Legislature(2005 - 2006)BUTROVICH 205

04/20/2006 08:30 AM JUDICIARY


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08:52:09 AM Start
08:52:53 AM SB316
10:43:54 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/21 09:30 am --
+= SB 316 COURT REVIEW OF STRANDED GAS DECISION TELECONFERENCED
Heard & Held
+ SB 313 SALVIA DIVINORUM AS CONTROLLED SUBSTANCE TELECONFERENCED
Scheduled But Not Heard
+ SB 48 PSYCH. EVALUATION/TREATMENT FOR STUDENTS TELECONFERENCED
Scheduled But Not Heard
+ HB 446 PENALTY FOR UNLAWFUL TRADE PRACTICE TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                     ALASKA STATE LEGISLATURE                                                                                 
               SENATE JUDICIARY STANDING COMMITTEE                                                                            
                          April 20, 2006                                                                                        
                            8:52 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                                                                                                             
                                                                                                                                
SENATE BILL NO. 313                                                                                                             
"An Act  relating to  scheduling Salvia  divinorum as a  controlled                                                             
substance."                                                                                                                     
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
SENATE BILL NO. 48                                                                                                              
"An Act  relating to  recommending or  refusing psychotropic  drugs                                                             
or certain types of evaluations or treatments for children."                                                                    
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
CS FOR HOUSE BILL NO. 446(JUD)                                                                                                  
"An  Act  relating  to  the  amount  of  a  civil  penalty  for  an                                                             
unlawful  act or  practice in  the conduct  of  trade or  commerce;                                                             
and  eliminating  mandatory  continuances  in these  matters  after                                                             
issuance of an injunction."                                                                                                     
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
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                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Larry Ostrovsky, Chief Assistant Attorney General                                                                               
Oil and Gas Section                                                                                                             
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT:  Answered questions regarding SB 316                                                                      
                                                                                                                                
Steve Porter, Deputy Commissioner                                                                                               
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT:  Answered questions regarding SB 316                                                                      
                                                                                                                                
Lori Backes, Executive Director                                                                                                 
All Alaska Alliance                                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on SB 316                                                                                      
                                                                                                                                
Bill Walker, General Counsel                                                                                                    
Alaska Gasline Port Authority                                                                                                   
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 8:52:09  AM. Present were  Senators                                                           
Hollis French,  Charlie Huggins,  Gretchen  Guess, and Chair  Ralph                                                             
Seekins.                                                                                                                        
                                                                                                                                
           SB 316-COURT REVIEW OF STRANDED GAS DECISION                                                                     
                                                                                                                                
8:52:53 AM                                                                                                                    
CHAIR RALPH SEEKINS announced SB 316 to be up for consideration.                                                                
                                                                                                                                
LARRY OSTROVSKY,  Chief Assistant  Attorney  General, Oil and  Gas,                                                             
Department  of Law  (DOL) and  STEVE PORTER,  Deputy  Commissioner,                                                             
Department   of  Revenue  (DOR)   introduced  themselves   for  the                                                             
record.                                                                                                                         
                                                                                                                                
8:54:16 AM                                                                                                                    
Senator Gene Therriault joined the meeting.                                                                                     
                                                                                                                                
CHAIR  SEEKINS  asked  Mr.  Ostrovsky  to  explain  what  a  "final                                                             
agency decision under this chapter" means.                                                                                      
                                                                                                                                
MR. OSTROVSKY  replied  "chapter" refers  to Chapter  82, which  is                                                             
the  Stranded Gas  Development Act  (SGDA).  Once the  commissioner                                                             
goes through  the process set out  in the SGDA, he issues  a "final                                                             
finding" and those words are the trigger for an appeal.                                                                         
                                                                                                                                
CHAIR SEEKINS  asked Mr. Ostrovsky  whether it is the  final agency                                                             
decision is what is appealable.                                                                                                 
                                                                                                                                
MR.  OSTROVSKY said  yes because  courts  like to  deal with  final                                                             
decisions.                                                                                                                      
                                                                                                                                
