Legislature(2009 - 2010)BUTROVICH 205
04/12/2010 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB369 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 369 | TELECONFERENCED | |
| + | HJR 45 | TELECONFERENCED | |
| += | HJR 49 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 369-IN-STATE PIPELINE/ MANAGER/TEAM
CO-CHAIR MCGUIRE announced HB 369 to be up for consideration.
[CSHB 369(FIN) was before the committee].
3:41:40 PM
SENATOR GARY STEVENS moved to adopt SCS CSHB 369(RES), labeled
26-LS1527\W. There were no objections and it was so ordered.
3:42:01 PM
MIKE PAWLOWSKI, aide to Senator McGuire, explained that he would
start off in Section 1 and then get back to the title. Section 1
incorporates legislative findings and purposes and used to be
found in SB 287, sponsored by Senator McGuire. The integration
actually happens on page 2, line 27, which gets to the purpose
of the act which is found in (b)(1) that gives general direction
to the Joint In-State Gasline Development Team to plan and
develop the construction of the in-state natural gas pipeline.
Language on page 3, line 1, directs the executive director of
the Alaska Housing Finance Corporation (AHFC) to oversee all
aspects of the project described within this act. Originally it
was the CEO of the AHFC and that didn't match with the statutes;
so now it's the executive director throughout the act.
3:43:07 PM
Sections 2 and 3 are new language that came from a previous
version of SB 287, the key being in Section 2 saying the
authority of AHFC is to create subsidiary corporations to carry
out the duties of this title. This is an important step for
organizational changes.
3:43:42 PM
CO-CHAIR WIELECHOWSKI joined the committee.
3:43:49 PM
CO-CHAIR MCGUIRE clarified that it's a subsidiary but it is
under the Budget Act, so the legislature has accountability.
3:44:04 PM
SENATOR WAGONER joined the committee.
MR. PAWLOWSKI said the change in Section 4 in AS 38.34.010 on
page 4, lines 2-12, established the position of in-state gasline
project coordinator. In the original bill the position that was
created was the in-state gasline project manager tasked with
actually not only coordinating expedited reviews, but also the
permitting of the project and moving it forward. In the current
version that responsibility has been split out away from what is
now called the coordinator position. Section AS 38.32.010
mirrors language that was created for the AGIA coordinator in
facilitating had coordinating between state agencies, the idea
being to separate to a degree the group that is permitting from
the group that is working with the agencies and entities that
issue those permits.
The charge for the in-state gasline coordinator on page 4, lines
13 and 14, he said carries out the provisions of AS 38.34.020.
He noted that while the CS moves the actual pipeline efforts
away from the Office of the Governor, the position of in-state
gasline coordinator is maintained within it in recognition of
the new roll of the coordinator position.
3:45:51 PM
Language on page 4, lines 30 and 31, through page 5, line 1, in
AS 38.34.030, establishes the Joint In-state Gasline Development
Team within the AHFC instead of the Office of the Governor. On
page 5, line 9, the CEO has been changed to the executive
director and on line 4. The in-state gasline development team
was changed so that it is the chairman of the board of directors
of the Alaska Railroad Corporation (ARRC) or the chairman's
designee rather than the CEO of the Corporation (in the original
version).
MR. PAWLOWSKI explained that on page 5, line 15, new language
says the development team shall also submit monthly updates on
the progress of the in-state natural gasline project to each
member of the legislature. This consistent reporting back to the
legislature was an important aspect of SB 287 that is included
in HB 369.
Under duties of the development team on page 5, lines 20-22,
language was inserted about the project being compatible not
competitive with the project described in AS 41.41, which is
ANGDA, and AS 43.90, which is AGIA. An amendment to this
language will come later.
3:47:27 PM
He said that language was added on page 8, lines 8-20, to speed
up delivery of a right-of-way to whatever group is trying to
build a pipeline came from SB 287. This was worked out
extensively with the DNR to maintain the type of public interest
issues related to a right-of-way in Title 38.35, but to waive
some of the more general applicable statutes like AS 38.05,
which is the best interest finding. Presumably with the
legislature making this decision they said this is in this is in
the state's interest and therefore, the regular permitting
process should go forward but this streamlines it a little bit.
