendment 9A.
REPRESENTATIVE WILSON objected for discussion purposes.
CO-CHAIR GATTO explained that if the committee fails to adopt
Administration Amendment 9A, then the over the top route would
remain in the legislation as written on the first few lines of
page 4. He then related his understanding that the over the top
route was eliminated as a possibility by FERC.
2:13:37 PM
REPRESENTATIVE SEATON pointed out that federal statute does
eliminate the over the top route. However, noting precludes
someone wanting the gas to seek a change from the federal
government to allow it to traverse over the top. If that
occurred and the state removed its prohibition on going over the
top, then the pipeline owner can make the modification and go
over the top. The state has consistently said the pipeline will
go through Alaska. Therefore, leaving the language prohibiting
the proposal of an over the top route simply means that the
state doesn't support and won't allow such a pipeline to take
gas from the North Slope over the top and through the McKenzie
Valley. He related his belief that the prohibition of the over
the top route should be left in the legislation.
2:15:19 PM
REPRESENTATIVE WILSON highlighted that the language in CSHB
177(O&G) says "may not be the route described in AS
38.55.017(b)" rather than "shall not".
MS. DAVIS explained that this language is in the context of the
application an applicant is required to file under AGIA. The
applicant must describe the route of the proposed pipeline. By
leaving intact the language currently in CSHB 177(O&G), the
applicant can't propose a pipeline that would utilize the over
the top route. The Senate companion legislation didn't have
such a prohibition, which she said could be related to the fact
that the language hadn't yet passed through the House Special
Committee on Oil and Gas. In an effort to conform the House and
Senate legislation, the notion with Administration Amendment 9A
is to delete the language. However, she acknowledged that it's
a policy issue.
2:16:58 PM
REPRESENTATIVE KOHRING noted his agreement with Representative
Seaton's statements, adding that the House Special Committee on
Oil and Gas was being proactive by adding the prohibition.
REPRESENTATIVE WILSON removed her objection.
REPRESENTATIVE SEATON stated his objection, adding that in order
to maintain the language in CSHB 177(O&G) the committee would
have to oppose Administration Amendment 9A, which proposed to
delete the language.
CO-CHAIR GATTO stated his objection also.
A roll call vote was taken. Representative Gatto voted in favor
of Administration Amendment 9A. Representatives Kohring,
Wilson, Seaton, Roses, Guttenberg, Edgmon, Kawasaki, and Johnson
voted against it. Therefore, Administration Amendment 9A failed
to be adopted by a vote of 1-8.
2:20:51 PM
CO-CHAIR GATTO, upon determining there was no comment on
Administration Amendment 9B, turned the committee's attention to
Administration Amendment 9C, which, with technical changes noted
during the meeting, read [original punctuation provided]:
Page 5, line 1, delete "the identification of that"
and replace with "identify the"
Page 5, line 2, replace "party with "parties" and
delete "applicable to the liquefaction services" and
insert "they would offer"
Page 5, line 3 - delete from "marine" through "the"
Page 5, line 7 - delete semi-colon and replace with ",
and"
Page 5, line 8 - delete "and licenses"
Page 5, line 10 - insert after "Commission" - " for
the transportation of liquefied natural gas in
interstate commerce if United States markets are
proposed;"
Page 5, line 12 - insert "commit that" before "if"
Page 5, line 13 - delete "commit to" and insert "the
applicant will"
Page 5, line 14, delete "is"
Page 5, line 20 - insert "or amended certificate"
after "certificate"
Page 5, line 23 - insert "or amended certificate"
after "certificate"
Page 5, line 26 - insert "commit that" before "if"
Page 5, line 27 - delete "commit to" and insert "the
applicant will"
CO-CHAIR GATTO highlighted that the changes to page 5, line 10
in Administration Amendment 9C are referencing liquefied natural
gas (LNG). He then requested explanation of that change.
MS. DAVIS explained that beginning on page 4, line 23, through
page 5, line 11, sub-subparagraph (ii) is designed to focus
exclusively on a project that proposes an LNG project.
2:22:59 PM
REPRESENTATIVE SEATON related his understanding that if the
project goes through pipeline, then there will be pipeline
details. However, he said that he doesn't see the details of
the 800 miles of pipeline if it were to go to Valdez. He
requested that Ms. Davis ensure it's addressed.
MS. DAVIS specified that the intent is for the application to
describe each component of the transportation arm with a project
that involves a pipeline to an LNG plant that then proceeds into
marine transportation. She pointed out that the language on
page 4, lines 1-14, address the details focusing on pipelines
while page 4, line 15 through page 5, line 11, details a project
involving transport through Canada or liquefaction of natural
gas liquids. She noted that the administration "tried not to
double up the requirements within" sub-subparagraphs (i) and
(ii) on page 4, line 15 through page 5, line 11.
2:25:49 PM
REPRESENTATIVE SEATON said that he doesn't see the tariffs for
the in-state portion of either pipeline.
CO-CHAIR GATTO directed Representative Seaton to page 4, lines
20-22.
REPRESENTATIVE SEATON clarified that the language refers to the
Canadian tariffs and terms.
MS. DAVIS acknowledged that the structure is misleading because
it suggests that the rate information only relates to the
Canadian portion. However, she didn't believe that's the case
because the language discusses regulatory agencies. Therefore,
the focus is on the whole pipeline. Still, Ms. Davis suggested
that the language should be placed in a section that applies to
all. To that end, she suggested that she would [review] the
language to ensure that the generic request for description of
ratemaking methodology and rates is included. Ms. Davis
highlighted that part of the challenge is that the legislation,
under the application requirements, reflect upon the tariff
rates.
2:30:53 PM
CODY RICE, Staff to Representative Gatto, Alaska State
Legislature, speaking to Administration Amendment 9C, related
his belief that the language change to "amended certificate" is
substantive. He said that language references the possibility
of an amended certificate, such as the certificate that
TransCanada currently holds.
MS. DAVIS explained that because TransCanada already holds a
certificate, TransCanada wanted to be sure that under this
process they would be committing to amend their certificate
versus obtaining a new certificate.
2:32:42 PM
CO-CHAIR GATTO turned the committee's attention to
Administration Amendment 11, which read [original punctuation
provided]:
Page 6, line 20 - page 7 line 8 - Delete this section
in its entirety and substitute:
"Sec. 43.90.130. (7) commit that the applicant
A. will propose and support the recovery of
mainline capacity expansion costs, including fuel
costs, from all mainline system users through rolled-
in rates as provided in (B) and (C) of this paragraph
or through a combination of incremental and rolled-in
rates as provided in (D) of this paragraph;
B. will propose and support the recovery of
mainline capacity expansion costs, including fuel
costs, from all mainline system users through rolled-
in rates; an applicant is obligated under this
subparagraph only if the rolled-in rates would
increase the rates
i. not described in (ii) of this
subparagraph by not more than 15 percent above the
initial maximum recourse rates for capacity acquired
before commercial operations commence; in this sub-
subparagraph, "initial maximum recourse rates" means
the highest cost-based rates for any specific
transportation service set by the Federal Energy
Regulatory Commission, the Regulatory Commission of
Alaska, or the National Energy Board of Canada, as
appropriate, when the pipeline commences commercial
operations;
ii. by not more than 15 percent above the
negotiated rate for pipeline capacity on the date of
commencement of commercial operations where the holder
of the capacity is not an affiliate of the owner of
the pipeline project; for the purposes of this sub-
subparagraph, "negotiated rate" means the rate in a
transportation service agreement that provides for a
rate that varies from the otherwise applicable cost-
based rate, or recourse rate, set out in a gas
pipeline's tariff approved by the Federal Energy
Regulatory Commission, the Regulatory Commission of
Alaska, or the National Energy Board of Canada, as
appropriate; or
iii. for capacity acquired in an expansion
after commercial operations commence, to a level that
is not more than 115 percent of the volume-weighted
average of all rates collected by the project owner
for pipeline capacity on the date commercial
operations commence;
2:33:35 PM
MS. DAVIS explained that this is the provision that identifies
the size of the cap for the cost of expansion. In the original
legislation the cap was identified as 15 percent of the maximum
initial recourse rate. She reminded committee members that the
recourse rate, the rack rate, is the listed price approved by
FERC. However, what happens most often is that an entity
shipping that entity's own gas will negotiate a rate in order to
obtain more favorable terms, which often results in a tariff
lower than the rack rate. The independent pipeline companies
expressed concern that capping expansion at 15 percent of the
higher rack rate would impair their ability to negotiate rates
with the shippers. Therefore, the independent pipeline
companies wanted the cap to reflect the reality of the
marketplace. The aforementioned resulted in the administration
taking the 15 percent cap and created three different caps. She
explained that a shipper paying the rack rate is capped at 15
percent of the maximum initial recourse rate. If an entity
negotiates a rate with the shipper, that entity is capped at 15
percent above the negotiated rate. For an entity that enters
after the initial shippers have signed on, subsequent shippers,
the third category is a weighted average of the rack rate and
the negotiated rate and thus the cap will be 15 percent of the
blended rate.
2:36:38 PM
CO-CHAIR GATTO questioned why the language "not more than 115
percent of" when the language "15 percent" could've been used
each time.
MS. DAVIS related her understanding that it works best in the
math and has to do with the weighted number. She offered to
check into that.
MR. RICE related his understanding that sub-subparagraph (ii) of
Administration Amendment 11 doesn't appear to be available to
integrated pipelines and upstream shippers. He characterized
the aforementioned as a policy call for the committee.
2:38:17 PM
CO-CHAIR GATTO then moved on to Administration Amendment 11A,
which read [original punctuation provided]:
C. will, if recovery of mainline capacity
expansion costs, including fuel costs, through rolled-
in rate treatment would increase the rates for
capacity described in (B) of this paragraph, propose
and support the partial roll-in of mainline expansion
costs, including fuel costs, to the extent that rates
acquired before commercial operations commence do not
exceed the levels described in (B) of this paragraph;
D. may, for the recovery of mainline capacity
expansion costs, including fuel costs, that, under
rolled-in rate treatment, would result in rates that
exceed the level in (B) of this paragraph, propose and
support the recovery of those costs through any
combination of incremental and rolled-in rates;
E. agrees not to enter into a negotiated rate
agreement that would preclude the applicant from
collecting from any shipper, including a shipper with
a negotiated rate agreement, the rolled-in rates that
are required to be proposed and supported by the
applicant under (B) of this paragraph or the partial
rolled-in rates that are required to be proposed and
supported by the applicant under (C) of this
paragraph;"
MR. RICE highlighted that the fuel costs are included in
Administration Amendment 11A.
2:39:02 PM
CO-CHAIR GATTO moved on to Administration Amendment 12, which
read [original punctuation provided]:
Page 7, line 19 - insert a comma after "plant"; insert
"that" after "whether" and delete "such a"
Page 7, line 20 - delete "such a" and insert "that"
after "that"
Page 7, line 22, insert comma after "commerce"
Page 7, line 25, delete "owned" and insert "used"
after "previously"
Page 7, line 27 - insert semi-colon after "operation"
Page 7, line 31, insert "for the state's matching
contribution under AS 43.90.110(1)(A) and (B)" after
"amount"
MR. RICE suggested that it may be better to insert the language
"described the identity of" before "operation" on page 7, line
27, in Administration Amendment 12. He also suggested on page
7, line 29, inserting "described" between "and" and "the" in
order to clarify the requirement.
2:41:03 PM
CO-CHAIR GATTO moved on to Administration Amendment 13, which
read [original punctuation provided]:
Page 8, line 1 - replace comma with semi-colon after
"license" and delete remainder of sentence.
Page 8, line 3 - delete "to" after "commit" and insert
"that the applicant will" after "commit"
Page 8, line 7 - after "means", delete "for preventing
or" and insert "by which the applicant plans to";
replace "managing cost overruns for" with "manage
overruns in costs of"
Page 8, line 8 - insert "if any," after "project,";
after "measures", delete "for minimizing" and insert
"that the applicant proposes to mitigate"; replace
"from" with "of"
Page 8, line 9, insert "for" after "provide"
Page 8, line 22 - Replace "award" with "issuance of a
license"; insert "to appeal" after "or"
Page 8, line 28, insert "matching" after "state"
Page 8, line 29 - insert comma after "base"
Page 8, line 31 - replace semi-colon with comma
MR. RICE highlighted that Administration Amendment 13 does deal
with specific language related to managing cost overruns. He
said that he didn't view it as specifically substantive.
