Legislature(2013 - 2014)HOUSE FINANCE 519
03/28/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB23 | |
| HB4 | |
| HB112 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 23 | TELECONFERENCED | |
| += | HB 112 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 4 | TELECONFERENCED | |
HOUSE BILL NO. 4
"An Act relating to the Alaska Gasline Development
Corporation; making the Alaska Gasline Development
Corporation, a subsidiary of the Alaska Housing
Finance Corporation, an independent public corporation
of the state; establishing and relating to the in-
state natural gas pipeline fund; making certain
information provided to or by the Alaska Gasline
Development Corporation exempt from inspection as a
public record; relating to the Joint In-State Gasline
Development Team; relating to the Alaska Housing
Finance Corporation; relating to judicial review of a
right-of-way lease or an action or decision related to
the development or construction of an oil or gas
pipeline on state land; relating to the lease of a
right-of-way for a gas pipeline transportation
corridor, including a corridor for a natural gas
pipeline that is a contract carrier; relating to the
cost of natural resources, permits, and leases
provided to the Alaska Gasline Development
Corporation; relating to procurement by the Alaska
Gasline Development Corporation; relating to the
review by the Regulatory Commission of Alaska of
natural gas transportation contracts; relating to the
regulation by the Regulatory Commission of Alaska of
an in-state natural gas pipeline project developed by
the Alaska Gasline Development Corporation; relating
to the regulation by the Regulatory Commission of
Alaska of an in-state natural gas pipeline that
provides transportation by contract carriage; relating
to the Alaska Natural Gas Development Authority;
relating to the procurement of certain services by the
Alaska Natural Gas Development Authority; exempting
property of a project developed by the Alaska Gasline
Development Corporation from property taxes before the
commencement of commercial operations; and providing
for an effective date."
3:22:43 PM
Representative Costello MOVED to ADOPT the proposed
Committee Substitute for HB 4, Work Draft 28-LS0021\R,
(Bullock, 3/27/13).
Co-Chair Stoltze OBJECTED for discussion.
JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, addressed
the changes in the CS. He turned to page 4, line 21.
Vice-Chair Neuman asked for a copy of the changes.
Mr. Michel agreed. He began on page 4, line 21 and relayed
that the CS changed the governing body from 5 members to 5
public members and 2 department commissioners designated by
the governor. Line 24 had been changed from "members" to
"public members." Board terms had been changed from 7 years
to 5 years (line 30). Additionally, board members would
serve at the pleasure of the governor instead of being
removed for cause.
3:25:24 PM
Mr. Michel relayed that because the board had been
increased to 7 members language had been increased from a
vote of 3 members up to 4 members who were required to
approve the sale and issuance of bonds (page 5, line 27).
Language on page 6, lines 25 and 26 had been changed from
"the corporation shall retain an attorney" to "the
corporation shall retain legal counsel"; the change had
been made to allow the corporation to hire a law firm or
more than one attorney. Additionally, the term "suit" had
been changed to "litigation" on line 26. He turned to page
9, line 26 where the term "shall" had been changed to "may"
in the sentence: "...the corporation may finance,
construct, or operate the natural gas pipeline as
necessary." He pointed to the concern that the term "shall"
was overly prescriptive and would not give the Alaska
Gasline Development Corporation (AGDC) a choice in
development decisions (e.g. to determine whether a
community even wanted a pipeline).
Mr. Michel moved to page 10, lines 4 and 5. The words
"fees, rental rates, and other charges" had been inserted
for clarity per a Department of Law (DOL) recommendation.