In Section 5, page 9, lines 4-5, the term "in-state gasline
project manager" was changed to "coordinator" and puts him
within the exempt service. Sections 6-8, all on page 9, are
provisions from HB 44 that tighten up and clarify the ANGDA
authority to be able to procure gas from other regions of the
state and delivering it to other regions rather than such a
specific charge they had under the ballot initiative as it
passed. They believe that integrating the bills with ANGDA on
the team really allows them to bring that expertise and the
broader statewide vision to the in-state gas development team.
MR. PAWLOWSKI said another substantive change was on page 10,
lines 6-29, and those are transitional provisions, some of which
were taken out of SB 287; the specific transition provisions are
lines 10-18 and reflect dates. He explained that under the
current Noah Swenson work about seeking letters of intent from
buyers and sellers by February 15, to initiate letters of
interest from private pipeline companies by March 15, 2011 and
to prepare and submit to the governor and the legislature
legislation that might be necessary by December 15, so that in
the bill as originally intended the project team is coming back
with a plan by July 1, 2011, but knowing that some legislation
might be necessary to carry it out, they have asked that they
come back on December 15 so that members having received monthly
updates are prepared to actually work on legislation that might
be necessary to move the project forward.
3:50:35 PM
The final substantive change was on page 10, lines 26-29; in the
transition language that was originally in HB 369 moving the
current work from the Office of the Governor to the Joint In-
state Gasline development team they have added clarifying
language saying that if the AHFC creates a subsidiary to oversee
the gasline project that work will move to the subsidiary. It
goes back to one of the original premises of SB 287 of
separation from what could be called the mother ship.
CO-CHAIR MCGUIRE asked if intent language for looking at the
benefits of natural gas for the entire state rather than just
the Railbelt had been developed.
MR. PAWLOWSKI answered yes - on page 6, subsection (d); it was
original language from HB 369 which took a very broad statewide
view of an in-state gas project. Also subsection (f) on page 7,
lines 16-25, is a broad directive to the in-state development
group to consider, for instance, propane to Yukon River
Interior, coastal communities and transportation gas to other
locations in the state. This is the conforming changes that HB
44 (being rolled into this) brought to the table.
CO-CHAIR WIELECHOWSKI asked if this bill requires the
construction of a natural gas pipeline.
MR. PAWLOWSKI answered that he would ask the sponsor to answer
that question. He thought it was preparing a plan to deliver to
the legislature for a "go" decision.
3:53:08 PM
TOM WRIGHT, staff to Representative Chenault, sponsor of HB 369,
answered no; it's to produce a project plan.
3:53:44 PM
CO-CHAIR WIELECHOWSKI asked if the construction of this plan
come under the Executive Budget Act.
MR. WRIGHT answered yes.
CO-CHAIR WIELECHOWSKI asked if it would require a project labor
agreement (PLA).
MR. WRIGHT answered no; a PLA is not in this legislation.
CO-CHAIR WIELECHOWSKI asked if PLAs are required under the
Executive Budget Act.
MR. WRIGHT answered that he didn't know.
SENATOR HUGGINS said on page 9, line 14, language alludes to
ANGDA operating and maintaining the pipeline design and
construction and asked if that precluded a private organization
from doing the same functions.
MR. WRIGHT answered no.
CO-CHAIR MCGUIRE said one of the things she liked about the
mergers of the two bills is delivering the letters of intent.
The idea would be that a private entity would be the builder.
MR. PAWLOWSKI said the sponsor had quite strong language on page
6, line 18, that says the intent is that any project-related
assets acquired or developed be available for transfer or sale
to the institute best able to complete the project.
