03/13/2012 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB217 | |
| HB168 | |
| SB28 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 28 | TELECONFERENCED | |
| += | HB 168 | TELECONFERENCED | |
| += | SB 217 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 13, 2012
1:34 p.m.
MEMBERS PRESENT
Senator Dennis Egan, Chair
Senator Linda Menard
Senator Bettye Davis
Senator Cathy Giessel
MEMBERS ABSENT
Senator Joe Paskvan, Vice Chair
COMMITTEE CALENDAR
SENATE BILL NO. 217
"An Act establishing procedures and guidelines for auditing
pharmacy records; and providing for an effective date."
- MOVED CSSB 217(L&C) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 168(JUD)
"An Act requiring the amount of the security given by a party
seeking an injunction or order vacating or staying the operation
of a permit affecting an industrial operation to include an
amount for the payment of wages and benefits for employees and
payments to contractors and subcontractors that may be lost if
the industrial operation is wrongfully enjoined."
- HEARD & HELD
SENATE BILL NO. 28
"An Act making sales of and offers to sell certain energy
resources at prices that are unconscionable an unlawful act or
practice under the Alaska Unfair Trade Practices and Consumer
Protection Act."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 217
SHORT TITLE: PHARMACY AUDITS
SPONSOR(s): LABOR & COMMERCE
02/22/12 (S) READ THE FIRST TIME - REFERRALS
02/22/12 (S) L&C, FIN
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/01/12 (S) Heard & Held
03/01/12 (S) MINUTE(L&C)
03/06/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/06/12 (S) Heard & Held
03/06/12 (S) MINUTE(L&C)
03/13/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 168
SHORT TITLE: INJUNCTION SECURITY: INDUSTRIAL OPERATION
SPONSOR(s): FEIGE
02/23/11 (H) READ THE FIRST TIME - REFERRALS
02/23/11 (H) JUD
02/25/11 (H) BILL REPRINTED 2/24/11
03/21/11 (H) JUD AT 1:00 PM CAPITOL 120
03/21/11 (H) Heard & Held
03/21/11 (H) MINUTE(JUD)
03/23/11 (H) JUD AT 1:00 PM CAPITOL 120
03/23/11 (H) <Bill Hearing Canceled>
03/30/11 (H) JUD AT 1:00 PM CAPITOL 120
03/30/11 (H) Scheduled But Not Heard
04/04/11 (H) JUD AT 1:00 PM CAPITOL 120
04/04/11 (H) Moved CSHB 168(JUD) Out of Committee
04/04/11 (H) MINUTE(JUD)
04/05/11 (H) JUD RPT CS(JUD) 3DP 2NR
04/05/11 (H) DP: KELLER, PRUITT, THOMPSON
04/05/11 (H) NR: GRUENBERG, HOLMES
04/07/11 (H) TRANSMITTED TO (S)
04/07/11 (H) VERSION: CSHB 168(JUD)
04/08/11 (S) READ THE FIRST TIME - REFERRALS
04/08/11 (S) L&C, JUD
02/23/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/23/12 (S) <Bill Hearing Postponed>
03/01/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/01/12 (S) Heard & Held
03/01/12 (S) MINUTE(L&C)
03/13/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
BILL: SB 28
SHORT TITLE: PRICE GOUGING INVOLVING ENERGY RESOURCES
SPONSOR(s): WIELECHOWSKI, ELLIS, FRENCH
01/19/11 (S) PREFILE RELEASED 1/7/11
01/19/11 (S) READ THE FIRST TIME - REFERRALS
01/19/11 (S) L&C, FIN
03/13/12 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
DANA OWEN, Staff
Senate Labor and Commerce Committee
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Explained CSSB 217(L&C), labeled 27-
LS1411\B.
REPRESENTATIVE ERIC FEIGE
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of HB 168.
LINDA HAY, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Indicated she did not want to testify on HB
168.
MIKE SATRIE, Executive Director
Council of Alaska Producers
Juneau, AK
POSITION STATEMENT: Supported HB 168.
BARBARA HUFF-TUCKNESS, Director
Legislative and Governmental Affairs
Teamsters Local 959
Juneau, AK
POSITION STATEMENT: Supported HB 168.
