Legislature(2013 - 2014)HOUSE FINANCE 519
03/29/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB4 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | 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."
2:01:14 PM
Co-Chair Stoltze noted that the bill before the committee
had one amendment. He noted that the revised amendment
deleted a reference to the "days of notification."
Co-Chair Stoltze MOVED Amendment One 28-LS0021\R.8,
Bullock, 3/29/13. Representative Holmes OBJECTED for
discussion.
Page 4, line 23, following "state":
Insert ", except that the commissioner of natural
resources and the commissioner of revenue may not be
designated to serve on the board unless the project
for which a license is issued under AS 43.90 has been
abandoned or is no longer receiving the inducements in
AS 43.90.110(a) or the commissioner of natural
resources and the commissioner of revenue are no
longer signatories on a valid contract under
AS 43.90."
Page 12, lines 14 - 20:
Delete "The conduct of and results from field
studies and other technical information; trade
secrets; and information that discloses the
particulars of a business or the affairs of a private
enterprise, investor, advisor, consultant, counsel, or
manager developed or obtained by the corporation
relating to the development, financing, construction,
or operation of an in-state natural gas pipeline
project by the corporation that, if disclosed, could
cause commercial or competitive harm or damage are
confidential and not subject to AS 40.25.110."
Insert "Information and trade secrets of the
corporation are confidential and not subject to
AS 40.25 if the corporation determines that disclosure
would cause commercial or competitive harm or damage
to the corporation. Information that discloses the
particulars of a business or the affairs of a private
enterprise, investor, advisor, consultant, counsel, or
manager that is developed or obtained by the
corporation and related to the development, financing,
construction, or operation of an in-state natural gas
pipeline project by the corporation is confidential
and not subject to AS 40.25."
Page 38, line 29, following "state;":
Insert "and"
Page 39, lines 4 - 6:
Delete "; and
(7) 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"
Page 39, line 17:
Delete "90"
Insert "30"
Page 43, line 14:
Delete "an approved"
Insert "a"
Page 43, line 15, following "parties":
Insert ", and the formation of the precedent
agreement or related contract was not affected by
unlawful market activity or unfair dealing as
described in (b)(1) of this section"
JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained
the revised amendment. He began with page 4, line 23
following the word "state" insert, "except that the
commissioner of natural resources and the commissioner of
revenue may not be designated to serve on the board unless
the project for which a license is issued under AS 43.90
has been abandoned or is no longer receiving the inducement
under or the commissioner of natural resources and the
commissioner of revenue are no longer signatories on a
valid contract under AS 43.90."
2:04:36 PM
Mr. Michel noted the next change shown on page 12, lines
14-20. He stated that the language was deleted beginning on
line 14, page 12. New language was inserted stating
"information and trade secrets of the corporation were
confidential and not subject to AS 40.25 if the corporation
determined that disclosure would cause commercial or
competitive harm or damage to the corporation." Information
that disclosed the particulars of a business or the affairs
of a private enterprise, investor, advisor, consultant
council or manager that was developed or obtained by the
corporation and related to the development, financing,
construction or operation of an instate natural gas
pipeline project by the corporation was confidential and
not subject to AS 40.25.
Mr. Michel discussed the next change on page 38, line 29
including a drafting correction; insert the word "and." The
next change seen on page 39 lines 4-6 deleted "and" and
inserted "order and expansion of an instate natural gas
pipeline or an open season under the terms provided for an
expansion or open season in this chapter."
Representative Holmes understood that similar language was
added on page 38 lines 9-11. She assumed that the language
was deleted. Mr. Michel concurred and apologized. She noted
that the language was also included on page 39 of the CS,
lines 5 and 6. She assumed that the language on line 39 was
eliminated because it was duplicative.
CORY MILLS, LEGISLATIVE LIAISON, DEPARTMENT OF LAW, agreed
with Representative Holmes' assessment.
Mr. Michel continued with page 39, line 17 where the number
90 was deleted and the number 30 was inserted. He noted
that page 43 the words "an approved" were removed and the
letter "a" was inserted.