2:41:43 PM
MR. RICE related his understanding that Administration Amendment
14 is one that addresses an area in which Representative Roses
is interested. Administration Amendment 14 read [original
punctuation provided]:
Page 8, line 18-21 - Delete section (15) and
substitute:
(15) to the extent permitted by law, commit to
(A) hire qualified residents from
throughout the state for management, engineering,
construction, operations, maintenance, and other
positions on the proposed project;
(B) contract with businesses located in the
state;
(C) establish hiring facilities or use
existing hiring facilities in the state; and
(D) use, as far as is practicable, the job
centers and associated services operated by the
Department of Labor & Workforce Development and an
Internet-based labor exchange system operated by the
state;
Page 8, line 25-27
Line 25 - delete "prior to" and replace with
"before"
Line 26 - after "agreement" delete "to assure
expedited construction and" and replace with "; in
this paragraph, "project labor agreement means a
comprehensive collective bargaining agreement between
the licensee or its agent and the appropriate labor
representatives to ensure expedited construction with"
MS. DAVIS explained that Administration Amendment 14 fleshes out
paragraph (15) in response to concerns expressed regarding local
hire and business impact. The language also makes more specific
references to hiring facilities and the use of existing and
future job centers.
2:42:39 PM
CO-CHAIR GATTO expressed concern with the use of the term
"hiring facilities". Although he indicated that it isn't
necessary to describe such facilities specifically, but the
language in the amendment could be satisfied by establishing a
phone booth.
MS. DAVIS recalled that part of the concern was that the term
"hiring hall" carries many legal nuances, including
institutional knowledge relative to being restricted to union
halls. The attempt with Administration Amendment 14 was to use
broader language than the phrase "hiring hall".
CO-CHAIR GATTO stated his satisfaction with the language.
2:43:34 PM
REPRESENTATIVE SEATON recalled testimony at a previous hearing
in which the only requirement under subparagraph (D) is 30-day
residency whereas under project labor agreements (PLAs) an
individual has to be a resident, but there can be pre-
applications over time. He asked if there is an explanation
regarding whether the inclusion of subparagraph (D) lessens the
ability of residents to get on a priority list for applying
under a PLA.
MR. RICE said he can't speak to this definitely, but pointed out
that Administration Amendment 14 does address the definition of
PLA. He related his assumption that through the PLA process
there will be clarified residency requirements. He then related
his understanding that most union halls require one year of
residency.
2:45:11 PM
REPRESENTATIVE SEATON clarified that his question about
subparagraph (D) is that it automatically results in 30-day
residency. However, he doesn't see any language specifying that
these facilities will be used where jobs can't be filled through
a PLA. Therefore, he asked whether there needs to be a default
position so that jobs that can't be filled through the PLA will
use subparagraph (D). He opined that it seems that the
legislation would circumvent the PLA requirements by mandating
that job centers and the Internet be used, which only require
30-day residency. He then asked Ms. Davis to review this matter
with the labor organizations.
MS. DAVIS agreed to do so.
2:47:36 PM
CO-CHAIR GATTO inquired as to whether the term "practicable" is
the preferred term.
MS. DAVIS deferred to the drafter.
2:48:06 PM
CO-CHAIR GATTO turned the committee's attention to
Administration Amendment 15, which, with technical changes, read
[original punctuation provided]:
Page 9, line 1 - replace semi-colon with comma
Page 9, line 2 - replace semi-colon with comma
Page 9, line 8, Replace "the readiness and ability"
with "that the applicant is ready and able"
Page 9, line 9 - delete "following"
Page 9, line 10 - delete "operation within the"
Sec. 43.90.140. Initial application review; additional
information requests; complete applications.
Page 9, line 12 - insert "submitted under AS
43.90.120" after "application"
Page 9, line 13 - Replace "meets the requirements in"
with "is consistent with the terms of"; insert "meets"
after "and"
Page 9, line 14 - Replace "in" with "of"; Replace "an"
with "any"
Page 9, line 15 - Replace "the" with "those terms and"
Page 9, line 16 - Replace "The" with "To evaluate an
application not rejected in (a) of this section, the";
insert "from an applicant" after "request"
Page 9, line 17-18 - Insert period after first
"application". Delete "from an applicant for the
purpose of evaluating an application that is not
rejected under (a) of this section."
Page 9, line 19 - Replace "An application shall be
rejected if the" with " If, within the time specified
by the commissioners, an"; delete "timely"
Page 9, line 20 - Insert "additional" at the beginning
of the line; delete "in"
Page 9, line 21 - Delete "answer to a request under
(b) of this section"; replace period with comma and
insert after comma, "the application will be
rejected."
Page 9, line 22 - Replace "The" with "For an
application not rejected under (a) or (c) of this
section, the"; delete "that an application not"
Page 9, line 23 - Delete "rejected under this section"
and insert "that the application" before "including"
MR. RICE highlighted the deletion of "timely" on page 9, line
19, which refers to the requirement when documents were to be
returned to the commissioners. He questioned whether that
deletion would weaken the commissioners' position or not.
MS. DAVIS explained that the changes amplify the term "timely"
and sets it out as a specific time specified by the
commissioners. Therefore, the timeliness requirement is
actually fortified.
2:49:53 PM
REPRESENTATIVE ROSES drew attention to the change made to page
9, lines 17-19, which would make the language read as follows:
"The commissioners may request additional information relating
to the application from an applicant."
MS. DAVIS characterized the change as a stylistic change made by
the drafter. She specified that the change in Administration
Amendment 15 on page 9, lines 17-19, results in subsection (b)
reading as follows: "To evaluate an application not rejected in
(a) of this section, the commissioners may request from an
applicant additional information relating to the application."
2:51:16 PM
CO-CHAIR GATTO moved on to Administration Amendment 15A, which
read [original punctuation provided]:
Sec. 43.90.150. Proprietary information and trade
secrets.
Page 9, line 28 - insert comma after "AS 40.25"
Page 9, line 29 - replace semi-colon with period;
replace "after" with "After"
Page 9, line 30 - insert "and retained" before "under"
MR. RICE noted that the one substantive change in this amendment
is the insertion of "and retained" on page 9, line 30. He
related his understanding that the language change means that if
the document is returned to the originator, some of the release
requirements could be waived.
MS. DAVIS explained that this was picked up in the Senate
Judiciary Standing Committee because information not considered
confidential or trade secret by the commissioners can be
requested and returned to the applicant if they so choose. The
existing language is inaccurate.
2:52:26 PM
CO-CHAIR GATTO continued with Administration Amendment 16, which
read [original punctuation provided]:
Page 10, line 1 - delete "is not" after "or" and
before "trade secret"
Page 10, line 2 - replace "at the" with "on"
Page 10, line 3 - Replace "An" with "The"; insert
"challenges" after "that" and delete "protests or
appeals"
Page 10, line 4 - Replace "by which the award of a
license is made" with "for making the award"
Page 10, line 6 - Replace "protest or appeal" with
"challenge"; replace "that is" with "held"
Sec. 43.90.160. Notice, review, and comment.
Page 10, line 15 - Delete "not public records and are"
Page 10, line 20 - Replace "this subsection" with "AS
43.90.150"
Page 10, line 21 - Insert "confidential" before
"information"; insert "that is" before "satisfactory";
insert comma after first "commissioners"
Page 10, line 22 - Insert "of the information" after
"summary"
Page 10, line 27 - Replace "upon" with "on"
CO-CHAIR GATTO related his understanding that the point behind
this amendment is to help the applicant with trade secrets and
confidentiality.
MS. DAVIS confirmed that to be the case in the first section of
Administration Amendment 16.
2:53:16 PM
REPRESENTATIVE ROSES drew attention to the language on page 10,
lines 3-7 of (CSHB 177(O&G).
MS. DAVIS clarified that it will read: "The applicant that
challenges the award of a license or the process for making the
award shall be considered to have consented to the disclosure of
all information submitted under this chapter by the applicant
making the challenge, including information held confidential
under (a) of this section."
REPRESENTATIVE ROSES related his understanding that no
challenges were going to be allowed.
MS. DAVIS noted her agreement, adding that she didn't believe
anyone caught this. She then reminded the committee that the
remaining piece is a constitutional challenge in the section of
the legislation addressing the statute of limitations. She
explained that if an applicant filed a constitutional challenge
against the award process, conceivably they wouldn't be held to
have waived a constitutional claim. Therefore, this could
operate in that limited context. In further response to
Representative Roses, Ms. Davis confirmed that as it's currently
written it only challenges the award. The only right to
challenge would be a constitutional challenge, she said.
REPRESENTATIVE ROSES said that he didn't read the language in
the same way.
2:55:32 PM
REPRESENTATIVE SEATON asked if [the changes proposed in
Administration Amendment 16] mean that an applicant's data will
be released or does the language refer specifically to a supreme
court challenge.
MS. DAVIS explained that this section was written before the
right to challenge was eliminated. Therefore, the primary focus
was on an applicant who challenged the award and felt they
should've received the award. The concern was to be sure not to
have the successful applicant's information fully public and
allow the unsuccessful applicant to "shoot from the bushes" and
select what they were willing to put out or not put out. The
goal was to ensure that the challenger is on equal footing with
the winning licensee. However, since the right to challenge
awards has been eliminated, the only provision left is a
constitutional challenge. The question then becomes, she said,
whether the [remaining language] has a limited function in the
context of constitutional challenges. She acknowledged that the
aforementioned is a policy call.
2:57:34 PM
REPRESENTATIVE SEATON posed a situation in which an applicant
who opposes the license will fall under the suggested term
"challenge." He then asked if the challenging applicant will
have to make all of its bid information public under the
suggested term "challenge."
MS. DAVIS replied yes.
MR. RICE related his understanding that Representative Seaton
believes the term "challenge" may be somewhat broader than the
previous language and questions whether that could encompass an
editorial critical of the licensee. He said that he didn't know
the answer and suggested that perhaps several lawyers would need
to debate the matter.
2:59:04 PM
CO-CHAIR GATTO recessed until 6:00 p.m.
6:12:50 PM
CO-CHAIR GATTO reconvened the meeting at 6:12 p.m. Present upon
reconvening were Representatives Gatto, Johnson, Seaton, Roses,
Wilson, Guttenberg, Edgmon, and Kawasaki.
6:12:55 PM
CO-CHAIR JOHNSON moved that the committee rescind its previous
action in approving or disapproving Administration Amendments 1-
9A to CSHB 177(O&G). There being no objection, it was so
ordered.
REPRESENTATIVE GUTTENBERG moved that the committee adopt
Conceptual Amendment 1, which read [original punctuation
provided]:
Page 24, line 25
Add
Sec. 43.90.480 Community impacts. The Legislature
recognizes that as a result of construction of an
Alaska Natural Gas Pipeline, municipalities and
communities will be faced with potential increased
demand for public services without increased tax
revenue to pay for those services. The Department of
Commerce, Community and Economic Development shall
develop an assessment of the socio-economic impacts of
the Natural Gas Pipeline project. The examination of
community impacts should include socio-cultural
impacts, and cumulative impacts.
The Department shall review the Stranded Gas
Development Act Municipal Impact Analysis, dated
November 8, 2004 (corrected) developed by the
Municipal Advisory Group as a basis for developing the
socio-economic impact assessment.
The Department shall also make recommendations to the
Legislature about the best way to provide assistance,
such as Payment in Lieu of Taxes, or other financial
assistance, to impacted communities.
The Department shall deliver a report and
recommendations on municipal and community impacts to
the Speaker of the House and President of the Senate
of the Alaska Legislature within 30 days after the
convening of the 2nd Regular Session of the Alaska
Legislature after the date a natural gas pipeline
project that provides for delivery points in the state
receives a license under 43.90.100, as enacted by sec.
1 of this Act.
CO-CHAIR JOHNSON objected.