Chair Seekins asked him to explain the process of an appeal.                                                                    
8:56:25 AM                                                                                                                    
MR.  OSTROVSKY said  someone  might ask  for reconsideration  of  a                                                             
decision.  Usually  they  would  present  facts  and  circumstances                                                             
that  the commissioner  hadn't considered.  Normally  an appeal  is                                                             
filed  with  the  superior court  and  superior  court  would  then                                                             
order  the   agency  record  assembled.   The  court  would   order                                                             
briefing. After that it depends on the type of appeal.                                                                          
                                                                                                                                
8:58:40 AM                                                                                                                    
CHAIR SEEKINS asked the timeframe it normally takes.                                                                            
                                                                                                                                
MR. OSTROVSKY  replied in his experience  where there is  a complex                                                             
issue  with  a  large record  supporting  it,  it  could  take  six                                                             
months  to a year.  The Supreme  Court process  would take  another                                                             
year and so it would be roughly two years.                                                                                      
                                                                                                                                
CHAIR  SEEKINS  asked  whether  the  record   would  be  catalogued                                                             
during the commissioner's decision-making process.                                                                              
                                                                                                                                
MR.  OSTROVSKY said  yes.  The decision  is usually  extensive  and                                                             
would comprise  of a couple  hundred pages.  It would generally  be                                                             
a distillation  of perhaps 1,500  pages. Under state law  the court                                                             
has to  be able to understand  the reason  for an agency  decision.                                                             
When the  law calls  for a  best interest  finding, a  commissioner                                                             
cannot simply state that he finds it in the best interest.                                                                      
                                                                                                                                
MR.  PORTER agreed  that  the  commissioner's  finding  would be  a                                                             
thorough analysis of the contract and many reports.                                                                             
                                                                                                                                
9:02:32 AM                                                                                                                    
CHAIR SEEKINS  referred to  the SGDA and  asked what motivated  the                                                             
bill to  come down. Currently  the final  agency decision  would go                                                             
de  facto  with   the  contract  to  the  governor   and  would  be                                                             
forwarded  to  the  Legislature  along  with the  contract  if  the                                                             
governor  chose  to do  so.  He  asked the  responsibility  of  the                                                             
Legislature.                                                                                                                    
                                                                                                                                
MR.  OSTROVSKY  advised  it  was  to  look  at  the  contract,  the                                                             
finding, and  all documents supporting  the finding and  deliberate                                                             
with  experts.  The Legislature  would  look  at  all the  data  to                                                             
verify  that the  commissioner's finding  that the  contract  is in                                                             
the best interest of the state.                                                                                                 
                                                                                                                                
MR.  PORTER said  during the  preliminary  finding the  Legislature                                                             
has  a responsibility  to  review the  contract  and a  preliminary                                                             
finding and to comment to the commissioner.                                                                                     
                                                                                                                                
MR. PORTER  based on the  review the  commissioner will review  all                                                             
the comments,  determine whether  the contract needed amending  and                                                             
if so,  renegotiate  the amendments  with the  applicant. Based  on                                                             
that  he will  issue  a new  and  final finding  and  submit a  new                                                             
contract  to the Legislature  for ratification.  Without the  final                                                             
authorization  from the Legislature,  the  governor could not  sign                                                             
the contract.                                                                                                                   
                                                                                                                                
9:06:43 AM                                                                                                                    
MR.  OSTROVSKY added  if  after the  review by  legislative  budget                                                             
and  audit,  if the  commissioner  changes  the  contract  he  must                                                             
renegotiate and secure agreement under AS 43.82.430(b).                                                                         
                                                                                                                                
CHAIR  SEEKINS said  the  final decision  on whether  the  contract                                                             
should  be executed  is  the  Legislature's.  He asked  what  legal                                                             
channels  someone could pursue  to challenge  the Legislature.  The                                                             
Legislature  has to now prepare  and pass the  Act. The Act  has to                                                             
be signed  by the governor  to become law  before the governor  can                                                             
execute the contract.                                                                                                           
                                                                                                                                