He pointed to page 11, lines 17 and 19 and explained that
the bill maintained language that Department of Natural
Resources shall grant a right-of-way lease if AGDC agreed
to the contract carrier covenants in AS 38.35.121 and added
common carrier covenants in AS 38.35.120. He detailed that
AGDC wanted the flexibility to elect or provide service as
a common or contract carrier for future pipelines. The word
"containing" had been inserted in the sentence: "The
portions of records containing information..."(Page 12,
line 5). The statute on page 12, line 6 had been changed
from AS 40.25.110 to AS 45.25 to exempt the corporation
from the Public Records Act (the previous language had
exempted the corporation from a portion of the act). The
language "if disclosed, could cause commercial or
competitive harm" were inserted on page 12, line 19. The
words "except for information that is confidential under
another provision of state law or under a federal law or
regulation" were inserted on page 12, lines 21 and 22. He
noted that minor conforming changes to AS 40.25 had been
removed.
3:30:23 PM
Mr. Michel communicated that the language "upon request
under AS 40.25" had been inserted on page 12, line 27.
Representative Gara asked for clarification on the page
number being discussed.
Mr. Michel replied that he was addressing page 12. He
reiterated that the language "upon request under AS 40.25"
had been inserted on page 12, line 27. The words "another
provision of state law, a federal law or regulation" were
inserted following language "disclosure of the information
will violate" on page 13, lines 1 and 2. The language "the
corporation shall determine fund management and may
contract with the Department of Revenue for fund
management" was inserted on page 13, lines 6 and 7; the
language provided AGDC the option for DOR or another entity
to manage the funds. The language "for the cost of managing
the fund" was inserted on page 13, lines 11 and 12; the
addition provided that the fund management cost would come
out of the fund.
3:32:14 PM
Mr. Michel turned to page 15, lines 13 and 14, which placed
AGDC under the Executive Budget Act related to its
operating budget and the corporation's subsidiaries. He
detailed that the organization's ability to bond and other
similar items were not subject to the act. A section from
the prior bill under Article 2 had been removed related to
federal taxation of interest on bonds per a DOR
recommendation. The department believed the state should
not provide investors with reason to think the state may
step in and repay the debt in the event that debt was
declared taxable; especially in light of current federal
discussions related to eliminating municipal tax
exemptions. He relayed that the word "private", which had
fallen in between the words "the" and "sale" had been
removed. He expounded that DOL had recommended that AGDC
should have the ability to retain an independent financial
advisor with any bond sale.
Mr. Michel moved to page 20 and explained that the bill did
not include the term "moral obligation," but the moral
obligation was derived by the formation of a capital
reserve fund. He read new language on lines 7 through 13:
The corporation may not establish a capital reserve
fund as described in this section except as expressly
authorized by law. The enactment of this section does
not express that authorization. Upon enactment of a
law expressly authorizing the establishment of a
capital reserve fund described in this section and for
the purpose of securing one or more issues of its
obligations, the corporation may establish one or more
special funds, called "capital reserve funds," and
shall pay into those capital reserve funds.
Mr. Michel expounded that the language provided that a
capital reserve fund would not be created until AGDC asked
for permission from the legislature. A drafting error had
been corrected on page 21, line 27 where the word "of" was
removed from the language "under of this chapter" to read
"under this chapter." On page 24, line 22 the language "a
comparison of the corporation's performance with the goals
of the corporation," was removed following the word
"auditor."
3:36:51 PM
Representative Munoz asked for the change on page 24. Mr.
Michel replied that language had been removed from lines 21
and 22. He noted that a copy of all the changes would be
provided to committee members.
Mr. Michel moved to page 38 related to the Regulatory
Commission of Alaska (RCA). The language on lines 8 through
11 had previously stated that the RCA could investigate
disputes related to a pipeline's open season; the language
had been changed to read:
...to resolve the dispute, the commission may order an
expansion of an in-state natural gas pipeline or order
an open season under the terms provided for an
expansion or open season in this chapter or AS
38.35.121(a)(4) and (c).
Mr. Michel addressed page 39, lines 5 and 6 that read
"order an expansion of an in-state natural gas pipeline or
order an open season under the terms provided for an
expansion or open season in this chapter." Language had
been inserted on lines 7 through 17 per a DOL
recommendation, which allowed the RCA to extend timelines
up to 90 days with consent of all parties for one-time only
for good cause and written order; the provision did not
apply to a precedent agreement filed before the issuance of
a certificate, consideration of an application for a
contract carriage certificate or an initial recourse
tariff. He moved to page 41, line 20 where the words "but
not before an initial recourse tariff is approved" had been
inserted. He elaborated that the language made the intent
explicit that a pipeline would need an RCA approved initial
recourse tariff prior to entering into a presubscription
agreement with shippers.
