Legislature(2005 - 2006)BUTROVICH 205
04/21/2006 09:30 AM Senate JUDICIARY
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| SB316 | |
| Adjourn |
* first hearing in first committee of referral
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+ teleconferenced
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| += | SB 316 | TELECONFERENCED | |
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ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
April 21, 2006
9:39 a.m.
MEMBERS PRESENT
Senator Ralph Seekins, Chair
Senator Charlie Huggins, Vice Chair
Senator Gene Therriault
Senator Hollis French
Senator Gretchen Guess
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 316
"An Act amending the Alaska Stranded Gas Development Act to
eliminate the opportunity for judicial review of the findings
and determination of the commissioner of revenue on which are
based legislative review for a proposed contract for payments in
lieu of taxes and for the other purposes described in that Act;
and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 316
SHORT TITLE: COURT REVIEW OF STRANDED GAS DECISION
SPONSOR(s): JUDICIARY
04/13/06 (S) READ THE FIRST TIME - REFERRALS
04/13/06 (S) JUD
04/19/06 (S) JUD AT 8:30 AM BUTROVICH 205
04/19/06 (S) Heard & Held
04/19/06 (S) MINUTE(JUD)
04/20/06 (S) JUD AT 8:30 AM BUTROVICH 205
04/20/06 (S) Heard & Held
04/20/06 (S) MINUTE(JUD)
04/21/06 (S) JUD AT 9:30 AM BUTROVICH 205
WITNESS REGISTER
Larry Ostrovsky, Assistant Attorney General
Oil, Gas & Mining Section
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Answered questions on SB 316
Steve Porter, Deputy Commissioner
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Answered questions on SB 316
Paul Fuhs, Lobbyist
Backbone
1635 Sitka St
Anchorage, AK
POSITION STATEMENT: Commented on SB 316
Tim Beck
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to SB 316
Phil Kugzruk
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to SB 316
Jomo Stewart
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to SB 316
Steve Hovenden
Fairbanks, Alaska
POSITION STATEMENT: Testified in opposition to SB 316
ACTION NARRATIVE
CHAIR RALPH SEEKINS called the Senate Judiciary Standing
Committee meeting to order at 9:39:07 AM. Present were Senators
Hollis French, Gretchen Guess, Charlie Huggins, and Chair Ralph
Seekins.
SB 316-COURT REVIEW OF STRANDED GAS DECISION
9:39: 33 AM
CHAIR RALPH SEEKINS announced SB 316 to be up for consideration.
STEVE PORTER, Deputy Commissioner, Department of Revenue (DOR)
and LARRY OSTROVSKY, Assistant Attorney General, Gas & Mining
Section, Department of Law (DOL), introduced themselves for the
record.
SENATOR CHARLIE HUGGINS asked Mr. Ostrovsky how difficult it
would be to complete the gas contract.
MR. OSTROVSKY responded the agreement of the contract should
happen in the political process rather than the judicial
process. The DOL anticipates that somebody will file an
administrative appeal on the findings and that has the potential
of stalling the contract.
SENATOR GRETCHEN GUESS asked Mr. Ostrovsky and Mr. Porter
whether they have had the chance to discuss Senator French's
proposed amendment. She said it addresses some of their
concerns.
MR. OSTROVSKY replied they have looked at it but they do not
support it because it does not reflect what is really going on.
The amendment might move the judicial review to the end, but
there is no place for judicial review of a proposal. When the
Legislature amended the Stranded Gas Act (SGA) in 1998 to leave
a role for itself, it essentially converted what would have been
a final agency decision into something that is essentially a
proposal to the Legislature and "for that reason, we don't
support the amendment," he explained.
SENATOR GUESS disagreed and countered that the Legislature put
itself in the middle of the contract but not the findings. She
said this is what she has been trying to get at for three days
and the answer is still not clear. She said it seems as if the
bulk of the focus has been on the delay but the other part is
that the Administration seems to be saying that they want it so
that an entity could only take the contract to court under
constitutional grounds.
MR. OSTROVSKY said that is correct. The DOL believes it doesn't
make sense to subject a recommendation to review when it is only
half the story. When the Legislature amended the SGA, they
wanted the findings attached when the contract was presented to
them.
SENATOR GUESS stated that the committee seems unsure of the
intent in 1998. She doubted that was what the Legislature
intended and said the question is what the process should be
now.
MR. PORTER said he looks at the requirements of what the
Department is designed to do and he looks and at the final
findings and what is appealable to the courts. Now that the
finding is no longer a final finding, the Department only has
the right to make a recommendation and so there is no action
available to the Department. From a process standpoint, it makes
sense that something appealable in court would be charged upon
an action.