SENATOR  GUESS  agreed  and  said  there is  nothing  in  435  that                                                             
addresses  the finding.  The Legislature  could  give the  governor                                                             
authority  to  execute   the  contract  without  even   seeing  the                                                             
contract.                                                                                                                       
                                                                                                                                
CHAIR SEEKINS  said the Legislature  has to pass a law in  order to                                                             
accept   the  contract  but   they  don't   have  any   affirmative                                                             
responsibility  under  any  law  to make  sure  that  the  contract                                                             
meets the terms of the SGDA.                                                                                                    
                                                                                                                                
MR.   OSTROVSKY   countered   that   there    were   constitutional                                                             
provisions  that  somebody  could  challenge  to  assert  that  the                                                             
contract doesn't maximize the state's interest, for example.                                                                    
                                                                                                                                
9:09:55 AM                                                                                                                    
CHAIR  SEEKINS  said  the only  basis  would  be  a  constitutional                                                             
basis.                                                                                                                          
                                                                                                                                
MR. OSTROVSKY said that is correct.                                                                                             
                                                                                                                                
SENATOR THERRIAULT  pointed  out that there  is reportedly  a whole                                                             
package   of   changes  to   the   SGDA   coming  down   from   the                                                             
administration  and they are  not sure that  the Legislature  would                                                             
pass  them or  what the  standard  would be  for  review. He  asked                                                             
whether  there was  a way  to stop  the  process to  make sure  the                                                             
court could  look at the constitutional  issue as well as  the best                                                             
interest finding.                                                                                                               
                                                                                                                                
CHAIR  SEEKINS  said   as  he  looks  at  the  original   SGDA  the                                                             
administration  has  an affirmative  responsibility  to  make  sure                                                             
the  contract meets  all of  the requirements  of  the Chapter  and                                                             
that  it is in  the long-term  best  interest in  the state.  Since                                                             
amending the  SGDA in 1998, the  administration no longer  has that                                                             
responsibility except in an advisory capacity.                                                                                  
                                                                                                                                
9:14:18 AM                                                                                                                    
MR.  OSTROVSKY said  it seems  that the  statute now  is a  process                                                             
that  the  Legislature  wants  the  administration   to  present  a                                                             
contract that  address all  of the factors  of the Act.  The effect                                                             
is  that the  Legislature,  after looking  at  the contract,  could                                                             
propose changes to it.                                                                                                          
                                                                                                                                
CHAIR   SEEKINS  countered   there   is  nothing   that  says   the                                                             
Legislature   has  any  bargaining   power.  In  effect,   the  law                                                             
approves the contract.                                                                                                          
                                                                                                                                
MR. PORTER  advised the way the Act  was designed it gives  the DOR                                                             
the responsibility  to negotiate  a contract  under specific  terms                                                             
and to  report the  preliminary finding  to the  public. After  the                                                             
public comment  period, the Legislature  at that time can  give the                                                             
Department  the direction  to  change  it. The  commissioner  would                                                             
review  the  public  comments  and  renegotiate  the  contract  and                                                             
present  a  final   findings  and  determination   along  with  the                                                             
contract.  After that, the  Legislature determines  whether  or not                                                             
to ratify the contract. That is the process, he stated.                                                                         
                                                                                                                                
9:18:48 AM                                                                                                                    
CHAIR SEEKINS  said the  Legislature would have  the option  to not                                                             
ratify the contract.                                                                                                            
                                                                                                                                
MR. PORTER agreed. That is a prerogative of the Legislature.                                                                    
                                                                                                                                
CHAIR  SEEKINS said  it appears  that the  Legislature has  assumed                                                             
the  responsibility  to  ratify  the  contract  but  it  lacks  the                                                             
affirmative  responsibility  to meet  any kind  of checklist.  That                                                             
is what makes some people nervous, he said.                                                                                     
                                                                                                                                
