Legislature(2023 - 2024)ADAMS 519
04/30/2024 10:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB122 | |
| HB169 | |
| HB234 | |
| HB55 | |
| HB145 | |
| Adjourn | |
| HB55 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 187 | TELECONFERENCED | |
| + | HB 234 | TELECONFERENCED | |
| + | HB 55 | TELECONFERENCED | |
| += | HB 145 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 169 | TELECONFERENCED | |
| += | HB 122 | TELECONFERENCED | |
HOUSE BILL NO. 122
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance the replacement of the
Alaska Railroad Corporation's passenger dock and
related terminal facility in Seward, Alaska; and
providing for an effective date."
1:01:13 PM
RANDY RUARO, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (via teleconference),
relayed that Alaska Industrial Development and Export
Authority (AIDEA) had issued over $1.3 billion in bonds in
the most recent history. He reported that AIDEA had no
defaults and the information was detailed on pages 29 to 35
of the 2023-2024 Alaska debt report. He stated that the
agency had a good track record of issuing bonds and
operated through the Open Meetings Act; the public was
given notice and opportunity to be heard on significant
actions such as the issuance of bonds. He relayed that the
agency had a good track record of supporting resource
development. He highlighted the Red Dog Mine as AIDEA's
standout project, which had produced billions of dollars in
economic value for Alaskans from corporate income tax to
Alaska Native Claims Settlement Act (ANCSA) 7(i) and 7(j)
funds flowing out to every Alaska Native shareholder in the
state.
Mr. Ruaro addressed Section 3 of HB 122, the amendment that
would give AIDEA $300 million in bonding authority for
projects related to critical minerals and rare earth. He
stated it was AIDEA's intent to be ready to work with a
federal program at the U.S. Department of Energy (DOE)
where $290 billion in loans and loan guarantees had been
made available through the DOE Loan Program Office (LPO).
He believed the funds were only available for two years,
but they were very flexible and could be used for rare
earth critical mineral access roads and energy sources
(including renewable energy). The agency hoped it would be
able to move forward with the bonding authority. He stated
that no bonds would be issued without a public process and
no bonds or projects would be accepted without going
through the agency's thorough regulatory due diligence
process. He noted it was not infrequent for AIDEA to spend
months on due diligence for projects. He urged the
committee to support the language in Section 3 of the bill.
1:04:25 PM
Co-Chair Foster noted that the committee would likely work
into the evening and on Saturday.
Representative Hannan asked if a couple of the language
elements in Section 3 were standard when AIDEA asked for
bonding. She read language in Section 3(c) and (d)
respectively: "bonds authorized may not be considered in
calculating the authority's bonding limitation for a 12-
month period" and "this section constitutes legislative
approval."
Mr. Ruaro answered that he was unsure whether the language
was standard. He explained that the language separated the
specific purpose related to critical minerals and rare
earth from AIDEA's other statutory bonding authority that
was much more general. He elaborated that the language was
an effort to keep the two things separate. He relayed that
in 2014, SB 99 was a similar bill that approved bonding
authority for Bokan Mountain and Niblack mine. He stated
that the language was not uncommon.
Representative Hannan asked if the two projects mentioned
by Mr. Ruaro had already been approved and bonded for or if
AIDEA would think to bond for them under the $300 million.
Mr. Ruaro answered that the Niblack mine was more of a
copper/silver mine. The Bokan Mountain mine was rare earth
and would be eligible for funding under the bonding
authority or the SB 99 bonding authority, which he believed
was still on the books.
Representative Hannan noted that the project example given
by Mr. Ruaro was specific and she assumed it had a specific
bonding level. She stated the language in the bill giving
AIDEA blanket authority was giving her heartburn with no
context except for rare earth minerals. She remarked
exploration did not always result in the desired outcome.
She asked if there was a reason the bill language did not
specify the specific projects and needed bonding authority
for each.
1:07:52 PM
Mr. Ruaro replied that due to the limited life of the
federal matching funds, there was a pressure to have
generic authority available if needed. There were currently
no specific projects that had gone through AIDEA's due
diligence process and were recommended for bonding. The
inclusion of the language was an effort to have the bonding
authority in hand in order to avoid missing the expiration
date of the federal funding. He added it was similar to
some broad authority AIDEA had for energy and energy
related projects such as transmission lines that were not
defined by project and amount.
Representative Hannan wondered why an AIDEA bond bill had
not been introduced a year earlier to include a request and
take advantage of federal funding instead of trying to
piggyback on top of a small bonding and narrow project
bill.
Mr. Ruaro responded that AIDEA had previously been trying
to qualify as a federal state energy financing institution
(SEFI) and it had now qualified. He detailed that AIDEA was
one of 13 entities in the nation that had the foresight to
do so. He elaborated that the status gave AIDEA an extra
leg up in accessing the federal funding.
1:09:59 PM
Representative Josephson asked Mr. Ruaro if he believed
there would be no need for further legislative review of
the bond opportunity included in the amended bill.
Mr. Ruaro replied that he believed there was always an
opportunity for legislative review and consideration
through the Legislative Budget and Audit Committee (LB&A);
however, there would not be a requirement for a vote.
Representative Josephson remarked that Mr. Ruaro and AIDEA
had talked about public transparency and comment. He had
reviewed AIDEA statutes, and it was his understanding that
AIDEA only needed to offer public testimony for one hour.