CARL PORTMAN, Deputy Director
Resource Development Council (RDC)
Anchorage, AK
POSITION STATEMENT: Supported HB 168.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 28.
THOMAS PRESLEY, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Commented on SB 28 on behalf of the sponsor.
JAVEN OSE, Citizen
Representing 650,000 Alaskans
Alaska
POSITION STATEMENT: Commented on SB 28.
ED SNIFFEN, Assistant Attorney General
Civil Division
Commercial and Fair Business Section
Alaska Department of Law (DOL)
Anchorage, AK
POSITION STATEMENT: Was available for questions on SB 28.
MATT WALLACE, Executive Director
Alaska Public Interest Research Group (AKPIRG)
Anchorage, AK
POSITION STATEMENT: Supported SB 28.
ACTION NARRATIVE
1:34:46 PM
CHAIR DENNIS EGAN called the Senate Labor and Commerce Standing
Committee meeting to order at 1:34 p.m. Present at the call to
order were Senators Giessel, Davis, and Chair Egan.
SB 217-PHARMACY AUDITS
1:36:22 PM
CHAIR EGAN announced consideration of SB 217. He invited his
staff to explain the proposed committee substitute (CS).
1:37:21 PM
SENATOR MENARD joined the committee.
DANA OWEN, staff to Senator Egan and the Senate Labor and
Commerce Committee, explained the CS to SB 217(L&C), labeled 27-
LS1411\B. A number of grammatical changes were made along with a
number of additions. On page 1, line 8, in section 1 "such" was
replaced by "those" for clarification. In section 2 on page 2,
line 7, new paragraph (3) was added that limits the number of
prescriptions an auditor may audit to 75. They have been
informed that standard audits run somewhere between 25 and 125
prescriptions and can run many more than that.
On page 2, line 18, the phrase "may not be the basis for finding
fraud;" replaces "may not constitute fraud;" for grammatical
clarity.
On page 2, line 21, "only provide information" was replaced with
"provide information only" to clarify the intent.
1:39:09 PM
On page 2, line 13, a new paragraph (13) was added to ensure
that a prescription mailed or delivered at the request of a
patient may not be the basis for a charge back recoupment or
penalty. He said that Southeast Alaska has actually had some
experience with this; most of the current contracts call for the
auditors to be able to hold back the entire amount of a
prescription if it has been mail ordered and they have a branch
of their business.
On page 3, line 7, "documented telephone calls from a prescriber
or prescriber's agent" was added to be able to validate a
pharmacy record.
On page 3, lines 25-27, subsection (b) was rewritten to clarify
that this bill does not apply to Medicaid audits. With that, Mr.
Owen offered to answer questions.
1:40:40 PM
SENATOR MENARD asked him to sum up the two letters of objection
in their packet.
MR. OWEN responded that previous testimony had indicated that
audits are an effective way to make sure fraud and mistakes are
not made in the business practices of dispensing drugs, and that
they are useful for holding down costs. Some people have argued
that the bill is unnecessary and the audits are working well the
way they are, but the committee has also heard testimony
otherwise.
SENATOR MENARD said she had heard that overall one of the
objections is that pharmacies don't get ample notice, that it
goes from one day to the next and then they want an intensive
audit to happen.
SENATOR GIESSEL moved to adopt CSSB 217( ), version B, for
discussion purposes.
CHAIR EGAN objected for further discussion. He found no further
comments.
SENATOR DAVIS moved to report CSSB 217 (L&C), version 27-
LS1411\B, from committee with individual recommendations and
attached fiscal note(s). There were no objections and it was so
ordered.
1:43:48 PM
At ease from 1:43 to 1:44 p.m.
HB 168-INJUNCTION SECURITY: INDUSTRIAL OPERATION
1:44:52 PM
CHAIR EGAN announced consideration of HB 168 [CSHB 168(JUD),
labeled 27-LS0395\D, was before the committee]. He said that
Representative Feige did an initial presentation on the bill
last week. Before accepting public testimony, Chair Egan asked
if he had any further comments.
REPRESENTATIVE ERIC FEIGE, sponsor of HB 168, said he wanted to
respond to some of the issues raised in a letter from the Alaska
Conservation Alliance. It says this legislation is not aimed at
frivolous lawsuits, and whether a lawsuit is frivolous or has
merit is really a matter of opinion. The bond amounts are not
determined by legislation but by the judge. Nothing in HB 168
specifies an amount. This bill in no way prevents Alaskans from
challenging government issued permits. The state permit process
allows for plenty of public input prior to granting permits with
plenty of opportunities to appeal them along the way. He
reaffirmed for the committee that Alaska has one of the most
comprehensive permitting process of any of the 50 states.
He directed attention to the legal memo prepared for Senator
Egan, dated February 29, 2012, that mirrors one that was
requested by Representative Gruenberg, dated March 21, 2011
(part of the original bill packet). It says that HB 168
parallels the requirements of Alaska Civil Rule 65(c) that
states:
No restraining order or preliminary injunction shall
issue except upon the giving of security by the
applicant in such sum as the court deems proper. The
payment of such costs and damages as maybe occurred or
suffered by any party who is found to have been
wrongfully enjoined or restrained.
No such security shall be required of the state or a
municipality or of an officer or an agency thereof.
REPRESENTATIVE FEIGE said the end of the letter said this
legislation is so broad that it may even prevent the state from
enforcing violations of law, but that is not true. A state
agency always has the option to simply withdraw the permit,
especially if the company or an operator is found to be in
violation of the terms of its permit.
1:48:56 PM
He said that HB 168 was amended in House Judiciary, consulting
with the Department of Law, to more closely mirror the language
of the court rule. The CS would clarify that the proposed
statute would not change it, and the discretion would be left
entirely to the court. He said they were very conscious of not
trying to change the court rule.
REPRESENTATIVE FEIGE said when legally permitted projects are
shut down it is not only the project sponsor who is affected but
the project's workers who get laid off (both union and non-
union) and their families. He saw HB 168 as a jobs bill and with
the Labor and Commerce Committee referral he thought the Senate
agreed.
CHAIR EGAN asked the sponsor's staff, Ms. Hay, if she wanted to
testify.
LINDA HAY, staff to Representative Feige, indicated she did not
want to testify on HB 168.
MIKE SATRIE, Executive Director, Council of Alaska Producers,
Juneau, AK, said the council supported HB 168. The council is a
non-profit trade association representing the producing large
metal mines and development projects in the State of Alaska; it
supports a rigorous science-based permitting system that allows
efficient and responsible development of Alaska's resources.
They encourage and respect the public process used to manage
these resources. Unfortunately, and too often, once the process
has been completed and permits have been issued, opponents of a
project file litigation to force the injunction or stay of these
permits, which delays and potentially stops the permitted
development. If this litigation is ultimately found to have no
merit, it is Alaskan workers and their families who suffer the
most due to lost wages and opportunity. To rectify this problem,
HB 168 requires a party seeking a restraining order, preliminary
injunction, a stay or a vacation of a permit to post a bond that
would cover, amongst other things, lost wages and benefits if it
is found the suit has been wrongfully enjoined. The courts have
broad leeway in fixing the amount of this bond, which allows
them to also protect the rights of the individual filing these
suits.
1:52:18 PM
MR. SATRIE said it's important to consider what HB 168 does and
does not do. It does not affect federal permits, appeals or
litigation. It does not in any way prevent appeals or litigation
of state permits, and it does not restrict the rights of public
interest litigants. But it does encourage engagement in the
early stages of public participation in the permitting process.
He said they want people to come to the table and find ways to
make projects better and not rely on litigation to solve their
differences.
He said this measure also requires public interest litigants of
state permits to recognize the financial risk of their actions
and ultimately may provide security for Alaskan workers and
their families.
MR. SATRIE thanked the committee very much for taking the time
to hear this bill that passed the other body with broad
bipartisan support.
1:53:23 PM
BARBARA HUFF-TUCKNESS, Director, Legislative and Governmental
Affairs, Teamsters Local 959, Juneau, AK, supported HB 168. The
important issue before this committee is the impact on Alaskan
workers, she said. Several years ago it was the issue for the
Pogo mine when 45 members were taken off the job because of some
last minute litigation. They lost two weeks of work, and of
course there was no recourse for them. The suit was not against
the employer in this instance, and it was not successful. She
said the workers ultimately returned to work and completed the
project.
CARL PORTMAN, Deputy Director, Resource Development Council
(RDC), Anchorage, AK, supported HB 168. He said they supported
efforts to bring more accountability to the appeals and
litigation process for community and resource development
projects. HB 168 makes progress in this regard by ensuring that
opponents of projects have some skin in the game. Under current
law, plaintiffs have little incentive not to file lawsuits and
appeals and seek injunctions to stop development projects.
Seeking injunctions cost plaintiffs very little, while the
project sponsors endure the high cost of uncertainty and delay.
The discovery phase in these types of cases can cost hundreds of
thousands of dollars to the state and project proponents. Even
when projects are not enjoined, the uncertainty of litigation
can effectively stop progress.
It is not just the project sponsor who is adversely affected by
these injunctions, Mr. Portman said. The employees of the
project sponsors' contractors are often burdened with the direct
and immediate impacts of a stay on a permit, which causes
construction and development to shut down. Under existing law,
judges have not required opponents of developing Alaska's
resources to post bonds or other security to cover the economic
harm to projects and to the workforce caused by the parties
seeking injunctions.
HB 168 does not limit the ability of citizens to sue, but it
requires a bond in those cases where an injunction is requested
before the case is adjudicated. HB 168 strikes an appropriate
balance by removing incentives for filing ideologically based
challenges designed to delay projects while still preserving the
right to bring meritorious challenges.
1:57:21 PM
MR. PORTMAN said the timber industry in Southeast Alaska would
be in better shape today if a bond was required before timber
sales are adjudicated. This industry has been decimated by
endless appeals and litigation over federal timber sales. Recent
headlines include yet more legal challenges that may further
delay exploratory drilling in the Alaska OCS (outer continental
shelf), drilling that is yet to occur on leases sold in 2008.
Litigation in the Arctic OCS is delaying the state's goal to
increase throughput in TAPS through new OCS development. While
these cases are in federal jurisdiction, litigation in state
court is likely to increase with the primacy assumed over the
water programs.
MR. PORTMAN said the ability of project proponents to weather
the storm of an unfounded stay of activities varies based on a
project's economics and the strength of the balance sheets of
those developing it. A worker who loses employment because of a
court-ordered stay might not have that lasting power to wait out
what is often a lengthy legal proceeding. It is fitting that
this bill was referred to this committee, as both labor and
commerce are directly impacted, he said. It can provide some
accountability to mitigate disruption of commerce while
protecting the interests of Alaskans engaged in projects that
may be subject to challenge. He thanked them again for hearing
this bill and urged its passage.
CHAIR EGAN found no question and said he would hold HB 168 and
take it up again soon.
SB 28-PRICE GOUGING INVOLVING ENERGY RESOURCES
1:59:16 PM
CHAIR EGAN announced consideration of SB 28 saying the committee
would take public testimony.
SENATOR BILL WIELECHOWSKI, sponsor of SB 28, said he filed this
bill in the past and it made it through a number of committees.
It is in response to concerns he is hearing from Alaskans about
very high fuel prices in Alaska.
SENATOR WIELECHOWSKI related that for too long Alaskans have
been paying some of the highest fuel costs in the nation. This
bill makes it an unfair trade practice for refiners,
distributors or retailers to charge unconscionable prices for
energy resources, heating oil and gasoline. The bill
specifically amends the Unfair Trade Practices Act to add number
58 to the current list of 57 consumer protection items in the
statute.
He explained that Alaska historically has paid 12 cents higher
than the national average for gasoline; at one time Alaska was
actually lower than the national average. However, in 2008
prices spiked to over $1 more than the national average, and
they have never settled back to where they had been. Currently,
Alaskans are paying 43 cents higher that the national average.
SENATOR WIELECHOWSKI said that a number of years ago, he and
Senator Davis asked the Attorney General to investigate this
matter; the conclusion was similar to Attorney General Botelho's
investigation in 2002, that the high prices are essentially a
result of an oligopoly in Alaska among the refiners. An
oligopoly is essentially a system that allows legal price
gouging to occur.
Because Alaska's market is so small, it is not a free market. He
said he understands that people don't want to interfere with the
free market, but the government commonly intervenes with energy
rates for heating oil, natural gas and hydro projects. For
instance, the Federal Energy Regulatory Commission (FERC) limits
rates on natural gas pipelines and oil pipelines, and Alaska has
the Regulatory Commission of Alaska (RCA) that was set up to
protect Alaskan consumers from being over-charged for natural
gas and other energy projects. All this bill is saying is that
you can charge whatever you want, but if the prices you charge
are unconscionable, then the state will not allow it.
2:02:49 PM
SENATOR WIELECHOWSKI said a lot of work had been done on this
bill in previous sessions; a number of changes had been made to
accommodate concerns of industry representatives and the
administration. The penalty for charging these prices is no less
than 10 times the economic benefit obtained by the suppliers, a
specific request from Tesoro a number of years ago. Industry is
specifically shielded from individual class action lawsuits, and
this bill leaves enforcement to the sole discretion of the
attorney general. Importantly, it makes it clear that a refiner,
distributor or retailer may submit evidence that seemingly
unconscionable prices are related to additional reasonable costs
incurred with the sale of the resource.
2:03:33 PM
SENATOR WIELECHOWSKI said some of the bill's specifics are based
on numbers he calculated about a year and a half ago when he
introduced the same bill. Alaskans use about 25 million gallons
of gasoline a month. He concluded at that time that every penny
in additional costs added by refiners costs Alaskans about
$250,000 more as a whole. He reminded them again that Alaskan
gasoline has typically averaged about 12 cents higher than
national gasoline prices and today we are 43 cents higher. So
assuming 31 cents per gallon is going to the refiners in excess
charges, Alaskans are being over-charged $7.75 million per month
or $93 million per year.
2:05:14 PM
He said he didn't have a problem with people making profit, but
Alaskans shouldn't be gouged for a resource that they need and
rely upon. If you assume every Alaskan uses 10 gallons per week,
you're looking at an increased cost of about $161 per person.
This is essentially a tax that every working Alaskan is paying
that goes to the refiner that is outside the state.
SENATOR WIELECHOWSKI showed a chart of the average refiner
margins for gasoline in Alaska, Washington and the U.S. It
showed that from 2004 refiner margins (profit) in Alaska tended
to very closely track Washington and the U.S. as a whole. In
July/August 2008, there was a huge spike - over one dollar
difference, and that gap has never been closed. He said
considering that Alaska has the lowest gas taxes in the nation,
that much of the oil comes from Alaska and virtually all of the
gas is refined here resulting in very little in transportation
charges, "There is absolutely no reason in the world that Alaska
should be paying the highest or second highest gasoline prices
in the United States, absolutely no reason for that at all!"
2:07:09 PM
SENATOR MENARD asked him to explain how small mom and pop gas
stations would be gouged by the refiners and distributors.
Wouldn't that force them out of business?
SENATOR WIELECHOWSKI replied this will have no impact on the
small mom and pop gas stations. He explained that one can track
what the average retail gasoline service station makes using
public information; it's not a lot, about 15 to 25 cents per
gallon. It hasn't changed much at all in recent years. This will
have no impact at all on them; in fact this will probably
benefit them, because when refiners charge higher prices the
gasoline stations are faced with a choice: they either bump up
their prices or they absorb some of the costs. A lot of them are
actually absorbing some of the increased costs and that is who
this bill would benefit. He said he had seen no evidence that
gouging is occurring at the service station level.
SENATOR GIESSEL asked what "unconscionable" means.
SENATOR WIELECHOWSKI replied that he struggled with that.
Initially, they set a specific standard, knowing that question
would be asked, of no more than 10 percent higher than Seattle
prices. The reason they picked that was because historically
Alaska and Seattle prices track very similarly, with Alaska
being a little higher sometimes. The refiners complained saying,
"You can't tie us to Seattle, because what if something happens
in Seattle? What if something happens in Alaska?"
He asked the refiners what they would like and came up with the
term "excessive or exorbitant." The Department of Law didn't
like that; so then they changed it to "unconscionable," because
that is used by the courts. Senator Wielechowski said he
personally would define "unconscionable" as more than 10 percent
of Seattle prices.
SENATOR GIESSEL said that raised several questions. She asked
the Pacific Northwest's predominant source of energy.
SENATOR WIELECHOWSKI replied a lot of their power is derived
from wind, hydro and natural gas.
SENATOR GIESSEL responded that it is inexpensive there, but up
here the predominant source of energy to do the refining process
is diesel, which is rather high-priced. How do you reconcile the
costs refineries face in Alaska with a very small market with
the costs in Seattle?
SENATOR WIELECHOWSKI replied that many would argue the per
kilowatt cost for wind or hydro is actually higher because the
upfront capital costs to build it are extremely high. That being
what it is, Alaska has two main refiners: Tesoro, which refines
roughly 80 percent of the gasoline, and Flint Hills, which
refines about 12 percent. The rest are some smaller companies
throughout Alaska. The two really control the market, and Flint
Hills is predominantly run with diesel. However, Tesoro is near
Cook Inlet and they are very fortunate enough to have a natural
gas market there. His understanding is that they use natural
gas, which in many places is one of the cheapest sources of
energy you can get.
THOMAS PRESLEY, staff to Senator Wielechowski, also pointed out
that language in section (f) says if reasonable costs are
associated with doing business in Alaska, those are a good
reason for not being guilty of price gouging.
SENATOR GIESSEL thanked him for pointing that out, but she
pointed out the added cost to a producer who has to go to court
to defend himself. It's also her understanding that Tesoro
imports a large amount of its oil from the North Slope and other
countries, because Cook Inlet oil, which they were built to
refine, is less and less available. Does that not add to their
costs?
2:13:38 PM
SENATOR WIELECHOWSKI answered yes, that is true. They buy some
of their oil on the spot market, but those transportation costs
aren't much different from what other refiners in the United
States that also buy on the spot market incur.
SENATOR MENARD said Alaskan refineries refine more gasoline than
the state can consume and asked why the price for exported gas
is sometimes lower than what is sold in Alaska. She stated she
had a problem with that.
SENATOR WIELECHOWSKI replied that he would be concerned about
that, too, but he wasn't aware of that happening.
2:16:04 PM
JAVEN OSE, citizen representing 650,000 Alaskans, said the
biggest joke at the gas pump is that we own the resource. If we
owned it, would we be paying this much for it? He asked them to
consider collecting all the state credit cards for gasoline and
make the people pay for it themselves. He said he is a typical
retired 69-year old man and has an income of roughly
$15,000/year. He has $6,800 in expenses not including $3,000 for
food. That leaves about $100 a week for fuel.
2:17:32 PM
As a solution, he suggested finding a number that brings Alaska
gasoline back to its $1.75 or $2.00/gallon price and selling it
back to the refinery. They can tack on their refinery charge and
the gas stations can make their 15 cents a gallon. The State of
Alaska will not lose anything and it will be good will towards
the people that are supposed to be the beneficiary of this great
resource.
If it was up to him, he would have made a deal for no tariff in
the state because of our location. Tesoro has been given every
tax credit conceivable, and look what they are doing;
opportunities for profit were too great to ignore! Saudi Arabia,
one of our allies today, sells its gas for 50 cents a gallon.
The Saudi citizens get $75,000 a year a piece for all of their
oil wealth. Venezuela has been keeping Alaskan villages supplied
with diesel and heating fuel, and the state has been sitting on
the bench. This has got to change, he exclaimed.
SENATOR MENARD commented that she knows that not one legislator
has a state credit card for gasoline or heating fuel.
2:20:59 PM
ED SNIFFEN, Assistant Attorney General, Civil Division,
Commercial and Fair Business Section, Alaska Department of Law
(DOL), Anchorage, AK, said he was available for questions on SB
28. He appreciated being able to work with Senator Wielechowski
on changing some of the wording in former iterations of the
bill.
2:21:48 PM
MATT WALLACE, Executive Director, Alaska Public Interest
Research Group (AKPIRG), said they are a non-profit, public
interest advocacy organization with a focus on issues such as
consumer protection, good governance, and transparency. He
supported SB 28, because it is about consumer protection and
fairness issues.
He said Alaskans are rightfully upset about high prices at the
pump. Right now the average gas price in Alaska is $4.26 versus
a U.S. average of about $3.82. Transportation costs in Alaska,
because it is so spread out, can make a huge impact on Alaskan
pocket books. We're very near the highest price in the country;
California's gas price is higher because of its higher state tax
on it.
MR. WALLACE said lots of factors go into that final retail
price. The tax regimes make a difference, but a factor unique to
Alaska is just the lack of competition in the refining industry.
When that happens, there is a much greater risk of price gouging
and "unconscionable prices" being charged to Alaskan consumers.
This bill provides a reasonable deterrent to this activity while
limiting the enforcement mechanism to the Attorney General's
office. It's possible this could get passed into law, and it
would never get used because of that deterrent. The key piece is
to have it on the books to provide the motivation to not charge
these unconscionably high prices.
2:24:59 PM
SENATOR GIESSEL asked him why he said Alaska lacks a free market
in refining.
MR. WALLACE replied that obviously Alaska doesn't have a legal
monopoly; there are rules against that. But a number of factors
make Alaska unique; its size and distance from the rest of the
United States. It's technically possible for that competition to
exist, but the economic bars are set so high that a limited
number of sellers have a higher immunity to charging these
prices.
SENATOR GIESSEL asked if he was saying that there are
environmental factors that limit the number of people that are
willing to take the risk to come into this market to build a
refinery and attempt to support themselves and their workforce.
MR. WALLACE said that was correct.
SENATOR GIESSEL said this bill appears to vilify refineries and
appears to be a jobs bill for attorneys and asked why he is not
supporting simple price controls on gasoline.
MR. WALLACE replied that he would be happy to evaluate a
proposal that would protect consumers in that way, but this bill
is a good first step to provide a deterrent that doesn't exist
now.
CHAIR EGAN said that completed public testimony on SB 28.
2:28:11 PM
SENATOR WIELECHOWSKI responded to a couple of Senator Giessel's
statements. He did not call refiners "unreputable" and he was
offended by the jobs-bill-for-attorneys comment. This is a bill
that is trying to protect Alaskans, and he was sorry if she
thought protecting Alaskans from price gouging was vilifying
someone or a jobs bill for attorneys.
SENATOR GIESSEL responded that the gentleman who just testified
said Alaska has a small market that costs a lot to get into.
There are distance factors, and these are issues that can't be
controlled. Therefore, refiners are not price-gouging Alaskans;
they are attempting to make a reasonable living and provide
wages for their staff and jobs for Alaskans. Opening up
allegations about them is troubling, and she didn't see how it
would help anything. If you want to control prices, you set
price controls.
SENATOR WIELECHOWSKI responded that for years his chart shows
that refiners were making healthy profits in Alaska until 2008
when they decided to start gouging Alaskans, and they have been
gouging Alaskans ever since. He philosophically disagreed that
refiners should have the ability to gouge Alaskans on an energy
product that every single Alaskan in this state needs and uses.
CHAIR EGAN held SB 28 in committee.
2:30:41 PM
Finding no further business to come before the Labor and
Commerce Committee, Chair Egan adjourned the Senate Labor and
Commerce Standing Committee meeting at 2:30 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 28 AAA fuel gauge report.PDF |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB 28 AlaskaSeattle6yearComp.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB 28 Refiner Margins.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB0028A.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB 28 Letters to Editor.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB28 Past Investigations.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB28 Sponsor Statement.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| SB 28 lttr opposing, Tesoro 2012-03-13.pdf |
SL&C 3/13/2012 1:30:00 PM |
SB 28 |
| HB 168 lttr opposing, Alaska Conservation Alliance 031212.pdf |
SL&C 3/13/2012 1:30:00 PM |
HB 168 |
| HB 168 supporting testimony, Portman 031312.PDF |
SL&C 3/13/2012 1:30:00 PM |
HB 168 |