MR. PORTER agreed.                                                                                                              
                                                                                                                                
9:20:48 AM                                                                                                                    
SENATOR THERRIAULT  noted that  there is  also no requirement  that                                                             
the administration take action on the comments.                                                                                 
                                                                                                                                
MR.  PORTER  said the  administration  would  do  that at  its  own                                                             
peril. The Legislature has the right not to ratify the contract.                                                                
                                                                                                                                
SENATOR  THERRIAULT   commented   that  the  discussion   continues                                                             
whether  or not the  Legislature  has the  constitutional right  to                                                             
say no to the contract.                                                                                                         
                                                                                                                                
MR. PORTER said he did not understand.                                                                                          
                                                                                                                                
MR.    OSTROVSKY    replied    there   is    a    presumption    of                                                             
constitutionality  but regardless  the governor's  intention  is to                                                             
follow the statute.                                                                                                             
                                                                                                                                
SENATOR  THERRIAULT  said  clearly   when  the  original  bill  was                                                             
introduced it had no legislative approval.                                                                                      
                                                                                                                                
9:22:58 AM                                                                                                                    
SENATOR  GRETCHEN GUESS  said the  transmittal letter  on the  bill                                                             
says,  "Any contract  negotiated  by  the administration  would  be                                                             
subject to  legislative review and  public hearing. Additionally  I                                                             
would encourage  the Legislature  to  require legislative  approval                                                             
of a contract  because of the  appropriate role of the  Legislature                                                             
in such  a unique  and significant  decision.  Furthermore if  such                                                             
contract in  lieu of taxes  was considered  a tax, the  Legislature                                                             
may  well  be  required  to  approve  such  action  by  law."  That                                                             
statement  makes it  seem  like there  was discussion  between  the                                                             
governor and Legislature at the time, she said.                                                                                 
                                                                                                                                
MR.  OSTROVSKY  speculated  the  letter  was due  to  some  concern                                                             
about the authority of the administration to set taxes.                                                                         
                                                                                                                                
CHAIR  SEEKINS noted  the  importance of  allowing  the public  the                                                             
opportunity  and the right  to challenge  the assumptions  on which                                                             
the contract was based.                                                                                                         
                                                                                                                                
MR.  PORTER commented  that  the  public  has full  opportunity  to                                                             
review  all  the  documents  and  to  comment   during  the  public                                                             
comment period.                                                                                                                 
                                                                                                                                
9:27:35 AM                                                                                                                    
SENATOR GUESS  argued that as the  bill is written now,  the public                                                             
could comment but could not challenge the findings in court.                                                                    
                                                                                                                                
MR.  PORTER said  that  is correct  and  explained  the reason  for                                                             
that  is because  the  Legislature  has  inserted itself  into  the                                                             
decision-making process.                                                                                                        
                                                                                                                                
SENATOR  GUESS disagreed.  She said  if that were  the reason  then                                                             
the Legislature would have the final decision and authority.                                                                    
                                                                                                                                
9:30:16 AM                                                                                                                    
SENATOR  FRENCH   said  if  it   were  just  a  statute-to-statute                                                              
conflict,  the court would  reconcile the two.  They would  look to                                                             
see  whether  the authorization   to execute  conflicted  with  the                                                             
SGDA.                                                                                                                           
                                                                                                                                
CHAIR  SEEKINS said  he was  conceivably correct  if the  situation                                                             
were that  the Legislature  authorized  a contract  that they  knew                                                             
didn't meet  the conditions of  the Chapter. He reiterated  earlier                                                             
statements regarding proposed amendments to the SGDA.                                                                           
                                                                                                                                
CHAIR  SEEKINS  noted  the  Legislature   could  always  amend  the                                                             
Chapter or send the contract back.                                                                                              
                                                                                                                                
9:34:15 AM                                                                                                                    
CHAIR  SEEKINS  said  when the  Legislature  amended  the  SGDA  in                                                             
1998, they  "left a wide-open  path." He  asked when the  documents                                                             
that the commissioner considers become public.                                                                                  
                                                                                                                                