6:15:43 PM
REPRESENTATIVE GUTTENBERG opined that the history of Alaska is a
boom and bust cycle and every community will be impacted by this
project. He recalled that last year the Stranded Gas
Development Act Municipal Impact Analysis found that the socio-
economic impacts will amount to about $180 million. He said he
wanted to be sure that the communities understand that the state
and the legislature recognize there will be impacts long before
the communities will be able to raise taxes to mitigate those
impacts.
6:17:04 PM
REPRESENTATIVE GUTTENBERG moved that the committee adopt
Amendment 1 to Conceptual Amendment 1, such that paragraph three
of Conceptual Amendment 1 would read:
The Department shall also make recommendations to the
Legislature about the best way to provide assistance,
CO-CHAIR GATTO questioned whether Representative Guttenberg
wanted to use the language "about the best way" or is the intent
merely to make a recommendation to the legislature "about how to
provide assistance."
REPRESENTATIVE GUTTENBERG said he considered that a friendly
amendment.
CO-CHAIR GATTO moved that the committee adopt Amendment 1 to
Conceptual Amendment 1, such that the third paragraph of
Conceptual Amendment 1 would read:
The Department shall also make recommendations to the
Legislature about how to provide assistance,
There being no objection, it was so ordered. Therefore,
Conceptual Amendment 1, as amended, was before the committee.
6:18:18 PM
CO-CHAIR JOHNSON maintained his objection to Conceptual
Amendment 1, as amended, and questioned whether the timeframe
specified in the last paragraph of Conceptual Amendment 1, as
amended, should be shortened in order to accommodate the 90-day
session. He suggested having the report delivered within 15
days rather than 30 days.
REPRESENTATIVE GUTTENBERG pointed out that the amendment
specifies that the report should be delivered within 90 days,
and therefore it could be delivered within 15 days. He noted
that he isn't sure when the license will be issued.
CO-CHAIR GATTO noted his inclination to leave the language as
is.
CO-CHAIR JOHNSON moved that the committee adopt Amendment 2 to
Conceptual Amendment 1, as amended, such that in the last
paragraph of Conceptual Amendment 1, as amended, the deadline
for the report would be changed from "30 days" to "15 days".
There being no objection, Amendment 2 to Conceptual Amendment 1,
as amended was adopted.
6:20:05 PM
REPRESENTATIVE ROSES expressed concern that the third paragraph
of Conceptual Amendment 1, as amended, assumes that all the
socio-economic impacts will be negative, which is why assistance
is being requested. He questioned whether there would be the
need for assistance in how the communities spend any increases
in revenue or will such be shared with other communities in the
state.
REPRESENTATIVE GUTTENBERG stated that the impacts come in prior
to the project and the gas flowing. With regard to how those
revenues will be spent or spread throughout the state, he
offered that, generally speaking, it's an enhancement to the
community. He highlighted that it cost more to have a pipeline
and it brings in revenue.
6:21:33 PM
REPRESENTATIVE ROSES clarified that his concern is that the
underlying assumption is that the impacts are only going to be
negative impacts, and therefore communities will need
assistance. He informed the committee that he was a property
owner when the oil pipeline was built and still holds many of
the same apartments. He assured the committee that during the
pipeline's construction his rents weren't stagnate and although
there were impacts, there were positive economic impacts. In
fact, he recalled that he went from owning one business to three
during that time [when the pipeline was constructed].
Representative Roses said that he didn't believe he experienced
any negative impact, although he acknowledged that municipal
services had to be increased. Still, during the construction of
the pipeline, property values increased 1-1.5 percent per month.
Therefore, municipalities were receiving additional revenue
during that time. Furthermore, that additional revenue came
from the many businesses that came into town to construct the
pipeline. He expressed hope that the aforementioned would be
taken into consideration when determining assistance levels.
Representative Roses asked if HB 177 specified that the impacts
must be addressed in the impact analysis.
6:24:07 PM
PAT GALVIN, Commissioner, Department of Revenue, clarified that
currently the Alaska Gasline Inducement Act (AGIA) doesn't
include a requirement on impacts. There is some language in
FERC regulations referencing the need for an impact study
primarily associated with local demand rather than impacts. He
acknowledged that this project is going to have impacts beyond
just impacts to municipalities as it will have statewide impacts
and those will have to be dealt with at all levels of
government. Commissioner Galvin said, "What we recognize, as
far as the legislature's intent, is to assure the public that
those [impacts] are going to be identified, addressed, and
responded to in a timely manner." He said that he didn't
believe the method proposed in Conceptual Amendment 1, as
amended, is the most comprehensive way of doing so as it seems
to address the impacts in a piecemeal fashion. Although the
administration believes that there's a more comprehensive manner
in which to deal with the impacts, the administration doesn't
believe it needs to be in AGIA at this time.
6:26:25 PM
REPRESENTATIVE GUTTENBERG opined that he wanted to make sure
that the impacts are at least recognized.
REPRESENTATIVE WILSON expressed concern because this will take
place before open season and thus it's just going to be a guess.
She noted her agreement that there will be statewide impacts and
that now isn't the time to address it.
6:27:55 PM
REPRESENTATIVE GUTTENBERG pointed out that it was already done
last year as it was part of the requirement. He noted that the
[Stranded Gas Development Act Municipal Impact Analysis] is a
statewide document that reviews many things. He opined that the
state simply needs to be prepared because there is great
prosperity to gain from this project, but without managing its
impacts there is a risk of having undue impacts in communities.
REPRESENTATIVE EDGMON noted his support of the amendment,
although he opined that Representative Wilson's comment does
have merit in terms of timing of the report. He opined that
it's valid to place this requirement in AGIA.
6:29:32 PM
CO-CHAIR GATTO related his understanding that Representative
Wilson's concern is that if the impact is addressed prior to the
gasline, her community would be hurt.
REPRESENTATIVE SEATON reminded the committee that when the
legislature addressed this matter [under the prior
administration] there was a contract and any taxes during
pipeline construction were forgiven. However, nothing in this
legislation forgives those property taxes that accumulate as the
process occurs. If the [property taxes accumulate], there will
be the need to offset it. Therefore, he opined that it should
be addressed in a situation under a contract that specifies that
property taxes won't be collected until the pipeline is in
service. The aforementioned is why the payment in lieu of taxes
was utilized under the [prior administration]. Representative
Seaton said that although he agrees with the concept of
Conceptual Amendment 1, as amended, it seems to clutter AGIA
without achieving anything and thus it should be part of the
contract discussion.
REPRESENTATIVE GUTTENBERG withdrew Conceptual Amendment 1, as
amended.
6:32:43 PM
REPRESENTATIVE GUTTENBERG moved that the committee adopt New
Amendment 1, which read [original punctuation provided]:
Sec. 43.90.320 Gas production tax exemption
Page 21-22
Delete page 21, line 16 through page 22, line 9.
REPRESENTATIVE WILSON objected.
REPRESENTATIVE GUTTENBERG explained that New Amendment 1 removes
the provision that locks into rates for 10 years. He said he
believes that can't be done anyway. He opined that this is one
of the constitutional issues of the legislation that will
probably be laid out early on.
6:33:52 PM
COMMISSIONER GALVIN related the administration's opposition to
New Amendment 1 because the administration believes that the tax
inducement is necessary to have in the legislation in order to
provide the appropriate level of inducement at the initial open
season. Although he did acknowledge that the constitutionality
of the provision is an issue, the language in CSHB 177(O&G)
provides a strong constitutional argument with regard to
providing that durable tax assurance for that 10 years. He
pointed out that the amendments that the committee will be
discussing tomorrow that have to do with the changes made in the
Senate Judiciary Standing Committee affect the durability of the
state's offer. He specified that the administration opposes the
removal of the entire inducement.
6:35:44 PM
REPRESENTATIVE ROSES noted his opposition to New Amendment 1.
He then reminded the committee of Dr. Scott's presentation, the
basis of which reviewed the effect of locking in the taxes for
10 years. Whether one agrees or disagrees with the numbers he
presented, it doesn't change all of the economics on which it
was based, which had to do with holding the tax at a fixed rate
for 10 years.
REPRESENTATIVE SEATON stated his opposition to New Amendment 1,
and opined that this provision has to be viewed as an inducement
as well as a constraint on inducements. Without a tax rate
provision, the bids could come forward with various tax ratings
and a very hard to calculate proposal. Representative Seaton
stated his objection.
6:38:32 PM
REPRESENTATIVE GUTTENBERG acknowledged that he has heard much
dialogue regarding concerns about the state's taxes. However,
the state's history doesn't support [those concerns]. He
recalled that the committee saw a PowerPoint that related that
even the most radical idea for tax increase has less impact than
the price fluctuations that will occur.
A roll call vote was taken. Representative Guttenberg voted in
favor of New Amendment 1. Representatives Kawasaki, Wilson,
Seaton, Roses, Edgmon, Gatto, and Johnson voted against it.
Therefore, New Amendment 1 failed to be adopted by a vote of 1-
7.
6:41:10 PM
REPRESENTATIVE GUTTENBERG moved that the committee adopt
Amendment 2, which read [original punctuation provided]:
page 2, line 30 through page 3, line 6
Sec. 43.90.110(a)(1)(C)
(C) a qualified expenditure is a cost
that is incurred after the license is issued under
this chapter, is incurred by the licensee or the
licensee's designated affiliate, and is directly and
reasonably related to obtaining a certificate of
public convenience and necessity from the Federal
Energy Regulatory Commission or the Regulatory
Commission of Alaska, as appropriate, for development
of the project, but does not include overhead costs,
litigation costs, the cost of an asset or work product
acquired by the licensee before the license is issued,
civil penalties, criminal penalties, lobbying
expenses, or fines.
CO-CHAIR JOHNSON objected.
REPRESENTATIVE GUTTENBERG explained that with Amendment 2 he
wanted to ensure that lobbying fees didn't enter into the
calculation as a qualified expenditure.
6:41:52 PM
REPRESENTATIVE ROSES posed a situation when someone hires an
attorney and asked if that would be considered legal [work] or
lobbying [work].
REPRESENTATIVE GUTTENBERG related his belief that an attorney
sitting before the committee on the behalf of someone should be
considered lobbying whereas an attorney working on someone's
case is legal work.
REPRESENTATIVE ROSES said that he doesn't object to [not
including in the qualified expenditure] lobbying expenses.
However, he emphasized that it will be difficult to determine
what is considered lobbying and what isn't.
6:43:17 PM
CO-CHAIR GATTO pointed out that lobbyists have to be registered.
Therefore, an attorney who is registered as a lobbyist is such,
but those not registered as such are merely attorneys. He noted
that lobbyist is defined in statute.
6:43:43 PM
REPRESENTATIVE SEATON interjected that the definition of a
lobbyist is in reference to the amount of contact with
legislators. An attorney who is registered as a lobbyist can be
so and not be strictly a lobbyist. An individual [being paid to
be before the legislature] and who is before legislators for
more than 10 hours in a 30-day period is considered a lobbyist
and has to register as such, he said. Representative Seaton
stated that he has the same concern as Representative Roses with
regard to differentiating what is lobbying. He then questioned
whether lobbying is incorporated in overhead, which can't be
included [in a qualified expenditure].
COMMISSIONER GALVIN drew attention to the language in Amendment
2 that says "directly and reasonably related to obtaining a
certificate of public convenience and necessity". He said that
he doesn't consider lobbying expenses as directly and reasonably
related to obtaining the certificate. Therefore, lobbying
expenses could be excluded on those terms or as a matter of
being an overhead cost. However, he said he didn't view
lobbying expenses as a typical overhead cost. Since lobbying
expenses weren't intended to be included in a qualified
expenditure, it isn't particularly troubling that it's
explicitly specified, he said. He mentioned that it's the
administration's intent to provide clarifying language in the
request of applications (RFA) on a number of items, which will
probably include qualified expenditures.
6:47:01 PM
REPRESENTATIVE ROSES asked if the oil and gas companies
currently performing exploration with production or corporate
taxes are allowed to deduct their lobbying expenses under that
scenario.
COMMISSIONER GALVIN replied no. In further response to
Representative Roses, Commissioner Galvin confirmed that the
state doesn't have any taxation in which lobbying expenses are
deductible.
REPRESENTATIVE ROSES opined, then, that it appears to be a moot
point.