3:39:55 PM
Mr. Michel moved to page 42, line 6 where the words "do not
include" had been inserted per a DOL recommendation. On
lines 11 and 12 the words "and of uncommitted firm
transportation capacity" had been inserted. The word
"service" was inserted to read "firm transportation service
agreement" on page 43, line 5. The word "approved" was
inserted on page 43, lines 8 and 9 in front of the words
"recourse tariff." Additionally, the word "approved" had
been inserted in front of the words "precedent agreement"
on line 14.
Co-Chair Stoltze remarked on how the amendment process
would be addressed.
3:42:39 PM
Mr. Michel turned to page 44, lines 20 and 21 where the
language "that the proposed service is not required by
public convenience and necessity" was added. He elaborated
that the language clarified that an applicant other than
AGDC was fit, willing, and able and that the service was in
the public convenience and necessity.
Representative Gara asked Mr. Michel to repeat the change.
Mr. Michel repeated the change to page 44, lines 20 and 21.
He directed attention to page 46 lines 15 and 22 where the
number "90" had replaced the number "30" to read "at least
90 days." The words "depreciable life" replaced the words
"economic life" on page 47, line 1. Section (c) had been
inserted on page 47, lines 5 through 14.
Co-Chair Stoltze asked for clarification on the change to
page 47, line 1. He believed the change should be from
"depreciation life" to "depreciable life." Mr. Michel
affirmed.
Representative Gara asked if everything in Section (c) had
been added on page 47. Mr. Michel responded in the
affirmative.
Mr. Michel pointed to page 47 line 17 where the language
"or violates a provision of this chapter" had been added.
On page 47, line 19 the language had been changed from a
30-day notice period to read "90-day notice period, and the
period of suspension."
Co-Chair Stoltze noted that the issue would be thoroughly
discussed by the committee.
Mr. Michel continued on page 47, lines 24 and 25 where the
clarifying language "after construction or an expansion of
the pipeline, and at any time that a carrier files for a
revised recourse rate" had been added. Language had been
inserted on page 48, lines 5 through 7 reading "except that
the depreciable life may be adjusted in accordance with the
time period between the approval of the recourse tariff and
the approval of the revised recourse tariff." He moved to
page 54, lines 13 and 19. He explained that originally the
bill defined a pipeline as a line that transports natural
gas; the language "or will transport natural gas" had been
added. He pointed to page 54, line 21, which stated that
the definition of natural gas pipeline had the meaning
given under AS 31.25.390. He elaborated that previously the
definition of a natural gas pipeline had been moved from AS
38.34 to AS 31.25.390 to conform to other portions of the
bill. The language "including a presubscription agreement"
had been added on page 54, lines 22 and 23.
3:48:56 PM
Co-Chair Stoltze noted that the changes were thorough
because of the important nature of the bill. He WITHDREW
his OBJECTION to the CS. There being NO further OBJECTION,
the workdraft was ADOPTED. He asked the bill sponsor to
provide comment on any concerns related to the CS.
REPRESENTATIVE MIKE HAWKER, SPONSOR, voiced agreement with
most of the changes. He believed there were several areas
that would have counterproductive consequences and may be
detrimental to the progress of a pipeline. He asked his
staff to highlight the concerns.
RENA DELBRIDGE, STAFF, REPRESENTATIVE MIKE HAWKER, spoke to
inadvertent consequences the CS would have for AGDC related
to confidentiality language and within the RCA framework
that could delay timelines and the project significantly.
She stressed that a 6-month delay of the project cost an
additional $100 million in inflation. She believed
continued discussions on the items with DOL could lead to
some resolutions with the committee.