SENATOR HOLLIS FRENCH said the prior day discussion enlightened
them with the understanding of how the SGA works. One notable
thing is the lateness of when the final fiscal interest finding
is released. He speculated that it was very unlikely that a
court would assume it had the power to stop the Legislature from
working on a contract. He challenged Mr. Ostrovsky and Mr.
Porter to find a case where a court ordered the Legislature to
stop a process so that they could review it.
He said he was in favor of changing the timing but he disagreed
with the reduction of citizen's right to have access to the
modeling, data and assumption that goes into the Department's
recommendation.
9:54:16 AM
Senator Gene Therriault joined the meeting.
CHAIR SEEKINS said the committee shared Senator French's
concern. He said once the commissioner has compiled all the data
in order to publish the preliminary findings, the supporting
data becomes public.
MR. PORTER said that was correct. There will be a preliminary
finding that will look similar to the final finding. At that
time the Department would make economic models available as well
as the reports and analysis. The DOR will build all of that into
files and make it available to the public via the Internet.
9:57:59 AM
CHAIR SEEKINS asked Mr. Porter to comment on rumors that the
Governor was "hiding the ball" and not disclosing a vast amount
of models and competing numbers from competing contracts.
MR. PORTER replied two years ago the price of oil was below $60
a barrel and some of the original reports have progressed over
time. Even so, the Department should provide every piece of that
data used to consider the best option for the state, he said.
CHAIR SEEKINS asked Mr. Ostrovsky whether he, as Senate
Judiciary Committee chairman, could put Mr. Porter under oath
and ask him whether he provided all of the documentation that
would otherwise be discoverable under court proceedings.
MR. OSTROVSKY indicated there would always be discovery disputes
but the question really is whether or not the Department has to
disclose every single piece of data.
CHAIR SEEKINS asked Mr. Porter to define what information would
be considered confidential.
MR. PORTER replied some of the discoverable information would be
available to the legislators but not necessarily the public.
10:04:48 AM
CHAIR SEEKINS asked whether there were any internal documents
that would be kept confidential.
MR. PORTER advised if the current contract does not move
forward, there are certain documents that the producers are not
privy to and if released, would limit the Department's ability
to negotiate future contracts.
CHAIR SEEKINS speculated that would be an area of dispute
regarding discoverable documents.
MR. OSTROVSKY said to some degree. The Stranded Gas Act (SGA)
provides a cloak of confidentiality for internal documents up
until the time of the proposed contract so that negotiations can
take place. He informed the committee that the Public Records
Act is a statute that operates very quickly. Once the request is
made, agencies have to respond within 10 working days. The
reason for withholding any documents has to be described and if
the party were not satisfied they would appeal to a judge who
would then ask the agency the reason for withholding the
documents. Both the SGA and the Public Records Act compel the
release of the supporting documents.
10:11:59 AM
CHAIR SEEKINS read page 19, line 25, subsection (f) [version L]
and said basically everything that would be considered
discoverable documents would become public.
MR. OSTROVSKY said there are statutory exceptions set out in
paragraphs 1-3.
SENATOR FRENCH asked whether subsection (f) makes the contract
itself confidential.
MR. OSTROVSKY said, "We believe it would be confidential under
(f)." It is a question of when the contract is completed. He
said until the commissioner proposes the contract, it is
difficult to say whether it is complete because it is still
subject to a decision not to present it.
SENATOR FRENCH said it seems like (f) is all about protecting
the strategizing and assembling the pieces of the contract.
10:15:59 AM
CHAIR SEEKINS said there is no argument that once the
preliminary findings are published that the contract and all of
the supporting documents become public.
MR. PORTER agreed. There are three classes of information;
information provided to the public, confidential information
provided to the legislators, and proprietary data from the
industry that the state does not have the right to disclose to
anyone.
10:18:53 AM
CHAIR SEEKINS asserted the intent of the committee was to ensure
that the public would have plenty of opportunity to review the
contract and the supporting documents.
SENATOR FRENCH agreed but expressed concern that the
Administration might not disclose all of the specifics of the
contract.
10:22:50 AM
TIM BECK, Fairbanks, testified in opposition to the proposed
change to the SGA saying it would be a detriment to the people
of the State of Alaska. He asserted that Governor Murkowski's
Administration was attempting to thwart the judicial system and
not allow the public access to the gas contract, therefore
eliminating citizens' rights.
SENATOR THERRIAULT asked Mr. Beck whether he would agree with
the direction that the committee was headed on the bill.
MR. BECK replied he would have to see the bill in its final
form. He stated a preference for allowing public review early in
the contract process.