MR.  OSTROVSKY  assumed   that  would  be  when  the   commissioner                                                             
transmits his final findings to the governor.                                                                                   
                                                                                                                                
CHAIR  SEEKINS   said  there  wouldn't   be  any  disagreement   if                                                             
subsection  (c)  stated  that  the  commissioner  should  make  the                                                             
documents  available to  the public  when  submitting the  contract                                                             
to the governor.                                                                                                                
                                                                                                                                
9:37:42 AM                                                                                                                    
MR. PORTER understood that would be the process.                                                                                
                                                                                                                                
CHAIR SEEKINS  said he was looking  at it from a public  standpoint                                                             
and wants  to make sure  there is nothing  stuck "in the  dark." He                                                             
asked  whether the  Legislature  is required  to  pay attention  to                                                             
the chain of possession of the contract.                                                                                        
                                                                                                                                
MR. OSTROVSKY said he did not believe there was a requirement.                                                                  
                                                                                                                                
9:39:50 AM                                                                                                                    
SENATOR HOLLIS FRENCH said he keeps coming back to  the roll of the                                                             
Legislature in authorizing the  contract and some legislators could                                                             
vote on the contract without even reading it.                                                                                   
                                                                                                                                
CHAIR  SEEKINS  expressed  concern   of  the  lack  of  affirmative                                                             
responsibility  to  pay  attention  to  the  contract  even  though                                                             
legislatures   have    an   implied   responsibility    under   the                                                             
Constitution.  If the  Legislature  were to  ignore  their duty  to                                                             
ensure  that the contract  meets  the best fiscal  interest  of the                                                             
state it would seem that would be a cause for challenge.                                                                        
                                                                                                                                
MR. OSTROVSKY  speculated  that there might  be. Nothing  precludes                                                             
someone from bringing a constitutional challenge, he stated.                                                                    
                                                                                                                                
9:42:25 AM                                                                                                                    
SENATOR  FRENCH added  that  the morning's  discussion  illustrates                                                             
the  importance  of the  final  finding  and determination  as  the                                                             
guidepost.  The  right  of  the  public   to  challenge  the  final                                                             
finding  should  be a  check  and  balance that  ensures  that  the                                                             
Legislature has done its job.                                                                                                   
                                                                                                                                
MR.  PORTER  reminded  the committee  that  the  thorough  analysis                                                             
would occur during the public process.                                                                                          
                                                                                                                                
SENATOR  FRENCH expressed  concern that the  public comment  period                                                             
could  shrink  to  30  days  and  that   the  DOR  might  not  make                                                             
available  the 15,000-30,000  pages that the  commissioner  used to                                                             
come  to  his determination.  For  example,  if  somebody  believes                                                             
that  the finding  was  issued  for political  reasons  the  public                                                             
might  be hampered  in  their ability  to make  their  case and  to                                                             
have access  to the modeling,  data, and  assumptions that  went in                                                             
to the two hundred page final determination.                                                                                    
                                                                                                                                
MR.  PORTER  responded  it   is  the  intent  of  the  DOR  and  is                                                             
supported  by statute that  it is their  responsibility to  provide                                                             
the   reports   and    documentations   leading    to   the   final                                                             
determination.                                                                                                                  
                                                                                                                                
9:45:50 AM                                                                                                                    
SENATOR  GUESS  reminded  Mr.  Porter   that  the  intent  of  this                                                             
administration   might   not   be   the  intent   of   the   future                                                             
administration  and that  the committee  was  still unsure  whether                                                             
or not the  Legislature would be  acting under the SGDA  this year.                                                             
The  statute   tends  to  surpass   the  present,  she   said.  She                                                             
supported   Senator  French's  concerns   regarding  the   public's                                                             
access  to  the  documents  and  reiterated  Senator   Therriault's                                                             
suggestion that  there is no recourse  for the public  to challenge                                                             
that the contract  goes against the  law. There is nothing  to help                                                             
the public compel the Legislature to follow the law.                                                                            
                                                                                                                                