2:07:43 PM
Mr. Michel concluded with page 43, line 15, following
"parties" the language "and the formation of the precedent
agreement or related contract was not affected by unlawful
market activity or unfair dealing as described in (b)(1) of
this section" was inserted.
2:08:10 PM
Representative Gara asked about the amendment allowing for
an expansion of the gas pipeline and its potential conflict
with the Alaska Gasline Inducement Act (AGIA) mandate that
the state not exceed a 0.5 BCF pipeline.
Ms. Mills recommended posing the question to Bonnie Harris
who served as an advisor to AGIA.
2:08:51 PM
BONNIE HARRIS, CIVIL DIVISION, OIL, GAS AND MINING SECTION,
DEPARTMENT OF LAW (via teleconference), stated that the
language regarding expansion of a pipeline was intended to
bind non-competition terms with AGIA's limitations. She
noted that clarifying language might be indicated, but she
opined that the CS expressed the intent correctly.
Representative Gara recalled a discussion regarding the
extension of the Regulatory Commission of Alaska (RCA). The
discussion focused on potential that a party might withhold
information, preventing the RCA from issuing their decision
in a timely manner.
Ms. Mills believed that the language could be found in
42.05 of the CS. She deferred the question to Mr. Goering
from the RCA.
2:10:59 PM
STUART GOERING, CIVIL DIVISION, COMMERCIAL AND FAIR
BUSINESS SECTION, DEPARTMENT OF LAW (via teleconference),
stated that the information sought by Representative Gara
was found in AS 42.05.433, which clarified the ability to
extend time for review of "related contracts" if the party
submitting them had not furnished adequate information. He
mentioned a provision in the contract carriage certificate
language in AS 42.08.330(b), page 44 that allowed the
commission to extend the review period for the duration of
the delay caused by the failure of the applicant to provide
additional information reasonably required by the
commission.
Representative Gara asked about page 44, line 21. He asked
if the language in the CS required an RCA finding that the
pipeline be "in the public convenience and necessity."
2:13:25 PM
Mr. Goering stated yes. The finding was required for
applicants other than Alaska Gasline Development
Corporation (AGDC). He noted that AS 42.08.020, beginning
on page 36 of the CS allowed that if AGDC was the
applicant, the public convenience and necessity required
the pipeline. He stated that AS 42.08.330 applied to all
other applicants. The applicant must demonstrate public
convenience and necessity in order to receive the
certificate.
Representative Gara posed hypothetically that AGDC retained
a role but contracted with another company to build and
operate a pipeline. He asked which provision would apply in
the situation.
Mr. Goering replied that the exact structure of the
business would determine the answer. He explained that AS
42.08.020 would apply if AGDC was the applicant for the
certificate with a hypothetical contract to operate the
pipeline. If another entity applied for the certificate, AS
42.08.330 would apply and the application would require a
showing that the proposed service was in the public
convenience and necessity.
Representative Gara asked about the CS. He understood that
an AGDC pipeline was eligible for two possible sources of
funds: the reserve fund and bonding. He wondered if money
from the reserve fund was not subject to the moral
obligation of the state, but bonding would incur state
responsibility for moral obligation.
2:16:31 PM
Co-Chair Stoltze stated that he would revisit the question
following adoption of the amendment.
Representative Holmes addressed language on page 38, lines
9-11 regarding an RCA expansion. She noted that
Representative Gara had inquired whether the expansion was
constrained by the AGIA license. She believed that any
expansion would have to be in accordance with the chapter.
She added that AS 42.08.300 limited any expansion in
conflict with AGIA.
2:18:12 PM
Representative Holmes WITHDREW her OBJECTION. Amendment one
was ADOPTED.
Co-Chair Stoltze noted a discussion about legislative
approval. He did not want legislative approval to provide
hindrance or handicap. He hoped that legislative approval
could be triggered by events. He requested that proposed
amendments address constitutional or legislative
prerogatives.