6:47:32 PM
REPRESENTATIVE GUTTENBERG said if the commissioner is going to
take this into consideration in the RFA, he would withdraw
Amendment 2. He then announced that after discussions with the
administration today he was satisfied with their definitions of
offtake and intake points, and therefore will not offer his
remaining amendments.
CO-CHAIR GATTO questioned whether nonquality pipeline gas could
be placed in intake pipe that holds pipeline quality gas.
COMMISSIONER GALVIN said that would be regulated by FERC, which
wouldn't allow that. Commissioner Galvin, in terms of
Representative Guttenberg's amendments, clarified that the
administration considers its use of "delivery points" to be both
inclusive of receipt points and thus the line could go either
way.
6:49:28 PM
REPRESENTATIVE ROSES posed a situation in which there were five
offtake points, and inquired as to how the pipe could be
expanded or allow for a new well to come on without the
possibility of having an intake. He related his understanding
that as part of a plan to expand or bring on new production, the
[licensee] has to specify how it will get the gas in the line.
COMMISSIONER GALVIN explained that the issue is that there would
be expansion that would be seen as coming through the existing
infrastructure at the initial intake location, which would
merely be an expansion issue. However, if expansion is
necessary due to a new discovery, then this issue would arise.
He said the pipeline is going to be acting as a competitive
commercial player and it's going to have a commercial incentive
to provide for this in most instances. He further said that
it's necessary to provide for a certain expectation of what the
state's needs will be, whether that number is ultimately going
to prove to be the right number remains.
REPRESENTATIVE ROSES opined, "I think we ought to be very, very
careful in sticking to numbers because ... my hope would be that
25 years down the road that we've got all kinds of pipes coming
into that pipe. And I don't think we want to stick a number in
here for fear of the fact that we don't want someone to assume
there's a limitation."
The committee took an at-ease from 6:54:20 PM to 6:57:43 PM.
6:57:44 PM
REPRESENTATIVE ROSES moved that the committee adopt Amendment 5,
which read [original punctuation provided]:
Sec. 43.90.250 is amended by adding a new title
Commissioner of Alaska Gasline Inducement Act
Pg. 17 Line 27
Following "of"
Insert "commissioner of"
Pg. 17 Line 28
Delete "coordinator"
Pg. 17 Line 31
Following "of"
Insert "commissioner of"
Pg. 18 Line 1
Delete "coordinator"
Pg. 18 Line 6
Following "The"
Insert "commissioner of"
Pg. 18 Line 6
Delete "coordinator"
Pg. 24 Line 31
Following "(2)"
Insert "Commissioner of"
Pg. 24 Line 31
Delete "coordinator and "coordinator""
Pg. 3 Line 7
Delete "an"
Insert "the"
Delete "coordinator"
Following "the"
Insert "commissioner of"
CO-CHAIR GATTO objected.
6:58:27 PM
REPRESENTATIVE ROSES reminded the committee that although HB 177
originally called for the Alaska Gasline Inducement Act
coordinator, Senate Judiciary Standing Committee members
questioned whether it was constitutional for the legislature to
have approval over that position and cited a case during the
Knowles Administration. He highlighted that the amendment
striking the language for any oversight removes the original
intent of the legislation. Also, the House Labor and Commerce
Standing Committee is considering legislation addressing the
Regulatory Commission of Alaska (RCA) and an amendment under
discussion has to do with the governor appointing the chair of
the RCA. Therefore, if there is no approval process for the
coordinator and the governor appoints the chair of the RCA, then
the legislature would have no oversight over any of the
positions involving a gasline that was constructed instate
because the RCA would have preference over FERC. The
aforementioned would mean that the coordinator, the regulator,
and board members of the RCA would all be appointed by the
governor, with no legislative oversight. Representative Roses
suggested then that changing the reference from "coordinator" to
"commissioner" would maintain the original intent of the
legislative confirmation of the coordinator position and avoid
constitutional concerns. The aforementioned would also mean
that the position would be dealt with in a similar fashion as
other commissioners with regard to salary, et cetera.
7:01:47 PM
COMMISSIONER GALVIN explained that the position was originally
envisioned a one that was appointed by the governor and didn't
require legislative approval. [The legislative approval] was
added by the House Special Committee on Oil and Gas. The
question of constitutionality resulted in the Senate Judiciary
Standing Committee removing that language and inserting language
that addresses the aforementioned concerns. The Senate
Judiciary Standing Committee included language that specifies
that the governor can appoint the position as well as remove the
position. He highlighted that the position doesn't have any
specific authority in regard to departmental-type authority.
The position has a coordination role and the position exercises
authority with regard to the expedited review process that
doesn't directly contravene another agency's authority. The
language merely specifies that coordination must be done through
the AGIA coordinator who can eliminate any requirements that
aren't legally required. The aforementioned, he opined, is an
exercise of the governor's authority, administrative
prerogative. Within that construct, the administration feels
that it's appropriate to have the position appointed by the
governor, to work with the commissioners of the respective
agencies, and serve at the pleasure of the governor. He
acknowledged that the commissioners are subject to legislative
confirmation, and pointed out that the commissioners exercise
agency authority under the direction of the governor. The
administration, he related, provides a fair balance of both
legislative oversight of appointment and the governor's ability
to exercise executive power.
7:04:21 PM
REPRESENTATIVE ROSES asked if there are any other positions that
fall into this same category in which the governor appoints a
position and has the ability to remove an individual without
following due process rights.
COMMISSIONER GALVIN responded that would be any position within
the governor's office. Furthermore, positions within the
governor's office serve at the same type of discretionary
pleasure of the governor and aren't subject to legislative
approval.
7:05:23 PM
REPRESENTATIVE EDGMON related his opposition to Amendment 5. He
opined that when the governor appoints a commissioner, the
governor is de facto appointing additional staff. He then
recalled hotly contested confirmation battles.
REPRESENTATIVE SEATON related his belief that changing the name
from coordinator to commissioner doesn't get around the
constitutional problem because this AGIA coordinator position
isn't the head of an agency.
7:07:17 PM
REPRESENTATIVE GUTTENBERG noted that there is a history of
commissioners and turf wars. This position coordinates
expeditious performance of all activities by state agencies. If
it was a single commissioner, he opined that there would be an
immediate conflict of interest within the governor's office.
Without the amendment, is the right way to go, he said. He then
mentioned that the committee just received a fiscal note, and
asked if the position went from a step A to a step B.
COMMISSIONER GALVIN said that he can't comment since he doesn't
have access to the fiscal note at this time.
REPRESENTATIVE GUTTENBERG related his understanding that it was
a step A.
REPRESENTATIVE ROSES withdrew Amendment 5.
7:09:28 PM
REPRESENTATIVE ROSES moved that the committee adopt Amendment 6,
which read [original punctuation provided]:
Pg. 12 Line 6
Following "success"
Insert: "which may include multiple design
proposals that may include different pipe sizes and
capacities"
CO-CHAIR JOHNSON objected.
7:09:37 PM
REPRESENTATIVE ROSES reminded the committee that he has asked
the presenters whether a bid would be considered out of
compliance if the applicant listed multiple sizes of pipe. Two
of the three producers said that if they were to submit a bid,
it probably would include various sizes of pipe since the
commitment for the gas is unknown. Amendment 6 is to ensure
that an entity did submitting a bid with varying sizes of pipe
wouldn't be considered noncompliant.
7:10:37 PM
CO-CHAIR GATTO offered an amendment to Amendment 6, such that it
would read as follows:
Pg. 12 Line 6
Following "success"
Insert: "which may include multiple design
proposals that may include but not limited to pipe
diameters, wall thicknesses, and capacities"
REPRESENTATIVE ROSES said he considered that a friendly
amendment.
COMMISSIONER GALVIN related his understanding that the common
statutory interpretation of the term "include" means "include
but not limited to". Commissioner Galvin then opined that it's
problematic for this language to be inserted strictly into the
evaluation criteria as it would be more appropriate in the
application description itself. He suggested that on page 3,
line 31, following the word "market" delete "including" and
insert the language "; a proposal may include multiple designs
with different pipe sizes and capacities; the detail description
shall include".
REPRESENTATIVE ROSES said he didn't have a problem with
Commissioner Galvin's proposed amendment to Amendment 6.
The committee took an at-ease from 7:13:56 PM to 7:17:28 PM.
7:17:38 PM
REPRESENTATIVE ROSES stated that he didn't object to changing
Amendment 6 to Conceptual Amendment 6 such that opportunities
for multiple pipe sizes, capacities, and designs to be included
in the AGIA language wherever most appropriate in the
legislation. However, he did note his preference for the
language to be inserted in AS 43.90.130.
7:18:09 PM
REPRESENTATIVE GUTTENBERG objected. He then posed a scenario in
which an entity comes forward with three projects within their
application and then they are granted the license. He inquired
as to whether an entity would be required to bring all three
proposals to FERC. He further inquired as to whether [the
state] would be part of the discussion.
COMMISSIONER GALVIN explained that in order to be evaluated, an
applicant would need to provide a description of its primary
project and what it will use to determine which design will go
forward. He surmised that the selection of a design would
primarily depend upon the amount of gas that's committed during
an open season. The project would be evaluated upon the
expectation of the likelihood of each scenario. To some extent,
he explained, the applicant would provide these various paths as
well as the conditions upon which the entity would make the
determination in order to evaluate the ultimate value of the
proposal to the state.
7:19:53 PM
REPRESENTATIVE GUTTENBERG posed a situation in which an
applicant with three projects is accepted and the process moves
forward to the open season and the applicant renders its
proposal to the parameters going forward. However, one of the
applicants had a better focus on what is going forward, but the
criteria/understanding didn't arrive until later. He inquired
as to the potential for a challenge at that point.
COMMISSIONER GALVIN reminded the committee that the legislation
includes limitations on challenges. He recognized the need to
provide fair competition and in that regard [the legislation]
tries to establish a balance between allowing the applicants to
provide a complete picture of what they are considering in order
to maximize the state's opportunity to obtain the greatest
value. If another project comes in low and doesn't pursue a
more aggressive project, consideration of the likelihood of each
of these coming through would have to be made as part of the
ranking of the projects. If the more complete application,
through subsequent events, resembles the modest application,
there's not much that can be done other than ensure that the
evaluation is being rigorous in evaluating those conditions
placed on it and that the applicant is legitimately pursuing
each of those alternatives.
7:22:36 PM
REPRESENTATIVE GUTTENBERG inquired as to whether the
administration would prefer a multi-tiered project or a single-
tiered project.
COMMISSIONER GALVIN said he can't answer that question in the
abstract. The decision would come down to whether or not that
multi-tiered approach has a legitimate possibility of coming in
with a higher-valued project. If so, the [administration] would
prefer that the applicant make the provisions for that potential
success opportunity that would provide some value to the state.
Therefore, it wouldn't be looked upon favorably if an applicant
came forth with three options, two of which were really just
"pie in the sky." He opined that the [administration] would be
looking for an applicant that is proposing a full package with
the greatest likelihood of moving forward and identifying the
highest value project. If the aforementioned is unattainable at
the time of selection but the applicant has the ability to move
forward, that would provide value to the state.
7:24:27 PM
REPRESENTATIVE GUTTENBERG asked if the administration considered
the multi-tiered proposal when AGIA was originally conceived.
COMMISSIONER GALVIN answered that [the administration] always
considered the multi-tiered approach as one that might likely be
reflected back through the application process. In further
response to Representative Guttenberg, Commissioner Galvin said
that he didn't view the [proposed process] as precluding a
multi-tiered approach.
7:24:59 PM
REPRESENTATIVE ROSES posed a situation in which there is a
single source applicant with no right to an appeal. In such a
situation, if that applicant comes in with a 52-inch pipe but at
open season it's discovered that there's only enough commitment
for 48-inch pipe, there's no ability to go back and evaluate
whether an applicant tossed out in the application process had
already discovered that 48-inch pipe was the best pipe.
However, allowing for a multi-tier approach allows for multiple
options and doesn't waste time redesigning.
COMMISSIONER GALVIN clarified that under AGIA the scenario
described by Representative Roses in which the pipe would have
to be redesigned for a lower size and smaller capacity line
couldn't occur. The aforementioned couldn't occur because the
commissioners don't have the ability to modify the license to
allow for such a reduction in the value of the licensed project.