MR. OSTROVSKY  commented  it was  his belief that  the court  could                                                             
compel  the Legislature  to  follow  the law  but  the court  could                                                             
compel the  DOR to follow  the law. The  Legislature has  the power                                                             
to  amend  the SGA.  The  check  doesn't  check  the  Legislature's                                                             
power but it might check the DOR's power.                                                                                       
                                                                                                                                
SENATOR GUESS  asked would  it then compel  the contract  to comply                                                             
with the law.                                                                                                                   
                                                                                                                                
MR. PORTER said that was an interesting scenario.                                                                               
     If you  assume that oil certainty  needs to be a  part of                                                                  
     the  contract, the way  it is currently  written, if  you                                                                  
     allow  the   public  to  appeal  to  the  court   at  the                                                                  
     findings  level before  it gets to  the Legislature,  the                                                                  
     Legislature   never   gets    to   make   that   decision                                                                  
     because...  let's  assume  that  you have  to  amend  the                                                                  
     SGDA and  you don't amend it  until that final time.  You                                                                  
     end  up in  the situation  where  the public  can  always                                                                  
     prevent  the  DOR from  presenting  the contract  to  the                                                                  
     Legislature   for  review  and   analysis  because   they                                                                  
     didn't  follow every element  of the  current law if  you                                                                  
     know the Act needs to be amended.                                                                                          
                                                                                                                                
9:50:29 AM                                                                                                                    
SENATOR GUESS asked Mr. Porter the intent of the bill:                                                                          
     Is the  intent of  this bill a "timing  intent," which  I                                                                  
     actually  agree with,  let's make all  the legal  actions                                                                  
     at one  time. Or is  the intent a  timing and a "we  also                                                                  
     want  to  take off  the  table any  challenges  that  the                                                                  
     contract  doesn't comply with  the law." Which this  bill                                                                  
     does  because   it  says  you   only  can  look   at  the                                                                  
     constitutionality of the issue.                                                                                            
                                                                                                                                
MR. PORTER  replied  the difficulty  is that  the Legislature  sits                                                             
as the lawmaker.  It can ratify  the contract and ignore  or change                                                             
the laws. The  final finding means  that the agency took  an action                                                             
that affects  the economic interest  of somebody. The  final report                                                             
that  the  commissioner  is  making  is  a  recommendation  to  the                                                             
governor and  the Legislature,  so there is  no final finding  upon                                                             
which  an economic  issue has  been changed  until the  Legislature                                                             
makes a decision, he stated.                                                                                                    
                                                                                                                                
SENATOR  GUESS countered  the final  finding is  that the  proposed                                                             
contract  and  any   amendments  meet  the  requirements   and  the                                                             
purpose of this Chapter. It's not a recommendation.                                                                             
                                                                                                                                
CHAIR SEEKINS  interrupted  to say  that it was  a precedent  prior                                                             
to the  execution of the  contract by the  commissioner but  now it                                                             
has  been relegated  to a  recommendation  by a  consultant to  the                                                             
Legislature.  The Legislature, by  inserting itself, now  stands to                                                             
have its  decision to  be challenged.  And the  challenge can  only                                                             
be made as to the constitutional fiscal interest to the state.                                                                  
                                                                                                                                
SENATOR GUESS asked the reason for the Stranded Gas Act.                                                                        
                                                                                                                                
9:54:40 AM                                                                                                                    
MR. PORTER  responded the  SGDA gave  the DOR  direction on  how to                                                             
negotiate the contract.                                                                                                         
                                                                                                                                
SENATOR  THERRIAULT  said  the  issue is  the  sticking  point.  He                                                             
suggested  there should  be a way  of removing  the sticking  point                                                             
without extinguishing the entire process.                                                                                       
                                                                                                                                
CHAIR  SEEKINS said  the way  the Act  was amended  was clumsy  but                                                             
that  he had  some  suggestions.  He asked  Mr.  Ostrovsky  whether                                                             
somebody could bring a lawsuit before the contract was signed.                                                                  
                                                                                                                                
