HB 378: "An Act amending the powers and duties of the Alaska Railroad Corporation and the Alaska Housing Finance Corporation related to the exercise of authority to purchase, transport, and sell natural gas produced on the North Slope for in-state use, and transferring exclusive and primary responsibility for the initiation and development of that project from the Office of the Governor and the Department of Natural Resources to those corporations; and providing for an effective date."
00 HOUSE BILL NO. 378 01 "An Act amending the powers and duties of the Alaska Railroad Corporation and the 02 Alaska Housing Finance Corporation related to the exercise of authority to purchase, 03 transport, and sell natural gas produced on the North Slope for in-state use, and 04 transferring exclusive and primary responsibility for the initiation and development of 05 that project from the Office of the Governor and the Department of Natural Resources 06 to those corporations; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 09 to read: 10 LEGISLATIVE FINDINGS AND PURPOSE. (a) The legislature finds that 11 (1) by 2018, declining oil flow through the Trans Alaska Pipeline System will 12 seriously diminish state revenue; 13 (2) Cook Inlet natural gas reserves are depleting at a rate that could cause
01 significant shortages for residential and commercial gas users in Southcentral Alaska by 2013; 02 (3) a proposed natural gas pipeline to deliver North Slope gas reserves to the 03 North American domestic gas pipeline grid at a connection in central Alberta will not produce 04 revenue for the benefit of the state before 2020; 05 (4) the state's significant reserves of natural gas should be made available on a 06 priority basis in the state to enhance employment opportunities, expand the state's economy, 07 and supply a significant portion of community energy needs; and 08 (5) in light of competing demands for future uses of the state's North Slope 09 natural gas reserves, only an aggressive effort involving planning, permitting, and 10 coordination of information sharing, of necessary agreements and commitments, and 11 commercial negotiations among interested parties will result in completion of construction of 12 an in-state natural gas pipeline that will provide significant direct benefit to the people of the 13 state at the earliest possible date. 14 (b) It is the purpose of this Act 15 (1) to give general direction to the Alaska Railroad Corporation, an agency 16 that enjoys express authority to acquire, construct, improve, maintain, equip, and operate a 17 natural gas pipeline and related facilities for the transportation of natural gas recovered from 18 the North Slope without regard to whether the facilities are or will be owned in whole or in 19 part by the corporation or located on land owned by the corporation, and the Alaska Housing 20 Finance Corporation, a public corporation with extensive experience in financing major 21 development projects, jointly and cooperatively to initiate planning and development of 22 construction of a high pressure in-state natural gas pipeline of appropriate diameter between 23 Alaska's North Slope and Cook Inlet sufficient to provide for the distribution of natural gas 24 for residential and commercial purposes at locations along the pipeline route; and 25 (2) to transfer the exclusive and primary responsibility for the development of 26 the project described in (1) of this subsection from the Office of the Governor and the 27 Department of Natural Resources to the parties identified in this Act. 28 * Sec. 2. AS 18.56.086 is amended to read: 29 Sec. 18.56.086. Creation of subsidiaries. The corporation may create 30 subsidiary corporations for the purpose of financing or facilitating the financing of 31 school construction, facilities for the University of Alaska, facilities for ports and
01 harbors, facilities developed cooperatively with the Alaska Railroad Corporation 02 to fulfill the obligations set out in AS 42.40.560, prepayment of all or a portion of a 03 governmental employer's share of unfunded accrued actuarial liability of retirement 04 systems, or other capital projects. A subsidiary corporation created under this section 05 may be incorporated under AS 10.20.146 - 10.20.166. The corporation may transfer 06 assets of the corporation to a subsidiary created under this section. A subsidiary 07 created under this section may borrow money and issue bonds as evidence of that 08 borrowing, and has all the powers of the corporation that the corporation grants to it. 09 However, a subsidiary created for the purpose of financing or facilitating the financing 10 of prepayment of a governmental employer's share of unfunded accrued actuarial 11 liability of retirement systems may borrow money and issue bonds only if the state 12 bond rating is the equivalent of AA- or better and subject to AS 37.15.903. Unless 13 otherwise provided by the corporation, the debts, liabilities, and obligations of a 14 subsidiary corporation created under this section are not the debts, liabilities, or 15 obligations of the corporation. 16 * Sec. 3. AS 18.56 is amended by adding a new section to article 7 to read: 17 Sec. 18.56.888. Exercise of powers in furtherance of financing North Slope 18 natural gas pipeline project. In addition to other powers granted in this chapter, the 19 corporation or a subsidiary of the corporation, working jointly and cooperatively with 20 the Alaska Railroad Corporation, may exercise powers granted under this chapter to 21 finance or facilitate the financing of the project described in AS 42.40.560. 22 * Sec. 4. AS 42.40.460 is amended by adding a new subsection to read: 23 (l) The provisions of AS 42.40.560(d) prevail over the provisions of this 24 section for the purpose of development of the North Slope natural gas pipeline project 25 described in that section. 26 * Sec. 5. AS 42.40.560 is amended by adding new subsections to read: 27 (b) In the exercise of its authority under (a) of this section for a North Slope 28 natural gas pipeline project, the corporation shall 29 (1) aggressively pursue the acquisition of all necessary federal permits 30 and acquisitions essential for the development and operation of the project; 31 (2) provide monthly reports to the presiding officers of each house of
01 the legislature and to the governor on the corporation's activities relating to the 02 project; 03 (3) initiate a cost study for construction of a gas-to-liquids facility; in 04 the exercise of its authority under this paragraph, the corporation may arrange for 05 essential engineering and design work; 06 (4) initiate efforts to identify and develop in-state markets for the 07 natural gas to be delivered by the project and, to the extent necessary to ensure the 08 long-term feasibility of the project, work to identify and develop overseas markets for 09 the gas; and 10 (5) work cooperatively with the Alaska Housing Finance Corporation 11 on a plan of financing for the project. 12 (c) Subject to AS 36.30.015(e), the board may provide that all or any portion 13 of the project described in this section shall be subject to competitive sealed bid or 14 competitive sealed proposal procedures. 15 (d) To fulfill its obligations under this section, the corporation shall identify 16 all or a portion of a proposed natural gas pipeline transportation corridor. To the 17 maximum extent possible consistent with ensuring the long-term feasibility of the 18 project, the corporation shall make reasonable efforts to locate the proposed corridor 19 between Fairbanks and the Kenai Peninsula, on its land. For land identified by the 20 corporation under this subsection that is not then subject to the corporation's 21 ownership, 22 (1) the Department of Natural Resources shall promptly reserve the 23 entirety of the corridor across state land identified by the corporation, subject to valid 24 existing rights and provisions of this section; 25 (2) on an interim basis, the Department of Natural Resources shall 26 condition authorizations for activities on the reserved land to protect the right of the 27 corporation to initiate and undertake construction of the project or other uses identified 28 for the land; and 29 (3) the Department of Natural Resources shall convey to the 30 corporation the state's entire interest in the land within the pipeline corridor, subject to 31 valid existing rights; in making the conveyance under this paragraph, the department
01 may reserve to the state (A) the interests required by AS 38.05.125; (B) the right of the 02 department to identify and reserve rights-of-way for potential future crossings under 03 AS 42.40.460(g); and (C) the authority of the department to identify, reserve, 04 authorize, and manage land within the pipeline corridor for future right-of-way leases 05 and uses under AS 38.35; the conveyance of land under this paragraph shall be 06 without cost to the corporation except for the direct administrative costs of the 07 department; the best interest findings requirements of AS 38.05 do not apply to 08 reservations and conveyances made under this subsection. 09 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 ALASKA RAILROAD CORPORATION: TRANSITIONAL PROVISIONS 12 AFFECTING OBLIGATIONS UNDER AS 42.40.560. (a) In discharging its obligations 13 under AS 42.40.560(b)(1), enacted by sec. 5 of this Act, the Alaska Railroad Corporation 14 shall initiate permit and acquisition applications in accordance with the federal permit 15 schedule that was provided to the legislature by the Office of the Governor on or about 16 December 15, 2009. 17 (b) The parties having responsibility for contracts, permit and acquisition 18 applications, and studies in progress on the effective date of this Act entered into by the 19 Office of the Governor or a state agency shall transfer those obligations and initiatives to the 20 Alaska Railroad Corporation. Transfer of those obligations and initiatives may not be 21 unreasonably delayed. 22 (c) Unless provision is made in legislation enacted in 2010 making and transferring 23 appropriations to reappropriate unexpended appropriations made in 2009 to the Office of the 24 Governor and executive branch agencies to support an in-state North Slope natural gas 25 pipeline project, the Alaska Railroad Corporation and the Alaska House Finance Corporation 26 may apply to the governor to transfer those unexpended balances of appropriations for uses 27 described in AS 18.56.888 and AS 42.40.560(b), as enacted by secs. 3 and 5 of this Act. The 28 governor may not unreasonably withhold approval of the request. AS 37.07.080(g) does not 29 apply to an application made under this subsection. This subsection constitutes legislative 30 approval to implement the transfer of responsibilities between the named entities as 31 contemplated by AS 37.07.080(h).
01 * Sec. 7. This Act takes effect immediately under AS 01.10.070(c).