Therefore, the assumption was that there would be a step-down
opportunity that would be presented in the applicant's proposal
in order to avoid the outcome of the license being withdrawn
after significant expenditures.
7:28:08 PM
REPRESENTATIVE KAWASAKI surmised that the decision is made
harder when the applicants come forward with single proposals
and others come forward with multiple proposals. He then
inquired as to how the public process would work.
COMMISSIONER GALVIN reminded the committee that the evaluation
criteria is in two parts: the net present value analysis and
the likelihood of success. The net present value, he pointed
out, will have to deal with these potential multiple projects.
Therefore, there would have to be some probability associated
with which would likely be the ultimate design of this project,
which would weigh the net present value figure for that
proposal. There would be overlap between the likelihood of
success and the net present value, which will be inherent in the
evaluation. Commissioner Galvin said that Representative
Kawasaki has hit upon the fact that it will be incumbent upon
[the administration] to explain how its decision was made at the
quantitative side as well as the ultimate ranking of proposals.
Although it isn't going to be simple, it is going to be based on
the following: the type of proposal that the applicants make;
the level of confidence that the applicants can demonstrate
regarding their ability to succeed at any particular point of
the proposal; and the state's assessment of whether the market
will accommodate that.
7:31:13 PM
REPRESENTATIVE SEATON questioned whether all applicants would
come forward with a 48-inch, 42-inch, and 24-inch pipeline. If
that's the case, then the likelihood of success under any
scenario would be that anyone controlling the gas would
automatically obtain the license. If this full range of
projects is allowed, is any pipeline company expected to forward
a proposal, he asked.
COMMISSIONER GALVIN related his belief that the proposals will
likely have some form of that tiered-down approach, although he
didn't believe they would all be exactly the same. However,
those proposals will likely include all those factors that go
toward the likelihood of success, in terms of the ability to
deliver the design. The pipe diameter and the capacity of the
line are only one part of the ultimate determination of whether
the project has value and will succeed. Whether the proposals
mirror each other in terms of how they approach the problem, he
said there will be significant variety regarding the applicants
and the projects.
7:33:40 PM
REPRESENTATIVE WILSON said that she likes Conceptual Amendment 6
because it gives the applicant permission to have some
variables. Furthermore, any applicant would be wise [to use a
multi-tiered approach].
REPRESENTATIVE GUTTENBERG withdrew his objection to Conceptual
Amendment 6.
There being no further objections, Conceptual Amendment 6 was
adopted.
7:34:38 PM
REPRESENTATIVE ROSES moved to adopt Amendment 7, as follows:
Pg. 8 Line 31 - Pg. 9 Line 1
Following "applicant"
Delete "; the affiliates of the applicant; all
partners, members of a joint venture,"
CO-CHAIR GATTO objected.
7:35:03 PM
REPRESENTATIVE ROSES spoke to Amendment 7. He said he thinks
requiring the applicant to provide a detailed description of all
affiliates, partners, and members of a joint venture who are not
even involved in the pipeline is inappropriate.
REPRESENTATIVE SEATON pointed out that in between semi-colons
the language read: "; all partners, members of a joint venture,
and other entities participating with the applicant and the
project proposed by the applicant;". He said that means that
the bill would only require the applicant to submit the names of
only those entities involved with the project for which the
application is being submitted.
COMMISSIONER GALVIN stated his agreement with the intent of
Representative Roses' amendment. He noted that in the Senate
version of this legislation, there is a comma instead of a semi-
colon on page 8, line 31 and on page 9, line 1, after
"applicant". He indicated that the punctuation in the Senate
version seems to support Representative Seaton's observation.
7:39:47 PM
REPRESENTATIVE ROSES moved to amend Amendment 7 to make it a
conceptual amendment to reflect his intent that the applicant
would not be required to reveal global information.
CO-CHAIR GATTO announced that Amendment 7 is now Conceptual
Amendment 7.
7:40:17 PM
REPRESENTATIVE GUTTENBERG asked Commissioner Galvin if there are
some aspects of "revealing disclosure in that manner" that would
be relevant to the success of an evaluation.
COMMISSIONER GALVIN answered that yes, there is a possibility
that having information regarding the worldwide affiliation of
an applicant may provide insight into some additional value;
however, he said he also recognizes that there is a certain
level of reasonableness with regard to the level of information
expected from the applicants. He said he thinks it is an
unreasonable request to require huge companies to disclose much
information beyond that pertaining to the parties that would be
participating in the project. He concluded:
To the extent that there may be additional values in
an affiliate, we would expect that if it's something
that adds value to the application, then it's
incumbent upon the applicant to include that in their
application ....
7:42:12 PM
REPRESENTATIVE GUTTENBERG asked:
And so, if an applicant didn't disclose something
because they didn't think it was relevant, and then it
became very relevant after the licensing had been
either evaluated or issued, would you think you had
the authority to go back and take corrective action?
COMMISSIONER GALVIN said Representative Guttenberg's question
assumes that the missing information is negative.
7:43:12 PM
REPRESENTATIVE GUTTENBERG offered an example wherein one
component of the equation went bankrupt and that information was
significant.
COMMISSIONER GALVIN directed attention to the definitions
section of the legislation, and pointed out that when companies
submit an application a lot of information will be received.
Therefore, he said he didn't believe it's necessary to cast the
net beyond the participants in the project, who they're bringing
into the project, and the affiliates of those - under the
definition of affiliate. "Beyond that you're getting pretty far
removed from the types of behavior or contingency that may
ultimately wind back and affect the actual success of this
project," he opined.
7:44:47 PM
CO-CHAIR GATTO questioned whether there may be oil companies
that are embargoed. He explained that his concern is to know
whether the company that may apply is affiliated with any other
embargoed company.
COMMISSIONER GALVIN suggested considering how Alaska protects
itself against "that type of arrangement" in other places, for
example, the hurdle that must be cleared to enter the oil and
gas leasing program. He stated, "I think that here the stakes
are raised in that we're offering a significant amount of state
money." He said he thinks it's appropriate to look beyond the
applicant to ensure there are no wayward subsidiaries; however,
he indicated that Representative Roses' interpretation of the
current language goes "far beyond that level of information that
we would need to protect the state's interest."
7:46:50 PM
REPRESENTATIVE ROSES said he thinks the legislation
unnecessarily asks for information from the applicant that tends
to be included in putting together a financial package. He said
the state is the reviewer of the application and it assigns the
license - it doesn't finance the project.
CO-CHAIR GATTO withdrew his objection to Conceptual Amendment 7.
There being no further objection, Conceptual Amendment 7 was
adopted.
7:49:29 PM
REPRESENTATIVE KAWASAKI moved to adopt Amendment 9, labeled 25-
GH1060\M.16, Bullock, 4/21/07, which read:
Page 30, following line 21:
Insert a new bill section to read:
"* Sec. 7. The uncodified law of the State of
Alaska is amended by adding a new section to read:
CONSISTENCY WITH THE ALASKA NATURAL GAS PIPELINE
ACT. It is the intent of the legislature that that the
licensed project the commissioners submit to the
presiding officer of each house of the legislature
under AS 43.90.180, as enacted in sec. 1 of this Act,
conforms as closely as possible with 15 U.S.C. 720a et
seq. (Alaska Natural Gas Pipeline Act)."
Renumber the following bill sections accordingly.
Page 31, line 4:
Delete "sec. 9"
Insert "sec. 10"
REPRESENTATIVE ROSES objected for discussion purposes.
7:49:43 PM
REPRESENTATIVE KAWASAKI explained that Amendment 9 relates to
"some of the public law dealing with the sense of Congress." He
cited Title 15, Chapter 15D, Section 720m of U.S. Code, which
read as follows:
It is the sense of Congress that-
(1) Alaska Native Regional Corporations, companies
owned and operated by Alaskans, and individual
Alaskans should have the opportunity to own shares of
the Alaska natural gas pipeline in a way that promotes
economic development for the State;
REPRESENTATIVE KAWASAKI said although it wouldn't be possible to
include "this portion of text" without significant
constitutional challenges, it is important to "add this into the
law in the uncodified section."
7:50:42 PM
CO-CHAIR GATTO asked, "Was this already deleted in the list of
amendments from the administration?"
COMMISSIONER GALVIN answered no. He explained, "Somehow this
was similar ... in theme to an amendment that was offered in
[the House Special Committee on Oil and Gas] ... that failed,
but it is not something that has been in the bill and was
removed."
7:52:16 PM
REPRESENTATIVE ROSES asked Representative Kawasaki to clarify if
Amendment 9 would allow Native corporations to be part owners in
the pipeline.
REPRESENTATIVE KAWASAKI responded that the amendment does not
specify how that can be done; it is more of a policy and
framework statement.
REPRESENTATIVE WILSON offered her understanding that Native
corporations already have the ability to be part owners if they
so chose.
REPRESENTATIVE KAWASAKI explained that he wanted to include the
language from the U.S. Code in the bill to make it "measurable."
7:55:22 PM
COMMISSIONER GALVIN directed attention to page 8, line 18,
[paragraph (15)], which read:
(15) commit to hire qualified state
residents for management, engineering, construction,
operation, maintenance, and other positions on the
proposed project and to contract with businesses
located in the state to the extent permitted by law;
COMMISSIONER GALVIN noted that the previous committee of
referral had proposed an amendment to this paragraph to add
Native corporations. He said there is a difference between the
federal government making such a requirement and the state
making it. He said, "It raises legal questions with regard to
the state providing some sort of advantage to these types of
entities under a state law." He offered his belief that
Representative Kawasaki, through Amendment 9, is trying to
establish, through an unenforceable provision of the law, the
legislature's stated desire that there be consideration of
"these entities" among the application process.
7:57:22 PM
REPRESENTATIVE GUTTENBERG said he thinks "the folks at home" are
looking for a way to invest in this project - not directly
through a corporation or licensee, but through another device.
He indicated that there would be some way for that to happen.
REPRESENTATIVE KAWASAKI noted that another consideration had
been to provide a means by which individuals could own shares.
He said there had been consideration of how to put that into the
law itself. However, the drafter pointed out that if a limited
liability company (LLC) was the pipeline owner, there would be
no way to own equity shares in an LLC. The aforementioned is
why it couldn't be included in the legislation as it stands.
7:58:44 PM
REPRESENTATIVE ROSES said although he doesn't necessarily object
to the concept of Amendment 9, the language is nearing the point
of being overly prescriptive. Choosing to offer private stock
is an option. He related that he supports giving the
opportunity to every Alaskan who wants to work on the project,
if and when it gets completed. Furthermore, anyone who wants to
be able to invest his/her money in it ought to be able to do so.
However, he said he doesn't think the [state] should tell the
applicant what they have to do in that regard. He characterized
it as stretching the limit of expectation.
REPRESENTATIVE KAWASAKI opined that [Amendment 9] isn't
prescriptive because:
It's consistent with ANGPA [Alaska Natural Gas
Pipeline Act], and if you want a $18 billion loan
guarantee, that's what ANGPA's going to require under
the ... Sense of Congress portion. ... We're going to
be using an $18 billion federal loan guarantee - the
federal government's going to sign off on that - $20
million for workforce development. I think that this
is fair. It's not constitutional under state law, but
it's constitutional under federal law, and I think it
needs to be weighed in on in a pretty significant way.
REPRESENTATIVE KAWASAKI explained that since he has been told
that the provision isn't constitutional, he placed it in the
uncodified section of law.
REPRESENTATIVE ROSES maintained his objection.
8:01:16 PM
A roll call vote was taken. Representatives Edgmon, Kawasaki,
Seaton, and Guttenberg voted in favor of Amendment 9.
Representatives Wilson, Roses, Johnson, and Gatto voted against
it. Therefore, Amendment 9 failed by a vote of 4-4.
REPRESENTATIVE KAWASAKI moved to adopt Amendment 10, which read
[original punctuation provided, with some handwritten changes]:
Page 30, following line 26:
Insert a new bill section to read:
"*Sec.7. The uncodified law of the State of Alaska is
amended by adding a new section to read:
CONSEQUENCES FOR A LACK OF FIRM TRANSPORTATION
COMMITMENTS. It is the intent of the legislature,
that in the event insufficient firm transportation
commitments are made during the first binding open
season, the State of Alaska will act to secure
additional firm transportation commitments, including
the consideration of
(1) A gas reserves tax; or
(2) Enforcement of oil and gas lease terms
CO-CHAIR JOHNSON objected.