3:56:40 PM
DAN FAUSKE, CEO and Executive Director, Alaska Housing Finance
Corporation (AHFC), said he is excited about this bill and
bringing forth a project plan. He said he shares people's
frustration that we seem to get close and have a whole lot of
good ideas, but don't seem to take the next step. He said he
served on the AGIA team under Governor Palin and had the view
that two projects are ongoing that he hopes will continue in the
direction they are going. What has changed for Alaska is the
evidence that gas supplies are running short and that the vast
majority of the population of the state could be subjected to
some real energy concerns. He said the intent of the bill is
clearly to not interfere with those projects, but rather to look
at alternatives. He thinks things are solvable.
CO-CHAIR MCGUIRE thanked him for agreeing to head the team and
said he had done a great job. She said the legislature is here
to support his work, and that is the point of the updates.
CO-CHAIR WIELECHOWSKI said it's a great team and he has seen the
work Mr. Fauske had done in his community. How did he envision
the process working? How much time will it take out of his
position at AHFC?
MR. FAUSKE answered that he has had this discussion with his
board chairmen, and it is doable. The way his mind works is that
he simplifies things. Even though this is a very complex issue,
he thought that most of the work had probably been done, but it
needs to be organized. It will take some time, but AHFC has
great staff and he wouldn't do anything to harm that. People who
have been there for many years will continue to be in place. He
thought that this issue will come together quicker than they
imagine, because the desire to get it moving has picked up.
4:02:40 PM
CO-CHAIR WIELECHOWSKI wanted to know how he would organize his
time. Would he hire additional staff for AHFC?
MR. FAUSKE answered that this project is a priority and some of
the consultants are already on board. Once they get it organized
it will come together pretty quickly. He would not put this work
in a second position.
CO-CHAIR WIELECHOWSKI said he wasn't implying that, but he
wanted to know how the whole thing would "roll out."
MR. FAUSKE said he has already met with his AHFC staff and has
determined there is office space. They are looking at six or
seven people and maybe some admin staff. He likes to keep things
lean and mean. They would use consultants but not house them. He
said "this is a short term project."
SENATOR HUGGINS encouraged him when he brings them a solution to
the legislature to bring a couple of discards for consideration
and explain why they didn't make the cut. They expect him to be
a referee.
MR. FAUSKE said he anticipated a document with everything
explained and then an executive summary.
SENATOR STEVENS asked him to talk about the subsidiary
corporations that might be created under his direction.
MR. FAUSKE answered when he did the tobacco bonds, they created
the Northern Tobacco Securitization Appropriation, and they are
set up to do those. They also did it when the legislature
transferred around $300 million for the Alaska Permanent Fund.
They do it so a stand-alone legal entity will oversee the work
under the guise of AHFC. He anticipated that the AHFC board of
directors would also oversee the work of the subsidiary in the
board meetings.
4:08:31 PM
JOHN BINKLEY, Chairman, Alaska Railroad Corporation (ARRC),
Fairbanks, expressed thanks to her and Representative Chenault
for their efforts in coming up with a solution. He pledged his
support to make this project successful.
4:09:46 PM
CO-CHAIR MCGUIRE said the ARRC's bonding authority is there if
it is needed. She thanked both of them for putting their
personal and professional lives aside to take this project on.
On behalf of Resources Committee thanks for leadership.
MR. FAUSKE reiterated that this is a chance in a lifetime for
him and that he is anxious to get started with something this
significant.
4:11:36 PM
REPRESENTATIVE CHENAULT, sponsor of HB 369, said they have put
together a team that has Alaska's future at heart and they are
headed in the right direction. He thanked her for the work she
and her staff have done on this project.
CO-CHAIR MCGUIRE said Alaskans are looking for signs for the
future.
REPRESENTATIVE CHENAULT said this is Alaska's future and it is a
long-term fix.
4:15:10 PM
CO-CHAIR MCGUIRE said they are trying to find ways that this
potential in-state gasline would benefit all Alaskans, because
it's very important that one part of the state doesn't move
forward while other parts remain behind.
4:16:04 PM
HAROLD HEINZE, CEO, Alaska Natural Gas Development Authority
(ANGDA), said that he was excited to be part of this
collaborative process. They have created a framework for vetting
all the issues so there is some discussion to reference. He was
very pleased with having AHFC in command and control.