He highlighted the contrast between the extensive
legislative public testimony process compared to the AIDEA
process. He asked if his understanding was accurate.
Mr. Ruaro answered that he was unfamiliar with that
regulation or statute. He personally believed the better
policy was to take the time necessary for full public
comment.
Representative Galvin was interested in more detail about
AIDEA's full public process. She had received public
comments comparing the provision in the bill unfavorably to
past projects such as Bokan Mountain and the Niblack mine.
She remarked there had been a lot of state support for the
two projects, but they appeared to be abandoned or stalled.
She asked for an update on the investments and if Mr. Ruaro
could differentiate them from the proposal in the bill.
Mr. Ruaro responded that it was his understanding that the
Bokan Mountain project was focused on developing a
separation technique that would allow for the economic
cost-effective separation of the rare earth minerals from
other minerals. He relayed that the work was underway, but
until the technology was sorted out, the project was not in
a position to move forward. He was not certain about the
status of the Niblack project other than that the entity
holding the mining patents was looking for a larger
investor.
1:13:35 PM
Representative Galvin asked for verification that any
potential project that may result from the bill would still
maintain a full public process and due diligence. She
referenced Mr. Ruaro's statement that there was a two-year
window for the federal funding. She asked about the
projects AIDEA anticipated that would potentially utilize
the funding if there would be time for the public process
and due diligence.
Mr. Ruaro answered that AIDEA was hopeful it could play a
role in the Graphite One project. He stated that graphite
was a significant rare earth critical mineral and AIDEA was
hoping to play a role in the financing, keep jobs in state,
and develop processing capabilities. There were a number of
other projects. He believed the Red Dog Mine had a mixture
of rare earth and critical minerals in its tailings. He
thought the Ambler mining district project had cobalt. He
stated it was common for mines in Alaska to often have some
elements of rare earth. He remarked that based on a USGS
report, the Pogo Mine had some rare earth enriched in its
ore.
Representative Galvin was familiar with all of the projects
mentioned. She asked if Mr. Ruaro was saying that the
public process and due diligence had already taken place to
some extent, and it may not be a hurdle or concern.
Mr. Ruaro asked for a repeat of the question.
Representative Galvin complied.
1:16:53 PM
Mr. Ruaro responded that he had been referring to the more
formal due diligence process AIDEA put projects through,
which was lengthy and took months. He relayed that the
process had not been completed for any rare earth mines or
mineral projects. The public process he was referring to
was the post [due diligence] decision by staff to forward a
project to the full board for consideration and comment. He
explained that the board meetings were publicly noticed and
there was an opportunity for public comment and board
action.
Representative Cronk asked if there was any reason the
committee should not support the bonding authority besides
the idea of not wanting to develop resources in Alaska.
Mr. Ruaro believed that based on AIDEA's history of over
$1.3 billion in bonding, no defaults, and its due diligence
process formalized in regulation 3 AAC, the legislature
could entrust AIDEA with the authority. He elaborated that
if the legislature had any concerns along the way, LB&A
provided an opportunity for oversight and review.
Representative Cronk asked how the bonding authority could
help the state with any energy issues it may have.
Mr. Ruaro replied that the authority was broad enough to
extend to transmission lines and renewable energy projects
including wind turbines. He stated there may be
opportunities for a source of renewable energy to be used
at a mine that was reducing the load for a nearby city or
community and potentially adding power to the grid.
1:19:40 PM
Representative Coulombe asked if AIDEA's project vetting
process included an environmental impact study (EIS).
Mr. Ruaro answered that AIDEA did not perform any
environmental permitting work, but it required a project to
be ready to go and the beneficiaries of a project to be in
a position to commit to repayment of the bonds. He
elaborated that National Environmental Policy Act (NEPA)
environmental reviews played a role in the process, but
AIDEA did not perform the review.
Representative Coulombe kept hearing that provision in the
bill gave blanket bonding authority. She highlighted the
bill language that gave AIDEA permission to issue bonds to
finance infrastructure and construction costs of
infrastructure that support the development of critical
mineral and rare earth element projects located in the
state. She recognized that it could be considered broad.
She asked for some examples of the infrastructure and
construction costs. She asked if it included roads,
buildings, or other things.
Mr. Ruaro answered it could include things like a road and
a renewable energy source such as wind turbines or
geothermal. Additionally, it could include a processing
facility, which was one of the types of facilities eligible
for the federal funding. There was a push at the federal
level to try to generate domestic supply chains to avoid
dependence on overseas sources like China. He noted that in
the past China had refused to export to countries it viewed
as being adversarial.
1:22:11 PM
Representative Josephson provided a scenario where the
legislature approved the bill as originally drafted and did
not approve Sections 2 and 3. He asked what kind of cash
reserves AIDEA currently had on hand to spend on critical
infrastructure projects.
Mr. Ruaro answered that if the bill did not pass, AIDEA
would still review critical mineral projects that came
forward and it had some resources available. He elaborated
that the bonding authority would be helpful if a larger
project came forward and AIDEA could potentially secure the
95 to 5 federal match through the DOE LPO.
Representative Tomaszewski thanked the committee for
hearing the bill. He believed the bill was important for
the state and that it would improve the economic situation,
create jobs, and bring in more tourism.
Co-Chair Foster relayed the amendment deadline was the
following day at 5:00 p.m.
HB 122 was HEARD and HELD in committee for further
consideration.
1:24:37 PM
AT EASE
1:29:06 PM
RECONVENED