REPRESENTATIVE KAWASAKI indicated that HB 177 is full of
inducements whereas Amendment 10 uses "the stick approach."
8:04:11 PM
REPRESENTATIVE ROSES indicated that he thinks the language of
Amendment 10 is an option whether or not it is written in the
legislation. Furthermore, he questioned whether stating the two
considerations with "or" between them would mean that no other
type of consideration could be made. He said the language of
Amendment 10, if adopted, would be "an unnecessary, negative
part of the bill."
REPRESENTATIVE GUTTENBERG said he thinks the people of Alaska
need to state how important [the gas pipeline] is to the state,
and negotiations are currently being made publicly. He said
Amendment 10 supports the strongest possible considerations to
be made. He said he sees the amendment as a recommendation for
a change to the uncodified section of law, and it is a strong
statement of beliefs.
8:06:43 PM
REPRESENTATIVE ROSES expressed concern that there is language in
the legislation that discusses going to a second open season if
the first one is unsuccessful. Amendment 10 would, between the
first and second season, allow prescriptive measures to be used.
He said, "Nothing stops us from doing that, even if this isn't
in the bill. So, I don't see how hanging a threat -
specifically stating it in the bill, whether it's codified or
uncodified - does us any good." He said he does not think there
is a single producer who doesn't realize that this could be a
possibility. He offered his understanding that the state has
"already done that in one area" and is currently involved in a
court case.
REPRESENTATIVE KAWASAKI disagreed with Representative Roses. He
stated his belief that Amendment 10 would result in some
commitments. He said if the committee were to pass "this"
unanimously, that would send a statement.
8:09:09 PM
REPRESENTATIVE KAWASAKI, in response to the comments of
Representative Roses, moved to adopt a conceptual amendment to
Amendment 10, to add: "(3) Other methods to secure our natural
resources."
[No objection was stated and the committee treated the
conceptual amendment to Amendment 10 as adopted.
The committee took an at-ease from 8:09:39 PM to 8:10:15 PM.
8:10:19 PM
CO-CHAIR GATTO, after conferring with Representative Kawasaki,
announced that before the committee was now Conceptual Amendment
10, with the added paragraph (3).
REPRESENTATIVE SEATON objected to Conceptual Amendment 10 [as
amended] because it would change the whole perspective of the
proposed legislation.
A roll call vote was taken. Representatives Kawasaki,
Guttenberg, and Edgmon voted in favor of Conceptual Amendment 10
[as amended]. Representatives Wilson, Seaton, Roses, Gatto, and
Johnson voted against it. Therefore, Conceptual Amendment 10
[as amended] failed by a vote of 3-5.
The committee took an at-ease from 8:13:43 PM to 8:31:17 PM.
8:31:19 PM
REPRESENTATIVE SEATON moved to adopt Amendment 11, labeled 25-
GH1060\M.17, Bullock, 4/23/07, which read:
Page 11, line 19, following "state":
Insert ", including the value of state income tax
or equivalent payment in lieu of tax, supplemental
profit-sharing to the state if contractually
stipulated, and supplemental profit-sharing to
municipalities if contractually stipulated and
equitably distributed to all municipalities"
CO-CHAIR JOHNSON objected for discussion purposes.
8:31:40 PM
REPRESENTATIVE SEATON explained that [Amendment 11] falls under
the evaluation criteria. Representative Seaton opined, "We need
to have everything in the evaluations ... so that everyone knows
what's being evaluated for netback to the state." Furthermore,
there was discussion of a 60 percent supplemental profit-sharing
with the state. Amendment 11 specifies that the aforementioned
would only be calculated as part of the net present value to the
state and apply if the contract stipulated that such a profit-
sharing arrangement existed. With regard to supplemental
profit-sharing with municipalities, the amendment says it would
be considered only if stipulated in the contract and equitably
distributed to all municipalities. Therefore, there would
basically need to be revenue sharing to all communities in the
state.
COMMISSIONER GALVIN said that the administration doesn't object
to Amendment 11 conceptually. He pointed out that the
administration considers the specific things in Amendment 11 as
items that would likely be evaluated in the catch-all provision
of the current language. The section addressing revenue sharing
amongst municipalities is something that would go beyond the
legislation's existing language. He opined that adding this
language is going to add a level of complexity to the RFA and
obtaining the necessary information to perform this type of
evaluation and ensure that it will be carried out. Commissioner
Galvin opined that it's really a matter of policy in how the
administration is going to weigh the various projects and the
types of revenue streams that will be included.
8:35:54 PM
REPRESENTATIVE KAWASAKI inquired as to what an equitable
distribution would be. He pointed out that the City of
Fairbanks, where the gasline will likely pass through, will be
differentially impacted than a city not on the gasline. He
questioned whether the aforementioned would be considered in
determining whether there has been an equitable distribution.
8:36:49 PM
REPRESENTATIVE ROSES inquired as to what happens in those
communities that aren't incorporated boroughs or municipalities.
REPRESENTATIVE SEATON indicated that perhaps Amendment 1 should
be conceptual. He reminded the committee that for some time the
state has had a revenue sharing formula and perhaps that and the
community dividend formula should be specified. If a pipeline
was giving a lot of money to Fairbanks, there is no reason why
the state should consider that as net value to the state. He
explained, "Say [there is a] revenue sharing formula or
community dividend formula that we utilize to distribute revenue
through the state that's going to replace ... revenue that the
state generally does through a community dividend or revenue
sharing. ... in that case, that would make a logical thing to
analyze that at net present value." He confirmed that this is a
policy call. Either way, he opined that the policy should be
specified so that [applicants] know how to structure their
proposal for the evaluation. If the committee decides not to
consider community revenue sharing as a net value to the state,
it can be eliminated and the applicant will know what will be
considered in the formulation and analysis.
8:39:39 PM
COMMISSIONER GALVIN said that basically questions whether
applicants will be encouraged to review ways of spreading
project money throughout the state other than the money coming
in through the general fund and the legislature deciding how to
spread it through the state. He surmised that the existing
language [of Amendment 11] is crafted such that there would need
to be a determination as to whether the proposed distribution is
appropriate. "Well, that puts the commissioners in a bit of a
bind in terms of trying to substitute our judgment for the
legislature in terms of what is an appropriate distribution and
whether it should be considered or not," he opined. He further
opined that this path is uncomfortable in terms of how to
determine whether a particular type of distribution should be
considered appropriate and thus count versus not. The
aforementioned speaks primarily to the distributions to the
municipalities, as it's one level of it. However, if it's a
commitment on the part of the project to make a payment to the
state, then it's difficult to argue that should be excluded from
consideration given that royalties and other payments to the
state are being considered. Commissioner Galvin opined that
when [Amendment 11] is reviewed in terms of the rest of the
section to which it's inserted, it does create complexity and a
level of difficulty in the evaluation that he would prefer to
avoid.
8:42:01 PM
REPRESENTATIVE GUTTENBERG opined that Amendment 11 is too
conceptual or doesn't have enough detail. He pointed out that
the City of Fairbanks is not going to have any of the gasline in
it, but it will be impacted to a significant degree. He opined
that the City of Fairbanks will be impacted such that it will be
unrecognizable, which is what occurred with TAPS. He then
questioned how the term "equitable" would be applied since the
commissioner isn't being provided enough guidance.
Representative Guttenberg said he failed to see how this will
actually provide fairness.
REPRESENTATIVE ROSES related his understanding that this doesn't
become an issue unless it's specified in the contract in the
bid. If a bid is based on the fact that [the applicant] is a
nonprofit entity, then it's appropriate to describe the
distribution process in terms of the legislation, which this
amendments seems to address, he opined. With regard to the
difficulty for the commissioners to evaluate that as part of the
process, he opined that the other 20 items are far more
difficult and cause more of an impact than the item [addressed
in Amendment 11].
8:45:25 PM
REPRESENTATIVE SEATON opined that it's very necessary to have
this policy debate. Therefore, he moved that the committee
divide Amendment 11 such that Amendment 11A would read as
follows:
Page 11, line 19, following "state":
Insert ", including the value of state income tax or
equivalent payment in lieu of tax, supplemental
profit-sharing to the state if contractually
stipulated,"
Amendment 11B would read as follows:
Page 11, line 19, following "state":
Insert "and supplemental profit-sharing to
municipalities if contractually stipulated and
equitably distributed to all municipalities"
There being no objection, Amendment 11 was divided as specified
above.
CO-CHAIR GATTO announced that before the committee is Amendment
11A.
CO-CHAIR JOHNSON withdrew his objection.
CO-CHAIR GATTO objected to Amendment 11A.
COMMISSIONER GALVIN related his belief that all of the described
payments on page 11, lines 18-19 of CSHB 177(O&G) already
encompass the provision of Amendment 11A.
8:47:45 PM
REPRESENTATIVE SEATON opined that clarity is necessary. The
descriptions in the legislation refer to the net present value
of the netback and wellhead value. Therefore, there is no other
description throughout the evaluation criteria of income tax,
other payments in lieu of taxes, or profit-sharing. He said it
would be good for the legislation to clarify that the
aforementioned items do count as factors, which is why the
language being inserted modifies paragraph (6).
A roll call vote was taken. Representatives Wilson, Roses,
Seaton, Edgmon, Kawasaki, Guttenberg, and Johnson voted in favor
of Amendment 11A. Representative Gatto voted against it.
Therefore, Amendment 11A was adopted by a vote of 7-1.
8:49:18 PM
REPRESENTATIVE SEATON moved that the committee adopt Amendment
11B [text previously provided].
CO-CHAIR JOHNSON objected.
8:49:35 PM
REPRESENTATIVE GUTTENBERG inquired as to how the term
"equitably" is defined in Amendment 11B.
REPRESENTATIVE SEATON said that it isn't well-defined.
CO-CHAIR GATTO asked if Representative Seaton wanted to change
Amendment 11B to Conceptual Amendment 11B.
REPRESENTATIVE SEATON replied yes.
REPRESENTATIVE WILSON objected for discussion purposes. She
opined that Conceptual Amendment 11B is a good amendment because
it gives every community some kind of sharing. Furthermore, if
a community isn't a municipality, it would still receive
something.
CO-CHAIR GATTO pointed out that Conceptual Amendment 11B refers
to municipalities not communities, many of which aren't close to
being a municipality.
8:51:27 PM
CO-CHAIR JOHNSON expressed concern with Conceptual Amendment
11B, and questioned whether it's entering into the legislature's
ability to appropriate. Profit-sharing is something that's
voted on each year, and he questioned whether [this amendment]
is setting up the legislature to take away the legislature's
appropriation ability by contractually having a predetermined
payment to a municipality or entity.
REPRESENTATIVE GUTTENBERG highlighted that many of the entities
along the proposed routes of the gasline aren't municipalities.
Furthermore, there is a lot of motivation for some of these
entities to form boroughs. This amendment would prevent profit-
sharing from going to areas that aren't municipalities, which he
opined is a basic unfairness.
8:52:42 PM
REPRESENTATIVE ROSES offered an amendment to Conceptual
Amendment 11B, such that the term "municipalities" is replaced
with "communities".
REPRESENTATIVE EDGMON objected, and noted that he doesn't know
the definition of "communities". He then suggested that perhaps
the amendment could refer to "municipalities in organized and
unorganized areas" in order to capture the unincorporated
communities.
CO-CHAIR GATTO related his belief that there is a definition of
"community" in statute.
8:53:44 PM
REPRESENTATIVE SEATON clarified that under the definitions of
the state a borough is a municipality. He then suggested that
following the term ["municipalities"], the language "under the
formula used by the state department of commerce" could be
inserted in order to include the unincorporated communities,
boroughs, cities, and municipalities.
REPRESENTATIVE ROSES withdrew his amendment to Conceptual
Amendment 11B.
8:55:16 PM
COMMISSIONER GALVIN specified that his primary request is that
the intent be clear with regard to which revenue streams should
be counted during the evaluation process.
REPRESENTATIVE KAWASAKI said that he believes he will vote
against Conceptual Amendment 11B because it's getting into a
policy realm that the legislature could address later.