CHAIR SEEKINS suggested that people were taking positions
without being fully knowledgeable about the process.
10:28:59 AM
SENATOR FRENCH referred to AS 43.82.430(a)(3) and said he
assumed that is the same final findings and determination that
is referred to in (c) and the challenge would come to that final
finding and determination.
CHAIR SEEKINS asked Mr. Ostrovsky whether (b) referenced the
preliminary finding.
MR. OSTROVSKY said that was a "playground for lawyers" and that
there was "ambiguity in AS 43.82.430(b)." The DOL would consider
the material described in subsections (a) and (b) tied because
the final findings and determination are what underlie the
conclusion that the long-term fiscal interest findings are in
the best interest of the state.
CHAIR SEEKINS asked whether there were one or two findings that
would come to the Legislature.
MR. OSTROVSKY said there would be one document, which would be a
findings and determination. The determination being that the
contract is in the long-term financial interest to the state.
Ambiguity aside, the court would probably not separate out the
two because the conclusion would be based on the package.
10:33:46 AM
CHAIR SEEKINS agreed the wording was ambiguous.
SENATOR FRENCH agreed and said it is important to clarify what
the Act says.
SENATOR THERRIAULT asked Mr. Ostrovsky whether it would be
clearer if subsection (c) said, "The commissioner's final
findings and determination under (a) or (b) of this section are
final agency decisions under this chapter."
MR. OSTROVSKY said that was a "belt and suspenders approach."
10:36:34 AM
PAUL FUHS, Lobbyist for Backbone, testified regarding concerns
that the organization has on the bill. Backbone is comprised of
approximately thirty citizens of past legislators and governors
who care about the issue. The organization was first formed when
BP attempted to take over the entire North Slope. They have been
quiet until interest of this issue came up. This is the final
year of the current administration and Alaska still does not
have a gas contract, he said.
10:38:56 AM
The gas contract is similar to a royalty oil and gas deal, he
stated. The administration negotiates the deal and brings it to
the Legislature for an up or down vote. The concern is the up or
down vote because there will be no chance for amendments and so
there will be a lot of pressure involved. He agreed with Senator
Guess's comments regarding, "why have the Stranded Gas Act?" He
said, "Just pass a law of applicability of gas development, put
the incentives in and the first people who show up can build the
project," he said.
10:43:22 AM
CHAIR SEEKINS agreed that the gas was stranded but said the
question is how to get the gas to market.
SENATOR THERRIAULT said he wasn't sure that Backbone could
question whether the gas was stranded since they would not know
the cost of the development of the project.
10:45:35 AM
SENATOR THERRIAULT asked Mr. Fuhs whether preserving the public
process would address Backbone's concern.
MR. FUHS said he thought it would. It would make more sense to
have public comment before the Legislature voted on it.
CHAIR SEEKINS stated under the original Act, the challengeable
point was after the final agency determinations.
10:52:14 AM
CHAIR SEEKINS noted there were three more people signed up to
testify.
PHIL KUGZRUK, Fairbanks, testified in opposition to the bill.
Oil companies have a paternalistic attitude toward Alaskans and
Alaskans should not agree to that, he said. He compared the
administration's bill and their holding of the gas contract to a
person buying a house and not allowing his wife to see any of
the details.
10:56:29 AM
SENATOR THERRIAULT advised Mr. Kugzruk of Mr. French's amendment
that would preserve the citizen's right to review the contract.
JOMO STEWART of Fairbanks offered to let Mr. Steve Hovenden
testify in his stead.
MR. HOVENDEN, Fairbanks, testified against the bill. He informed
the committee that the bill infuriates people and they do not
agree with eliminating judicial review.
11:04:01 AM
CHAIR SEEKINS asked Mr. Hovenden whether he has followed the
discussion of the committee on the bill.
MR. HOVENDEN said he has not followed all of the discussion but
when it comes down to eliminating public review, people are
getting upset.
CHAIR SEEKINS suggested he get a copy of the Stranded Gas Act
and read the sections dealing with preliminary findings and
public review. The intent of the committee is to establish the
point at which a judicial review would take place. The bill is
poorly worded and the committee is working on that, he stated.
SENATOR THERRIAULT thanked the witness and advised him that the
original bill would not likely pass out of committee. He assured
the witness that the Senate Judiciary Committee is the committee
that would come up with a good bill. He clarified that the bill
came into committee as a request of Governor Frank Murkowski's
administration.
11:12:20 AM
CHAIR SEEKINS held SB 316 in committee and recessed the meeting
until 9:30 AM Saturday, April 22, 2006.
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