MR. OSTROVSKY said yes.                                                                                                         
                                                                                                                                
MR.  PORTER added  normally after  the ratification,  the  governor                                                             
has up  to 60  days. The  DOR would  expect that  the agency  would                                                             
notify the  public that  they have  30 days with  which to  file an                                                             
appeal  with the  court  and usually  they  would  stay the  action                                                             
until that 30 days is over.                                                                                                     
                                                                                                                                
9:59:09 AM                                                                                                                    
CHAIR SEEKINS  said the bill has  to be passed by both  legislative                                                             
bodies and  signed by  the governor  so there is  a period  of time                                                             
for public notification.                                                                                                        
                                                                                                                                
SENATOR FRENCH  quipped the SGDA  is looking better and  better the                                                             
way it  stands. The  process is  orderly. The  problem is that  the                                                             
administration  has  created a  contract  that conflicts  with  the                                                             
Stranded Gas Act.                                                                                                               
                                                                                                                                
10:02:43 AM                                                                                                                   
SENATOR  CHARLIE  HUGGINS speculated  that  likely  the party  that                                                             
would file  a lawsuit would  be some  special interest group  based                                                             
on economic factor.                                                                                                             
                                                                                                                                
CHAIR  SEEKINS  asked  Mr.  Porter  to  explain  the  role  of  the                                                             
Department of Natural Resources in the process.                                                                                 
                                                                                                                                
MR.  PORTER directed  the  committee to  AS 43.82.430(2)  and  said                                                             
the  commissioners  of  both  departments  are  relegated  to  work                                                             
together  to determine  if any  amendments are  necessary based  on                                                             
public comments.                                                                                                                
                                                                                                                                
10:06:00 AM at ease 10:16:30 AM                                                                                             
                                                                                                                                
CHAIR SEEKINS  called the  committee back  to order. He  summarized                                                             
the  committee's  main  concern   was  that  when  the  Legislature                                                             
amended  the SGDA in  1998 they  eliminated the  public's right  to                                                             
challenge  whether  or not  the contract  and  proposed  amendments                                                             
met the  requirements of  the Chapter because  the Legislature  can                                                             
change that.                                                                                                                    
                                                                                                                                
MR.  OSTROVSKY  interjected  the public  would  always  be able  to                                                             
challenge  a  contract  whether  or  not  the  contract  meets  the                                                             
statute as it's ultimately enacted.                                                                                             
                                                                                                                                
CHAIR SEEKINS  said on  the other  hand the court  would side  with                                                             
the Legislature.                                                                                                                
                                                                                                                                
MR. OSTROVSKY replied, "Likely, yes."                                                                                           
                                                                                                                                
10:19:48 AM                                                                                                                   
CHAIR SEEKINS  asserted the  intent of the  committee is  to remove                                                             
the point  for someone to "high-center"  the process.  Conceptually                                                             
the  committee  wants  to  allow  for   someone  to  challenge  the                                                             
contract  after  the  contract   is  executed.  He  asked  how  the                                                             
committee should do that.                                                                                                       
                                                                                                                                
SENATOR FRENCH distributed his proposed amendment [entitled 24-                                                                 
LS1842\F.1]  to committee  members  and explained  the idea  behind                                                             
it. The  idea is simply  to postpone the  challenge until  you have                                                             
something to challenge, which is a ratified contract.                                                                           
                                                                                                                                
10:23:26 AM                                                                                                                   
MR. PORTER  responded the  difficulty with  the proposed  amendment                                                             
was that  it "messes up  the process  and the relationship  between                                                             
the Legislature  and  the judiciary."  He said  it would allow  the                                                             
judiciary  to   jump  in  front   of  the  Legislature   after  the                                                             
Legislature had made a decision.                                                                                                
                                                                                                                                