4:18:50 PM
He wanted to talk about how ANGDA fits into the puzzle and then
lead into HB 44. He said the ANGDA statute created a public
corporation in the state, and that part of the definition is
extremely important, because they have all believed from the
beginning that that sooner or later this project would have to
move to the private sector. And the test of the private sector's
willingness to do this or not under commercial terms is a key to
understanding whether it's a good project or whether it makes
sense or not. ANGDA has always believed the way it would happen
is in a business partnering type approach rather than in a
government to private sector solicitation. ANGDA would help
through the process in a more partnering sort of way, and he
does see that opportunity in the future.
MR. HEINZE said he was pleased to see that HB 44 has been
incorporated into HB 369. It is critical to ANGDA that it passes
and he is a little more urgent about it this year than last. The
reasons are because ANGDA has been trying to deal with the
shorter term issues that face Alaska. If these issues are not
dealt with in the next months, a lot opportunities for the in-
state will be lost. So, he is looking for positive ways for the
state to intervene to help things along; in particular, the
electric utilities face tremendous problems in terms of
decisions they have to make this summer - how they are going to
get gas and where they are going. He is pleased to see that some
contracts have been submitted to the RCA, but next winter's
deliverability issues have to be addressed.
He said ANGDA has been working very hard on all those issues.
The clarifying language is absolutely essential so that ANGDA
can continue that work. "Frankly, because of the need I have
stuck my neck out," he said, and he is probably beyond the exact
letter of his authorities - certainly as far as issuing bonds.
If the language doesn't happen he has to rethink what he is
doing in Cook Inlet and probably back away.
The other project that is important to ANGDA, Mr. Heinze said,
is the North Slope propane project and that impacts everybody
outside the Railbelt. That project is probably within his
authority, but at best it will be commercially challenged
project. For ANGDA to participate financially in that, they need
clear authority and clear support from the legislature. He urged
that they give the HB 44 compliments of HB 369 full
consideration, because they form a key piece to set up the
decisions the legislature will face next year as a result of the
work and plan that is brought back to them.
CO-CHAIR WIELECHOWSKI asked how the interaction between the
Joint In-State Gasline Development Team and ANGDA will work;
specifically page 5, lines 18-25, that says the in-state gasline
team shall produce a project plan for the development of an in-
state natural gas pipeline that is compatible but not
competitive with the project described and authorized by AS
41.41, the ANGDA statute. AS 41.41 says ANGDA's purpose is to
design and construct a pipeline system. Would he continue
developing his own pipeline system?
MR. HEINZE answered that he understood the language was
referring to the fact that the focus of this bill and setting up
this team is clearly on the in-state gas delivery system
basically North Slope to Cook Inlet to Valdez, something in the
range of a 24-inch diameter line. AS 41.41, when it passed, had
a part in the uncodified law that specified "a project that
ANGDA was to look at" and they were told to start doing. But
that didn't happen because of a number of things, lack of
funding being one. Basically, that was a 2 bcf/d project
delivering gas to Valdez for LNG and a spur line off that
project delivering gas into the Cook Inlet area. As he reads
this statute, that is one of the things that is on the table; it
may or may not be the right thing. It also puts the AGIA
pipeline on the other side of what they are working on. The
intent is to recognize that all these ideas have a high level of
compatibility.
4:27:39 PM
At ease for an unannounced fire drill.
4:44:52 PM
CO-CHAIR MCGUIRE called the meeting back to order at 4:44 p.m.
FRANK RICHARDS, Deputy Commissioner, Department of
Transportation and Public Facilities, said the department had
been working with the former in-state gasline team under Harry
Noah and now under Bob Swenson and they will continue those
efforts. He said:
What the department brings - Dan Fauske had torpedoes
- we will bring our artillery. We are owners of
Howitzers and so we have the active ammunition for
that. So we are ready to push forward in support of
Senator Huggins' desire for land-based armaments.