Co-Chair Stoltze believed there were a couple of policy and
technical issues that would require compromise.
Representative Hawker surmised that the issues primarily
related to unintended consequences rather than policy
differentials. He did not believe there were irreconcilable
differences.
3:53:45 PM
Co-Chair Stoltze pointed to the complexity of the issue.
Representative Hawker communicated willingness to work with
the committee.
Co-Chair Stoltze relayed that representatives from the
administration, the sponsor, and AGDC would be available to
vocalize an agreement on the issue.
Vice-Chair Neuman wondered what would happen if an open
season was unsuccessful.
Ms. Delbridge replied that there was no explicit provision
that defined what would occur if an open season was
unsuccessful. She elaborated that AGDC had no authority to
move forward without a successful open season because
commitments from shippers were needed to fund a project.
She explained that AGDC would continue to retain assets if
an open season was unsuccessful; however, a disposition of
assets may not be appropriate at the time given that the
corporation was designed to survive the initial pipeline
and to consider other pipelines.
3:56:35 PM
Representative Holmes believed the state would have rights
to the assets because of its ownership of AGDC. She asked
for verification that the state could choose to take the
assets back at any time.
Ms. Delbridge answered that she would obtain legal advice
from AGDC's legal counsel and DOL related to the assets.
She confirmed that the legislature would have the ability
to terminate the corporation at any time.
Representative Holmes believed that any funds that were not
subject to a moral obligation could be reappropriated by
the legislature if it chose to do so.
Representative Hawker replied in the affirmative. He
elaborated that the legislature always had dominion over
the corporation; however, the state had an obligation to
live up to any contractual agreements. He detailed if an
open season was unsuccessful there would be no contracts or
further obligation; however, the bill was crafted to create
tools that were not limited by scope and potential benefit
to the state in the building of one pipeline. He expounded
that AGDC was allowed to look at projects that would
provide gas to other regions of the state.
3:58:57 PM
Representative Gara asked when it would be appropriate to
ask questions about the bill that were unrelated to the CS.
Co-Chair Stoltze responded that there would be an
opportunity to discuss the bill at a later time.
Representative Gara asked when the bill would be heard
again. Co-Chair Stoltze replied that the bill would be
heard the following day. He remarked that he was working to
balance the Speaker's desire for the bill to move forward,
while providing the appropriate due diligence and process
in committee.
Representative Hawker offered to speak with any committee
members to help clarify any questions.
Co-Chair Stoltze noted the importance of due diligence.
Representative Gara noted that Co-Chair Austerman and
Representative Edgmon were absent. He wondered when
amendments should be ready. He opined that the following
Monday would be easier. Co-Chair Stoltze hoped to have
amendments by the following afternoon. He noted that
Representative Thompson would be gone the following day as
well. He believed the issue would be heard on Monday.
Representative Thompson remarked that he had made
arrangements to be available the following day.
Representative Hawker appreciated the committee's time.
HB 4 was HEARD and HELD in committee for further
consideration.
4:03:57 PM
AT EASE
4:12:46 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 23 2012 Gov TIFIA Letter of Interest (2).pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 Common Myths of Knik Arm Crossing.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 Importance of Legislation for TIFIA Loan.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 KABATA Fact Slides.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 KABATA Summary of Legislation.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 Sponsor Statement.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 Testimony Opposition.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB 23 Memo to House Finance Kenworthy.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB23-KABATA House Finance Presentation (PDF).pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB23 Traffic Safety Corridors.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB23 Pt. MacKenzie Townsite.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| HB23 Answers to Recents Comments.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 |
| CS WORKDRAFT HB 4 FIN R.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 4 |
| HB 23 DOR Letter SB 80 dated 3-30-11.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 23 SB 80 |
| HB4-RCAbackground.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 4 |
| HB 112 Support.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 112 |
| HB 112 Letters-Opposition Pkt 1.pdf |
HFIN 3/28/2013 1:30:00 PM |
HB 112 |