MR.  OSTROVSKY added  that there  have been  discussions  regarding                                                             
amendments  of  the Stranded  Gas  Development  Act.  The  proposed                                                             
amendment  would prevent  the governor  from  advancing a  contract                                                             
because it would be inconsistent with the Act as written.                                                                       
                                                                                                                                
10:25:30 AM                                                                                                                   
SENATOR FRENCH  interrupted to  ask him for  an explanation  of how                                                             
the  amendment  would   limit  the  ability  of  the   governor  to                                                             
transmit a contract.                                                                                                            
                                                                                                                                
MR.  OSTROVSKY said  it  depends  on where  the amendments  to  the                                                             
SGDA end up.                                                                                                                    
                                                                                                                                
SENATOR  FRENCH  referred  to  AS   43.82.430  and  said  once  the                                                             
contract  is amended  and  signed, the  contractors  must agree  to                                                             
the  changes  and  at the  same  time  the  commissioner  would  be                                                             
making his  final finding.  That all happens  before that  big 200-                                                             
page  document comes  out, he  said.  Everything has  to have  been                                                             
done before  that time.  The Chairman is  concerned about  stopping                                                             
the  review of  that contract  while  the court  sorts through  the                                                             
30,000 pages of background documents.                                                                                           
                                                                                                                                
10:28:40 AM                                                                                                                   
MR.  OSTROVSKY  noted  there  was  another  issue  of  whether  the                                                             
commissioner's  finding  would  be superseded  by  the  legislative                                                             
review that occurs after it.                                                                                                    
                                                                                                                                
SENATOR  THERRIAULT   countered  that  the  court   would  have  to                                                             
consider the law earlier than the date of the appeal.                                                                           
                                                                                                                                
CHAIR   SEEKINS  said   the  problem   was  in   the  timing.   The                                                             
Legislature  by authorizing  the signature  has in effect  approved                                                             
the contract regardless of what the Act says.                                                                                   
                                                                                                                                
10:34:18 AM                                                                                                                   
LORI BACKES,  Fairbanks,  testified and objected  to the  amendment                                                             
of  the  SGDA, which  she  claimed  would  effectively  remove  the                                                             
right  of the  people  to  seek judicial  review.  The  unnecessary                                                             
delay  in  the contract  is  the  governor's  insistence  that  the                                                             
Legislature  pass a revision  of oil taxes  before he releases  the                                                             
contract.  She   stated  that  the   governor  broke  the   law  in                                                             
negotiating the contract.                                                                                                       
                                                                                                                                
10:36:46 AM                                                                                                                   
SENATOR  THERRIAULT  asked Ms.  Backes  whether she  heard  Senator                                                             
French's proposed  amendment that  would delay the judicial  review                                                             
to the end of the process.                                                                                                      
                                                                                                                                
MS. BACKES  responded that she had  the amendment and did  not have                                                             
an  objection except  that it  has become  a  reverse process.  She                                                             
claimed  that moving it  to the end  of the  process would  be moot                                                             
since  the  contract  would  already be  enacted  and  the  statute                                                             
would have been amended to match the contract.                                                                                  
                                                                                                                                
10:40:02 AM                                                                                                                   
BILL  WALKER,  General  Counsel,  Alaska  Gasline  Port  Authority,                                                             
testified in  opposition to  the bill and said  he found SB  316 to                                                             
be  appalling.  It allows  the  commissioner  to  compile  whatever                                                             
best interest  finding that  he sees  fit and it  does not  have to                                                             
match the  law. That  is reverse  of the way  the law is  designed,                                                             
he stated.  He challenged  the governor  to release his  amendments                                                             
to the  Stranded Gas  Development  Act immediately  so they  can be                                                             
debated now.  He expressed  appreciate to  the committee for  their                                                             
current debate  and encouraged  the committee  to vote against  the                                                             
bill.                                                                                                                           
                                                                                                                                
10:43:54 AM                                                                                                                   
CHAIR SEEKINS  recessed the meeting  until 9:30 AM tomorrow,  April                                                             
21, 2006.                                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects