Legislature(2013 - 2014)BUTROVICH 205

04/12/2014 09:00 AM STATE AFFAIRS

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08:59:59 AM Start
09:00:17 AM HB383
09:20:20 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 383(RLS) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 12, 2014                                                                                         
                           8:59 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Fred Dyson, Chair                                                                                                       
Senator Cathy Giessel, Vice Chair                                                                                               
Senator John Coghill                                                                                                            
Senator Bill Wielechowski                                                                                                       
MEMBERS ABSENT                                                                                                                
Senator Bert Stedman                                                                                                            
COMMITTEE CALENDAR                                                                                                            
CS FOR HOUSE BILL NO. 383(RLS)                                                                                                  
"An Act relating to the membership of the board of the Alaska                                                                   
Gasline Development Corporation; and providing for an effective                                                                 
     - MOVED CSHB 383(RLS) OUT OF COMMITTEE                                                                                     
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 383                                                                                                                  
SHORT TITLE: AK GASLINE DEVELOPMENT CORP. MEMBERSHIP                                                                            
SPONSOR(s): RULES BY REQUEST                                                                                                    
04/04/14       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/14       (H)       RLS                                                                                                    
04/08/14       (H)       RLS AT 5:00 PM CAPITOL 120                                                                             
04/08/14       (H)       Moved CSHB 383(RLS) Out of Committee                                                                   
04/08/14       (H)       MINUTE(RLS)                                                                                            
04/09/14       (H)       RLS RPT CS(RLS) 7DP                                                                                    
04/09/14       (H)       DP: HAWKER, GRUENBERG, HERRON, OLSON,                                                                  
                         CHENAULT, KELLER, JOHNSON                                                                              
04/09/14       (H)       TRANSMITTED TO (S)                                                                                     
04/09/14       (H)       VERSION: CSHB 383(RLS)                                                                                 
04/11/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/11/14       (S)       STA                                                                                                    
04/12/14       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
REPRESENTATIVE MIKE CHENAULT                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT: Introduced  HB  383 that  was introduced  by                                                             
House Rules at his request.                                                                                                     
TOM WRIGHT, Staff                                                                                                               
Representative Mike Chenault                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Provided supporting testimony for HB 383.                                                                 
JOHN J. BURNS, Chair                                                                                                            
Alaska Gasline Development Corporation (AGDC)                                                                                   
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 383.                                                                           
ACTION NARRATIVE                                                                                                              
8:59:59 AM                                                                                                                    
CHAIR  FRED  DYSON  called  the  Senate  State  Affairs  Standing                                                             
Committee meeting  to order at 8:59  a.m. Present at the  call to                                                               
order  were Senators  Wielechowski, Coghill,  Giessel, and  Chair                                                               
         HB 383-AK GASLINE DEVELOPMENT CORP. MEMBERSHIP                                                                     
9:00:17 AM                                                                                                                    
CHAIR  DYSON  announced  the consideration  of  HB  383."An  Act                                                               
relating to  the membership  of the board  of the  Alaska Gasline                                                               
Development Corporation;  and providing  for an  effective date."                                                               
This  was  the  first  hearing. [CSHB  383(RLS)  was  before  the                                                               
9:00:51 AM                                                                                                                    
REPRESENTATIVE MIKE  CHENAULT, Alaska State  Legislature, Juneau,                                                               
Alaska, introduced HB 383, which  was sponsored by House Rules at                                                               
his  request.  He  explained  that the  bill  amends  the  Alaska                                                               
Gasline Development Corporation (AGDC)  statute to allow for out-                                                               
of-state  board  appointments,  which   was  the  intent  of  the                                                               
legislature  when it  considered  and passed  House  Bill 4  last                                                               
year. The intent  of that bill was that the  governor should have                                                               
the ultimate  discretion in appointing the  most qualified people                                                               
in leading AGDC  in carrying out its mission  to develop projects                                                               
that get gas to Alaskans.                                                                                                       
REPRESENTATIVE  CHENAULT  highlighted   that  during  the  Alaska                                                               
Constitutional  Convention, the  framers  amended  Section 26  to                                                               
replace  the state  residency requirement  with the  U.S. citizen                                                               
requirement. Delegate  John Hellenthal said  he had faith  in the                                                               
executive  and the  legislature  to pick  qualified  men, and  he                                                               
would be worried  if such a restrictive  provision limiting board                                                               
appointments to residents  of Alaska were included  in the Alaska                                                               
Constitution.  Representative Chenault  noted he  was citing  the                                                               
convention  minutes on  page 2239.  He then  cited delegate  John                                                               
McNees  who said  that the  executive  should not  be limited  in                                                               
reaching out to  appoint the best available  man, irrespective of                                                               
where that may be.                                                                                                              
REPRESENTATIVE CHENAULT  explained that  the AGDC  Board includes                                                               
two  commissioners  and  five public  members  appointed  by  the                                                               
governor. The governor is encouraged  to appoint people who bring                                                               
particular  qualifications and  expertise.  By  statute the  AGDC                                                               
mission requires  the board  and corporation to  act in  the best                                                               
interest  of Alaska.  He noted  that all  but one  member of  the                                                               
current board are Alaskans.                                                                                                     
REPRESENTATIVE CHENAULT  continued to discuss HB  383 speaking to                                                               
the following sponsor statement:                                                                                                
     Committee  Substitute for  House  Bill 383(RLS)  amends                                                                    
     the  Alaska  Gasline  Development  Corporation's  (ADC)                                                                    
     statutes to  allow for out of  state appointments. Last                                                                    
     session,  the legislature  passed  House  Bill 4.  This                                                                    
     extensive legislation laid out  a structure for AGDC as                                                                    
     a  corporation, defining  what  the legislature  wanted                                                                    
     and  included language  to  define board  appointments,                                                                    
     items  generally   addressed  in  AS   39.05,  existing                                                                    
     statutes related  to public officers and  employees. AS                                                                    
     39.05.100  requires board  appointees  to be  Alaskans,                                                                    
     unless  otherwise provided.  House  Bill 4  articulated                                                                    
     board   requirements,   without  specifically   stating                                                                    
     whether members  had to  be Alaskans  or not,  with the                                                                    
     understanding  that  by  not  specifying,  appointments                                                                    
     could  be  U.S.  citizens  as   stated  in  the  Alaska                                                                    
     Constitution.   Legal  guidance   at  the   time,  plus                                                                    
     testimony, was that House Bill  4 language allowed both                                                                    
     out-of-state citizens and Alaskan residents to serve.                                                                      
       What the sponsors neglected to do, and this was an                                                                       
         oversight, is specifically exempt AGDC from AS                                                                         
     CSHB 383(RLS) corrects this oversight.                                                                                     
9:04:23 AM                                                                                                                    
CHAIR DYSON noted That Dan Fauske  and Miles Baker with AGDC were                                                               
available to answer questions.                                                                                                  
SENATOR  WIELECHOWSKI   asked  if  there  was   an  opinion  from                                                               
Legislative   Legal  that   this  legislation   falls  under   AS                                                               
39.05.100, because AGDC is a corporation.                                                                                       
9:05:11 AM                                                                                                                    
TOM WRIGHT,  Staff, Representative  Mike Chenault,  affirmed that                                                               
it does.                                                                                                                        
SENATOR  WIELECHOWSKI   asked  if  there  was   an  opinion  from                                                               
Legislative Legal  that legislative confirmation is  required for                                                               
this position.                                                                                                                  
MR. WRIGHT affirmed that this  position would require legislative                                                               
SENATOR  WIELECHOWSKI asked  if he  disagrees with  the statement                                                               
that  has been  made that  the governor  could appoint  anyone he                                                               
wants without legislative approval.                                                                                             
MR.  WRIGHT  offered his  belief  that  confirmation is  required                                                               
under AS  31.25.020. It says  "public members of the  board shall                                                               
be appointed by  the governor and are subject  to confirmation by                                                               
the legislature."                                                                                                               
CHAIR DYSON opened public testimony.                                                                                            
9:06:33 AM                                                                                                                    
JOHN  BURNS,   Chair,  Alaska  Gasline   Development  Corporation                                                               
(AGDC), Fairbanks,  Alaska, testified  in support  of HB  383. He                                                               
said this legislation  will correct an oversight in  House Bill 4                                                               
and  will ensure  that  the board  will be  able  to achieve  the                                                               
mission and  responsibility conferred on  AGDC by the  passage of                                                               
House Bill  4. He described this  legislation as one of  the most                                                               
comprehensive, enabling pieces of  legislation that has passed in                                                               
many  years. It  embodies the  hopes of  Alaskans and  commitment                                                               
that  Alaskan's  gas will  be  developed  and made  available  to                                                               
Alaskans.  The  responsibility  to  achieve  that  objective  was                                                               
conferred on AGDC, and the board  is committed to deliver on that                                                               
MR. BURNS  stated that  if SB  138 passes it  will add  to AGDC's                                                               
responsibility,  because  it  will  be  its  role  to  conduct  a                                                               
thorough evaluation and  recommend which of the  two gas projects                                                               
to  sanction. The  ability for  AGDC  to achieve  its mission  is                                                               
dependent on the composition of  the board. Its members must have                                                               
the   required  skillset.   The   composition  of   a  board   is                                                               
particularly important  when the subject is  highly technical and                                                               
specialized.  HB  383  will  empower the  board  to  achieve  the                                                               
mission to develop and construct a gasline.                                                                                     
He pointed out that the  committee knows who the governor intends                                                               
to appoint  to the board  and the work he  has done on  behalf of                                                               
AGDC in  the six  months since his  appointment. He  posited that                                                               
Mr. Rabinow exemplifies  why the passage of the  bill makes sense                                                               
and is  in the state's  best interest as  the owner of  AGDC. Mr.                                                               
Rabinow has four decades of  pipeline experience and expertise in                                                               
large  project  development,  implementation and  management.  He                                                               
attested  to  Mr.  Rabinow's   integrity,  commitment  to  AGDC's                                                               
mission  and  objectives,  and his  active  participation  during                                                               
board meetings.  He provides an  owner's perspective  and insight                                                               
about pipeline  construction, management,  and financing  that is                                                               
MR. BURNS  spoke to  Mr. Rabinow's  loyalty. He  took an  oath of                                                               
office  and signed  a confidentiality  agreement,  just like  all                                                               
other AGDC board members. Mr.  Burns said that without exception,                                                               
our loyalty is  to the state and our  fiduciary responsibility is                                                               
to  AGDC.  He emphasized  that  appointments  to the  AGDC  Board                                                               
should focus on  a person's ability rather  than their residency.                                                               
He concluded  that HB 383  is in the  best interest of  the state                                                               
and should go forward.                                                                                                          
9:14:24 AM                                                                                                                    
SENATOR COGHILL asked  if the Act is retroactive  to September 1,                                                               
2013 because that's when Mr. Rabinow was appointed.                                                                             
MR.  WRIGHT   clarified  that  the  appointments   were  made  on                                                               
September 13, 2013.                                                                                                             
SENATOR COGHILL asked  if the expectation under House  Bill 4 was                                                               
that the appointment was legitimate,  but later it was found that                                                               
wasn't the case.                                                                                                                
REPRESENTATIVE CHENAULT affirmed that is reason for the bill.                                                                   
SENATOR COGHILL  expressed appreciation that the  sponsor brought                                                               
the  legislation  forward.  He   said  he  often  struggles  with                                                               
retroactivity, but in this circumstance it's warranted.                                                                         
REPRESENTATIVE CHENAULT responded  that the intent is  to see the                                                               
confirmation process go forward.                                                                                                
CHAIR  DYSON observed  that this  legislation is  consistent with                                                               
the sponsor's understanding of the intent of House Bill 4.                                                                      
MR. WRIGHT agreed that  the intent of HB 4 was  to allow the best                                                               
and  brightest  to   serve  on  the  AGDC   Board  regardless  of                                                               
residency, as long as they are a U.S. citizen.                                                                                  
SENATOR GIESSEL noted  that some boards and  commissions don't go                                                               
through  the confirmation  process  yet subsection  (b), page  1,                                                               
lines 5-6, specifically leaves a  political process in place. She                                                               
asked if it was left for a reason.                                                                                              
MR. WRIGHT  affirmed that  the intent is  to have  a confirmation                                                               
process for this board.                                                                                                         
CHAIR DYSON  said this state  has a citizen legislature  and most                                                               
boards are expected  to be made up of citizens,  but expertise is                                                               
needed with a  board like AGDC. He opined  that it's shortsighted                                                               
to think that Mr. Rabinow can't be objective.                                                                                   
MR. WRIGHT  said the board is  fortunate to have two  members who                                                               
have an understanding  of pipelines: Albert N.  Bolea and Richard                                                               
A. Rabinow.                                                                                                                     
CHAIR  DYSON  commented  on  the   importance  of  expertise  and                                                               
MR. WRIGHT  added that  a large number  of consultants  the state                                                               
relies on aren't residents.                                                                                                     
CHAIR  DYSON  found  no  further   questions  or  discussion  and                                                               
solicited a motion.                                                                                                             
9:19:29 AM                                                                                                                    
SENATOR  GIESSEL  moved  to report  CSHB  383(RLS),  labeled  28-                                                               
LS1656\U,  from  committee  with individual  recommendations  and                                                               
attached zero fiscal note(s).                                                                                                   
9:19:47 AM                                                                                                                    
SENATOR WIELECHOWSKI objected.                                                                                                  
CHAIR DYSON asked for a roll call.                                                                                              
A roll call vote was  taken. Senators Giessel, Coghill, and Dyson                                                               
voted  in favor  of  moving HB  383.  Senator Wielechowski  voted                                                               
against  it. Therefore,  CSHB 383(RLS)  was reported  out of  the                                                               
Senate State Affairs Standing Committee by a vote of 3:1.                                                                       
9:20:20 AM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Dyson adjourned the Senate State Affairs Standing                                                                         
Committee meeting at 9:20 a.m.                                                                                                  

Document Name Date/Time Subjects
CSHB 383 (RLS) - Sponsor Statement-CSHB 383 (RLS).pdf SSTA 4/12/2014 9:00:00 AM
HB 383
CSHB 383 (RLS) - Legislation.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 Fiscal Note-AGDC.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - AGDC Board Oath of Office.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - Alaska Gasline Moves Forward with AGDC Board.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - AS 31 25 020.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - AS 39 05 100.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - AGDC Board of Directors.pdf SSTA 4/12/2014 9:00:00 AM
HB 383
HB 383 - Art 3 Section 26-AK Constitution.pdf SSTA 4/12/2014 9:00:00 AM
HB 383