CO-CHAIR MCGUIRE said they were commenting during the fire drill
that the department had already started collecting data in
recognizing the accelerated timelines, and she wanted to thank
him for that and said they look forward to the DOTPF's
participation on the team.
MR. RICHARDS said they have applied for the right-of-way already
and will continue those efforts.
4:46:11 PM
CO-CHAIR MCGUIRE closed public testimony.
4:46:30 PM
CO-CHAIR MCGUIRE moved conceptual Amendment 1 as follows:
Amendment 1
Offered in the Senate by Senator McGuire
To SCS CSHB 369(RES), 26-LS1527\W
On page 5, line 20 following "natural gas pipeline"
delete:
that is compatible but not competitive with
the project described in and authorized by
AS 41.41 or the project described in and
authorized by AS 43.90
On page 2, following line 31, insert new subsection:
(2) to give general direction to the Joint
In-State Gasline Development Team that, to
the maximum extent practicable, the plan for
development of an in-state natural gas
pipeline required under AS 43.34.040 is
compatible but not competitive with the
projects described in AS 41.41 and AS 43.90;
and
Renumber accordingly.
She objected for an explanation.
4:46:41 PM
MR. PAWLOWSKI said Amendment 1 addresses earlier language he
identified on page 5, lines 21-22, of the current version. He
said while the intent of the bill is to maintain "bookends" in
between ANGDA's and AGIA's current project abilities there is
concern that if this "compatible/competitive language exists in
the codified law it might take options off the table - in that
particularly the Alaska Gasline Inducement Act has the .5 bcf/d
sort of cut off point for in-state gas. The idea is that if
moving this language to the findings and purpose section into
the uncodified law, as this amendment does, it still gets the
same point on the table that they want all projects working
together to move the state forward, but also frees the team to
consider every possible aspect.
CO-CHAIR MCGUIRE said this came from the Senate bill that was
meant to respond to the Governor's office. She removed her
objection and finding no further objections, Amendment 1 was
adopted.
4:48:23 PM
CO-CHAIR MCGUIRE moved conceptual Amendment 2 as follows:
Amendment 2
Offered in the Senate by Senator McGuire
To SCS CSHB 369(RES) ) 26-LS1527\W
On page 4, line 14 following "agencies" insert "or
entities"
She objected for an explanation.
MR. PAWLOWSKI explained that throughout the bill where the in-
state gasline coordinator's position is recognized, the task is
to coordinate with state agencies or entities. In this
particular instance on page 4, line 14, "or entities" was left
off after agencies.
SENATOR FRENCH asked what the difference is.
MR. PAWLOWSKI replied that "entities" are related to groups like
the ANGDA, the AHFC, and ARRC; they're not actually agencies of
the state, but rather instrumentalities underneath an agency.
CO-CHAIR MCGUIRE removed her objection and Amendment 2 was
adopted.
4:49:29 PM
CO-CHAIR MCGUIRE moved conceptual Amendment 3 as follows:
Amendment 3
Offered in the Senate by Senator McGuire
To SCS CSHB 369(RES) 26-LS1527\W
On page 11, line 9, following "state agency" insert
"or entity"
4:50:09 PM
CO-CHAIR MCGUIRE announced an at ease.
4:51:32 PM
CO-CHAIR MCGUIRE called the meeting back to order at 4:51 and
withdrew conceptual Amendment 3 and offered a new conceptual
Amendment 3, which would on page 10, line 24, after "state
agency" insert "or entity" clarifying that any of the permits,
studies in progress, et cetera will be transferred over to the
AHFC subsidiary. There were no objections and new Amendment 3
was adopted.
CO-CHAIR MCGUIRE thanked Jack Chenoweth and Tam Cook who spent
hours and hours drafting both of these bills.
4:52:49 PM
SENATOR HUGGINS moved to report CS for HB 369, as amended, from
committee with individual recommendations and attached fiscal
note(s). There was no objection and SCS CSHB 369(RES) moved from
the Senate Resources Standing Committee.
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