Furthermore, revenue sharing has some inherent problems and
falsehoods. He suggested that the amendment should be voted
down and the policies of community dividends could be discussed
at a later time. He then opined that any pipeline route will
likely head to Fairbanks first and thus anything along that
route will be disproportionately impacted.
8:57:57 PM
REPRESENTATIVE SEATON moved that the committee adopt an
amendment to Conceptual Amendment 11B such that the term
"municipalities" would be deleted and the language "communities
under the formula used by the state Department of Commerce,
Community, & Economic Development" inserted.
REPRESENTATIVE KAWASAKI objected.
REPRESENTATIVE SEATON explained that the language refers to the
formulation that the Department of Commerce, Community, &
Economic Development (DCCED) has used that gives $250,000 to
boroughs, $75,000 to municipalities, $25,000 (indisc.). He
further explained that nothing in the system prevents money from
going to a particular municipality, [the amendment] merely means
that the money wouldn't be considered net present value to the
state.
8:59:39 PM
REPRESENTATIVE GUTTENBERG opined, "... it still falls short when
we start to micromanage these things. He returned to the
concern with the use of the term "equitable" and asked if there
will be a definition for each area. Representative Guttenberg
said that Conceptual Amendment 11B raises too many concerns and
leaves too many unanswered questions.
REPRESENTATIVE KAWASAKI withdrew his objection to the amendment
to Conceptual Amendment 11B.
There being no further objection, the amendment to Conceptual
Amendment 11B was adopted.
CO-CHAIR JOHNSON maintained his objection.
9:02:21 PM
A roll call vote was taken. Representatives Wilson, Seaton, and
Edgmon voted in favor of Conceptual Amendment 11B, as amended.
Representatives Roses, Guttenberg, Kawasaki, Johnson, and Gatto
voted against it. Therefore, Conceptual Amendment 11B, as
amended, failed to be adopted by a vote of 3-5.
The committee took an at-ease from 9:03 p.m. to 9:18 p.m.
9:18:43 PM
REPRESENTATIVE SEATON moved that the committee adopt Conceptual
Amendment 12, labeled 25-GH1060/M.18, 4/23/07, which read
[original punctuation provided]:
Page 20, line 23, following "by":
Insert "(A)"
Page 20, line 25, following "project":
Insert " ;or
(B) eliminating the ability of the
state to take its royalty in kind for gas in the
quantity and volume committed to the firm
transportation capacity acquired during the first
binding open season of the project, if the person
entitled to this election agrees to provide gas for
in-state residential and commercial uses at the
delivery points described in the license at the same
value as would be received by the state if the state
receives its royalty in value under subsection
43.93.10(c)(1) with the corresponding distance-
sensitive transportation charges; if the lessee or
other person exercising this election fails to
adequately supply the in-state gas requirements, after
reasonable notice, or if the contract effectively
prevents the state from exercising its rights with
other lessees to switch between taking its royalty in
value or in kind because of various unit agreements
among lessees, the election is considered to
terminate, and the provisions of the original lease
relating to the state's taking its royalty gas in kind
or in value apply"
CO-CHAIR GATTO objected.
REPRESENTATIVE SEATON explained that Amendment 12 eliminates the
ability of the state to take royalty in-kind (RIK), but only if
the person with the initial FT in the open season agrees to
provide in-state gas to residential and commercial users at the
delivery points described in the license at the royalty rate
plus the distance-sensitive transportation rates required by
FERC. The aforementioned would eliminate the problems with the
RIK and royalty in-value (RIV) switching. However, he
highlighted that this change would only occur so long as the
[lessee] fulfills its obligation to supply the in-state gas
needed and the contract terms don't prevent the state from
taking RIV and RIK from other leaseholders under a unit
agreement. He mentioned that such an arrangement would normally
be required if one member of a unit is taking off gas.
9:21:54 PM
REPRESENTATIVE KAWASAKI pointed out that the subsection to which
Conceptual Amendment 12 refers should be 43.93.010(c)(1).
COMMISSIONER GALVIN stated that although the [administration]
doesn't oppose the concept of Conceptual Amendment 12, he wasn't
sure if it's practical to achieve this concept given the nature
of the RIV and RIK scenario. This amendment tells a company
that if it chooses the option presented in the amendment, the
state won't ever switch to RIK. Furthermore, the company would
be bound, any time it receives a request to sell in state.
There are practical limitations whether the requirement has been
met. Conceptual Amendment 12 creates a practical hurdle that
may not be overcome through careful language crafting.
Moreover, he questioned whether this will ever be requested or
implemented because it includes exceptions that "swallow the
value of it."
9:25:14 PM
REPRESENTATIVE ROSES asked if the language in Conceptual
Amendment 12 is an impediment for an entity to enter a bid or
for the state to evaluate a bid that an entity may provide in
the application process.
COMMISSIONER GALVIN replied no.
CO-CHAIR GATTO withdrew his objection. There being no further
objection, Conceptual Amendment 12 was adopted.
9:26:02 PM
CO-CHAIR JOHNSON moved Amendment 13, labeled 25-GH1060\M.20,
Bullock, 4/23/07, which read:
Page 11, line 4, following "section.":
Insert "When evaluating each application, the
commissioners shall give a preference to an
application that meets all of the requirements in
AS 43.90.130 and may consider applications that fail
to meet the requirements in AS 43.90.130 but that
address in-state needs, financing, access, and
alternatives for expansion of the project."
CO-CHAIR GATTO objected.
CO-CHAIR JOHNSON explained that Amendment 13 maintains the
ability of the commissioners to evaluate the criteria without
automatically rejecting a bidder who can't meet all 20 of the
"must-haves".
9:27:15 PM
REPRESENTATIVE KAWASAKI opined that Amendment 13 "guts a better
part of AGIA." He opined that if the "must-haves" aren't liked,
then there should be discussion of those.
COMMISSIONER GALVIN said that the administration agrees with the
view expressed by Representative Kawasaki in that AGIA will
either include "must-haves" or it won't. He opined that only a
handful of the "must-haves" are perceived as posing a barrier to
applications. Again, those perceived as barriers should either
be required or changed to something more reasonable. From the
administration's view, none of the requirements that it has
heard objection to are what it considered to be commercially
unreasonable. Additionally, the expansion and rolled-in rates
are something that the state has strove for in FERC advocacy,
with regard to their regulations, and fought hard to achieve.
The administration, he related, feels strongly that AGIA needs
to have "must-haves". Otherwise, it eliminates the state's
negotiating position.
9:31:05 PM
REPRESENTATIVE ROSES asked how the language on page 12, lines
24-31 of CSHB 177(O&G) is different than that proposed in
Amendment 13.
COMMISSIONER GALVIN said that the [state] wouldn't have the
authority to put out a "watered down request for applications"
if the first one fails. In such a situation, the matter would
return to the legislature to decide whether the criteria would
have to be changed. The provision cited by Representative Roses
is primarily designed to address a situation in which
applications that qualify are received, and yet the
commissioners decide not to proceed with qualifying
applications. Amendment 13 proposes that the list of "must
haves" are recommendations and all applicants will be evaluated
and have a shot at receiving a license regardless of whether the
state's requirements are met. The state should consider what is
necessary to be considered, he emphasized.
9:33:23 PM
REPRESENTATIVE ROSES pointed out that language in Amendment 13
specifies that any applicant that meets all of the requirements
will receive more consideration than those that don't. The
amendment addresses a situation in which no applicant meets all
the requirements and allows [the commissioners] to use the
criteria in AGIA to determine who has the best project from the
proposals received, without having to return to the legislature
to change the criteria. He offered his belief that if the
[state] had to return to the state in such a situation it would
end up where Amendment 13 proposes.
COMMISSIONER GALVIN interpreted the language, "give a preference
to" [in Amendment 13] to mean there are qualifying and
nonqualifying applications. He reiterated that [the
administration] needs to send a clear message that either the
applicant meets the "must-haves" or it won't be considered. If
a company takes the chance to submit a noncomplying application,
then it takes the risk that the state will receive compliant
applications with which it will go forward. Either the state
says these are criteria that are to be met or they must be
reconsidered now. Additionally, merely stating that a
preference will be given to those applications that meet the
"must-haves" doesn't provide any indication as to how much of an
advantage it will mean.
COMMISSIONER GALVIN then turned attention to the language that
closes the amendment: "may consider applications that fail to
meet the requirements in AS 43.90.130 but that address in-state
needs, financing, access, and alternatives for expansion of the
project." He opined that the aforementioned language doesn't
provide any standard and would basically open the door to any
application, regardless of whether the applicant meets the
state's requirements. If there is a concern about a particular
"must-have" being unreasonable or an unreasonable obstacle for
an otherwise acceptable offer, he encouraged the committee to
have a discussion about that. However, by changing this
language the "must-haves" become "hopefuls" and all comers will
be evaluated based on whatever they provide.
9:38:49 PM
REPRESENTATIVE ROSES asked if Commissioner Galvin holds a
reasonable expectation that if the language regarding the 20
"must-haves" isn't changed, there would be an entity that meets
the criteria and becomes an applicant. He further asked if
Commissioner Galvin believes that changing the criteria would
result in an applicant coming forward fulfilling less of the
criteria merely because the applicant could do so.
COMMISSIONER GALVIN replied yes to both.
REPRESENTATIVE ROSES asked, "If you feel strongly that you think
somebody is going to come in with the 20, why would any other
bidder that also might think somebody's going to come in with 20
not include the 20?"
COMMISSIONER GALVIN clarified that if the language remains as it
is, he wouldn't expect an applicant to fail to meet the 20
"must-haves" simply to make a statement. If the language is
changed per Amendment 13, then an applicant would have
significantly less risk of meeting the 20 "must-haves" so long
as they could make their case that one of the criteria really
wasn't a "must-have." Commissioner Galvin reiterated, "We feel
strongly our 'must-have' list is something that the state has
every right to ask for and also is commercially reasonable and
shouldn't preclude anybody who would participate to
participate."
9:40:34 PM
REPRESENTATIVE ROSES said not having worked for a company that
has built a pipeline or a gas or oil company, he is unable to
specify which criteria are "must-haves." Furthermore, in a
situation in which no applicant comes in with the 20 "must-
haves" [Amendment 13] provides some flexibility for the state by
allowing the commissioners the ability to choose between the
applicants without rejecting them all.
COMMISSIONER GALVIN added that the state will know by October
whether there were any applications at which time the list of
"must-haves" can be assessed to identify if there's an
unreasonable barrier to applicants. Commissioner Galvin again
stated, "We're fairly confident that if we have companies that
legitimately want to build a pipeline that's an open access
pipeline, which is what the state wants to get out of this
process, that they should be able to meet all those
requirements. ... The question becomes whether AGIA is going to
work or not." He further related that the administration
believes there are an appropriate balance of inducements and a
reasonably commercial set of "must-haves" that won't preclude
entry. Therefore, the administration would like to have the
opportunity to give the aforementioned a chance because doing so
provides the best opportunity to get the highest value for the
state.
9:43:21 PM
REPRESENTATIVE SEATON expressed concern with Amendment 13 in
that it makes the bid terms merely a preference, although it
doesn't specify how much of a preference will be given to an
applicant that fulfills the bid terms. The problem with this
amendment would really arise during legislative approval because
the legislature, he opined, would have to review all of the
proposals and determine the evaluation for those that don't meet
the "must-haves." The "must haves," he pointed out, are
centered around the maximization of exploration. He
acknowledged that the problematic "must-haves" are the rolled-in
rates, the 70:30, the three-year open season, and having to
proceed with certificate. Representative Seaton said that the
crux of AGIA seems to be whether there will be inducements and
bid terms or whether the state will entertain all applications.
The committee took an at-ease from 9:46:21 PM to 9:50:17 PM.
9:50:19 PM
CO-CHAIR JOHNSON related his understanding that an applicant
with all 20 "must-haves" remains the winner even under Amendment
13. He interpreted Amendment 13 as giving the commissioners the
ability to make a decision and providing the legislature the
ability to review the contracts. Amendment 13, he opined, will
result in [more applicants] for evaluation. He stated that it's
his responsibility to his constituents to ensure that all
proposals are reviewed and evaluated, which this amendment does.