2:20:45 PM
Representative Holmes asked about legislative oversight and
prerogatives regarding the assets of AGDC. She noted that
AGDC would be a subsidiary of the state and its assets
would belong to the state. She wondered about the process
if AGDC had a failed open season. Would the legislature
have ownership of AGDC's assets if an open season failed?
How would the state regulate AGDC if an open season failed?
JOE DUBLER, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
ALASKA GASLINE DEVELOPMENT CORPORATION AND DIRECTOR OF
FINANCE, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF
REVENUE, replied that assets belonging to AGDC and the
Alaska Housing Finance Corporation (AHFC) also belonged to
the state. The boards of both entities were staffed with
commissioners and public members to allow the assets to be
managed in accordance with the state's desires. In the
event of an open season, all data and designs would be
property of the state. Funds would be transferred back to
the state after the corporation was dissolved.
Representative Gara understood that AGDC was governed by a
board that would serve with two commissioners.
Mr. Dubler agreed and saw board approval as a primary
control of the corporation.
2:24:27 PM
Representative Gara asked about a requirement for
reimbursement for transferring the state's work product to
a private entity.
Mr. Dubler did not recall a requirement of that nature. He
did recall that the board would have a fiduciary
responsibility to the state to safeguard their assets. He
noted that AHFC and AIDEA operated in a similar fashion.
2:26:30 PM
Representative Gara discussed the moral obligation of the
state. He wondered if the bonds would be considered a moral
obligation if another, better project emerged.
Mr. Dubler replied no. He explained that the construction
period would be financed with different debt than the long-
term bonds taken out for a construction loan. The
construction lenders demand a high rate because of the
completion risk assumed.
Representative Gara asked about moral obligation for AGDC
financing.
Mr. Dubler replied that the state was not responsible for a
moral obligation of AGDC. States often established separate
corporations for housing agencies and student loan
corporations to eliminate possibilities for general or
moral obligations unless chosen so by the state. He stated
that AGDC would be a stand-alone corporation in Alaska. The
state was not responsible for the debt of the subsidiary.
Representative Gara was surprised and comforted by the
information. He asked legal counsel's opinion on the
matter.
2:29:50 PM
Ms. Mills stated that the issue had been vetted. The
administration opposed the Capital Reserve Fund initially
because of its creation of a moral obligation. She agreed
with the statement made by Mr. Dubler regarding the state's
lack of moral obligation.
Representative Gara requested a letter from the Attorney
General assuring the committee that the legislature was not
pledging the moral obligation if AGDC were to bond.
Ms. Mills offered to provide the requested letter.
2:31:22 PM
Representative Costello asked about the gasline project in
relation to Susitna.
Mr. Dubler viewed the two projects as complimentary. The
Susitna hydro project provided electricity for the
railbelt. The natural gas would provide an alternative to
electricity when needed. He mentioned a schedule of
projected gas flow and noted that some demands would not be
met. Susitna would provide the remainder of the energy
needs for the region.
Co-Chair Stoltze understood that the Susitna project was
evolving.
Mr. Dubler commented that the projections for growth in the
railbelt led to anticipation of a shortfall in 2025 for
total energy usage in the region. He reiterated that the
Susitna project was complimentary to the gasline project.
Co-Chair Stoltze pointed out support for the instate
gasline from entities opposing the Susitna project.
2:34:54 PM
Representative Thompson pointed out that Fairbanks was part
of the railbelt.
Mr. Dubler appreciated the clarification. He was unsure of
the exact definition of "railbelt."
Representative Gara asked if the reserve fund was required
by AGDC to bond.
Mr. Dubler believed that AGDC could bond without the
reserve fund. The reserve fund provided an additional tool
by creating the moral obligation. He stated that AGDC would
revisit the legislature with a request if a reserve fund
was deemed necessary. He pointed out that revenue bonds
would provide typical financing for the project.
Co-Chair Stoltze recognized former Representative Gene
Kubina for providing bagels to the committee.
Representative Mike Hawker appreciated that the committee
continued to hear the bill.
2:38:43 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 4 Amendment Stoltze R version 3-29-13.pdf |
HFIN 3/29/2013 1:30:00 PM |
HB 4 |