The amendment doesn't preclude the commissioners from rejecting
applicants, but merely allows the review of proposals "that may
not dot an 'i' or cross a 't'." He opined that Amendment 13
will make it harder on the administration and the legislature.
9:52:14 PM
CO-CHAIR GATTO pointed out that Amendment 13 specifies that "the
commissioners shall give a preference to an application that
meets all the requirements". If that's the case, the remainder
of the language proposed in the amendment isn't necessary. The
only reason to have the remainder of the language, he opined, is
to defeat the earlier language. He interpreted the amendment to
mean that preference may be given, but it isn't a requirement.
He emphasized that Amendment 13 is deeply concerning because
it's a significant change.
9:53:03 PM
CO-CHAIR JOHNSON said he would consider an amendment to
Amendment 13 that would refer to "considerable preference"
rather than just "preference".
CO-CHAIR GATTO asked if there was objection to the amendment to
Amendment 13 [as specified above]. There being no objection,
the amendment to Amendment 13 was adopted.
9:53:29 PM
CO-CHAIR GATTO [maintained his objection and] announced that
before the committee is Amendment 13, as amended.
A roll call vote was taken. Representatives Roses and Johnson
voted in favor of Amendment 13, as amended. Representatives
Seaton, Guttenberg, Edgmon, Kawasaki, Wilson, and Gatto voted
against it. Therefore, Amendment 13, as amended, failed to be
adopted by a vote of 2-6.
9:54:26 PM
REPRESENTATIVE ROSES moved that the committee adopt Amendment 8,
which read [original punctuation provided]:
Pg. 9, Line 14
Delete "shall"
Insert "may"
CO-CHAIR GATTO and REPRESENTATIVE KAWASAKI objected.
REPRESENTATIVE ROSES explained that changing the language from
"shall" to "may" allows the commissioners to consider
applications that don't meet all 20 "must-haves" rather than go
through a reapplication process.
9:55:55 PM
REPRESENTATIVE KAWASAKI pointed out that passage of Amendment 8
would eliminate the "must-haves."
REPRESENTATIVE ROSES suggested that when the state gets to the
point of desperation to pass this legislation in order to obtain
a gasline, the criteria may be adjusted very quickly.
REPRESENTATIVE SEATON characterized the amendment as resulting
in a subjective in or out selection process. He opined that
Amendment 8 takes this down the wrong path.
9:59:12 PM
CO-CHAIR GATTO suggested that there are many "must-haves" [of
which] 20 are essential criteria that must be met while the
remainder will be considered.
COMMISSIONER GALVIN suggested that the state isn't at the point
of desperation and the state should maintain a strong position
that these are "must-haves." The aforementioned should be
maintained until the state is shown that it's an unreasonable
position to hold. He opined that it's not inappropriate for the
state to take nine months to determine whether to become more
accommodating. Although he recognized that this amendment would
provide the commissioners more authority, he emphasized the need
for the state to speak clearly through this legislation and
through the authority granted to the administration that these
are the "must-haves" to be considered for the inducements being
offered.
10:01:42 PM
REPRESENTATIVE WILSON characterized the ["must-have"] language
as stipulating who is driving the train. She opined that the
state should be in charge unlike in the previous administration.
CO-CHAIR GATTO stated his opposition to Amendment 8.
10:02:49 PM
REPRESENTATIVE ROSES said that if the objective is to obtain the
maximum number of applicants to move forward with a project for
consideration, Amendment 8 would be helpful. However, if the
objective is to "squeeze the producers so that if they don't
come forward if somebody comes forward with a proposal, that you
can then threaten to take away their leases" or impose tariffs
or taxes, then the "must-haves" will achieve that. He stressed
that he wasn't sure that prescriptive criteria without
flexibility results in receiving an application. If the state
is confident there will be applicants with the prescriptive
requirements, then it should maintain confidence with the
suggested change in Amendment 8. If the state isn't confident
and is trying to leverage an entity to force them to do
something they haven't in the past, leaving "shall" will achieve
that.
A roll call vote was taken. Representatives Roses and Johnson
voted in favor of Amendment 8. Representatives Guttenberg,
Edgmon, Kawasaki, Wilson, Seaton, and Gatto voted against it.
Therefore, Amendment 8 failed to be adopted by a vote of 2-6.
10:05:45 PM
CO-CHAIR JOHNSON moved that the committee adopt Amendment 14,
labeled 25-GH1060\M.21, Cook, 4/23/07, which read:
Page 10, line 2, following "applicant.":
Insert "However, the commissioner shall first
make the information available to the legislature
under AS 43.90.170(d)."
Page 12, following line 6:
Insert "(d) After the evaluation of each
application under this section, a copy of the
application, evaluation, and all information submitted
by the applicant, including proprietary information
and trade secrets, shall be submitted to each house of
the legislature for its review. The legislature shall
maintain the confidentiality of information that the
applicant claims is proprietary or a trade secret
under AS 43.90.150."
Reletter the following subsection accordingly.
CO-CHAIR GATTO objected.
CO-CHAIR JOHNSON explained that Amendment 14 allows the
legislature to review the winning and the losing bid, so long as
each individual legislator signs a confidentiality agreement.
CO-CHAIR GATTO maintained his objection.
10:06:41 PM
COMMISSIONER GALVIN reminded the committee that the
administration has previously stated that rejected applications
would be available to the public, recognizing that there may be
confidential information that must be addressed. He stated that
the administration has no objection to providing a vehicle for
the legislature to review that confidential information
consistent with other confidential information from the
qualifying applications. Therefore, the administration doesn't
object to Amendment 14, he said.
A roll call vote was taken. Representatives Seaton, Roses,
Johnson, and Wilson voted in favor of Amendment 14.
Representatives Guttenberg, Edgmon, Kawasaki, and Gatto voted
against it. Therefore, Amendment 14 failed to be adopted by a
vote of 4-4.
The committee took an at-ease from 10:09 p.m. to 10:10 p.m.
10:10:45 PM
CO-CHAIR GATTO moved that the committee adopt Amendment 15,
labeled 25-GH1060\M.12, Bullock, 4/21/07, which read:
Page 5, following line 11:
Insert a new subparagraph to read:
"(E) if the project proposed by the
applicant requires the discovery of additional gas, a
timeline for the discovery and development of new gas
reserves and a cost estimate for the exploration and
development;"
CO-CHAIR JOHNSON objected.
10:10:57 PM
MR. RICE stated that Amendments 15, 16, and 17, were drafted
based on information provided to the committee by the Port
Authority regarding specific concerns it had with the process.
The amendments were drafted for the purposes of discussion.
However, after some discussion, Co-Chair Gatto was concerned
that Amendment 15 seems to be predicated on the concept that
this will be an integrated shipper upstream and midstream. The
concept of a midstream project applicant being required to
produce a timeline for discovery of gas isn't particularly
appropriate. The purpose of the amendment, he clarified, is to
allow the committee to make the policy decision about whether
the aforementioned is appropriate or not.
CO-CHAIR GATTO directed attention to a memorandum from the
drafter, Don Bullock. The third paragraph refers to Amendment
15, labeled M.12, as follows: "requires the applicant proposing
the project to speculate about availability of gas on the North
Slope. Most of the existing language ... requires the applicant
to submit information for which the potential pipeline developer
will have first-hand knowledge. The amendment M.12 requires
speculation about what and when some third party may act and how
much that third party might spend."
10:13:50 PM
REPRESENTATIVE ROSES questioned whether the amendment is
necessary. He highlighted that a project would be adjusted
based on the open season for discovery, and therefore somebody
will have to "pay or play."
CO-CHAIR GATTO pointed out that the project asks for an
applicant to discover additional gas. To specify a timeline for
discovery appears to place a hurdle that no one can meet, he
opined.
10:14:53 PM
REPRESENTATIVE GUTTENBERG recalled that even last year the
legislature was told that there wasn't enough gas, but that
there would be and there would be a timeline for discovery and a
timeline for development. He opined that if there isn't enough
of gas, then [the applicant] should specify how it will get it,
explore for it, and a timeline. He further opined that
requiring a timeline for the development of additional gas could
be helpful. He recalled that one of the difficulties [under the
previous administration's proposal] was that there were no
timelines. In conclusion, Representative Guttenberg said that
Amendment 15 makes sense.
10:17:18 PM
CO-CHAIR JOHNSON inquired as to how TransCanada or MidAmerican
could reasonably be expected to do what's proposed in Amendment
15. Co-Chair Johnson characterized it as speculation.
REPRESENTATIVE SEATON noted his agreement with Co-Chair Johnson.
He then highlighted that AGIA is a pipeline not a gas
development act, and therefore he suggested focusing on the
pipeline. To require this timeline would almost preclude
applications from an entity that didn't have the geological
knowledge of those reserves, he opined.
10:18:22 PM
COMMISSIONER GALVIN, in discussion with various parties,
surmised that Amendment 15 would create an additional hurdle on
a larger capacity project that a lower capacity project wouldn't
have to meet. However, given the previous testimony perhaps a
low capacity project will likely have to go through "these"
since there's no certainty with any particular off-take. Still,
Amendment 15 doesn't fit the AGIA model in regard to type of
information that will be available to all of the applicants that
it's trying to attract.
A roll call vote was taken. Representatives Kawasaki and
Guttenberg voted in favor of Amendment 15. Representatives
Edgmon, Wilson, Seaton, Roses, Johnson, and Gatto voted against
it. Therefore, Amendment 15 failed to be adopted by a vote of
2-6.
10:20:40 PM
CO-CHAIR GATTO moved that the committee adopt Amendment 16,
labeled 25-GH1060\M.13, Bullock, 4/21/07, which read:
Page 5, following line 11:
Insert a new subparagraph to read:
"(E) an analysis of how the proposed
project may affect the production of oil on the North
Slope, including the effect on the rate of production
and the affect on the total volume of oil that may be
produced;"
CO-CHAIR JOHNSON objected.
10:20:44 PM
REPRESENTATIVE GUTTENBERG related his belief that [Amendment 16]
encompasses something that AOGCC would be asked to do. However,
he surmised that the applicants are being asked to do [the
analysis as specified in Amendment 16]. He questioned how this
could be received from the applicants.
CO-CHAIR JOHNSON maintained his objection.
A roll call vote was taken. Representative Kawasaki voted in
favor of Amendment 16. Representatives Wilson, Seaton, Roses,
Guttenberg, Edgmon, Gatto, and Johnson voted against it.
Therefore, Amendment 16 failed to be adopted by a vote of 1-7.
10:22:43 PM
CO-CHAIR GATTO moved that the committee adopt Amendment 17,
labeled 25-GH1060\M.14, Bullock, 4/21/07, which read:
Page 8, following line 30:
Insert a new paragraph to read:
"(19) state whether the project will make
gas liquids available in the state for value-added
processing;"
Renumber the following paragraphs accordingly.
CO-CHAIR JOHNSON objected.
REPRESENTATIVE GUTTENBERG related his understanding that
Amendment 17 adds another criteria, but doesn't specify whether
gas liquids will be made available in the state.
10:23:18 PM
COMMISSIONER GALVIN clarified that Amendment 17 is a "must-have"
in terms of information. He then reiterated that the question
of whether the gas will be made available is a question for the
owner of the gas and the liquids not the pipeline. The pipeline
only provides a service for shipping the product. Therefore, it
isn't appropriate to ask the pipeline whether it will sell
liquids since it doesn't have the authority to do so.
REPRESENTATIVE GUTTENBERG suggested that the origin of the
amendment may have been from the thought that the entire
upstream and midstream are from the same entity. Again,
Representative Guttenberg pointed out that there is no criteria
for saying yes or no, the information merely has to be provided.
COMMISSIONER GALVIN commented that it's more a matter of whether
the applicant would have the information to provide.
A roll call vote was taken. Representatives Wilson, Roses,
Seaton, Edgmon, Kawasaki, Guttenberg, Johnson, and Gatto voted
against Amendment 17. Therefore, Amendment 17 failed to be
adopted by a vote of 0-8.
10:25:51 PM
A discussion ensued during which the committee ultimately
decided that it would address the CS incorporating the changes
tomorrow.
[HB 177 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 10:29:34
PM.
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