04/10/2002 03:42 PM House NGP

INTRODUCTION OF SB 360 - "ALASKA NATURAL GAS PROJECT ACT"                                                                     
                                                                                                                                
[This was not  a scheduled hearing, but an explanation  before the                                                              
Joint Committee on Natural Gas Pipelines.]                                                                                      
                                                                                                                                
Number 1098                                                                                                                     
                                                                                                                                
CHAIRMAN  TORGERSON  announced  the  next order  of  business,  an                                                              
explanation  of SB  360,  which was  introduced  that  day by  the                                                              
Senate  Resources Committee.   As  chairman of  that committee  as                                                              
well, he explained the intention behind the legislation.                                                                        
                                                                                                                                
CHAIRMAN  TORGERSON  expressed hope  that  SB  360 will  become  a                                                              
vehicle  for "passage  of any  of  the work  that we're  currently                                                              
doing."   He  said  it accomplishes  a  lot of  necessary  things.                                                              
First,  it recognizes  that there  won't be a  project built  this                                                              
year.   There isn't a  lot of work  that the legislature  needs to                                                              
do this  year, he  explained.   However, there  has been  a public                                                              
expectation  that  something  would  happen, such  as  passage  of                                                              
legislation  to  provide  incentives  or help  spur  the  project.                                                              
"I've said, from  day one, that I would not leave  my negotiations                                                              
with  an incentive,"  he said.   "I  still believe  that, that  we                                                              
shouldn't  until all the  details are  laid on  the table  of what                                                              
we're doing, what the project economics are."                                                                                   
                                                                                                                                
CHAIRMAN  TORGERSON  noted that  the  timeline for  receiving  the                                                              
project economics  has continued to slide backwards,  with nothing                                                              
received;  he  said  he  isn't  sure   that  information  will  be                                                              
received this  session, but believes  it is important to  at least                                                              
put the parameters  together that would direct  the administration                                                              
to start  negotiations, for example,  with municipalities  on some                                                              
of their issues.   In some cases,  he noted, it will  come back to                                                              
the legislature for approval later.                                                                                             
                                                                                                                                
Number 1194                                                                                                                     
                                                                                                                                
CHAIRMAN TORGERSON  highlighted provisions  of SB 360.   It allows                                                              
the project  to be  phased under  the Alaska Right-of-Way  Leasing                                                              
Act.    It  gives  all  agencies   the  full  cooperation  of  the                                                              
Department  of  Natural  Resources (DNR)  commissioner,  "more  or                                                              
less,"  for expedited  permitting.   It  allows  the governor,  if                                                              
he/she finds  provisions of  the law that  impede the  project, to                                                              
propose   a  waiver.      Furthermore,   any  decisions   by   the                                                              
commissioner  or  other  agencies  shall  be  subject  to  limited                                                              
judicial review.   He remarked, "These are all part  of ANGTA that                                                              
we  wanted to  have part  of our  laws."   It also  says that  any                                                              
judicial action brought must be done within 60 days, he noted.                                                                  
                                                                                                                                
CHAIRMAN  TORGERSON  continued,  noting  that SB  360  allows  the                                                              
commissioner of  the Department of  Revenue to start  negotiations                                                              
with local governments  on property tax "after they  are sure that                                                              
the  project   is  not   economically  feasible,   and  then   the                                                              
commissioner  will put together  a ...  [socioeconomic] report  on                                                              
the impacts  of local governments,  and then ... he  may recommend                                                              
to us whether to  waive it all, reduce it, defer  it, or whatever;                                                              
and that  would require  legislative approval  after that  work is                                                              
done."  The  bill also directs  the commissioner of DNR  to waive,                                                              
reduce,  or defer  all  or part  of the  royalty  payments on  the                                                              
project;  again,   this  takes   legislative  approval,   he  told                                                              
members,  upon discovery  that  the  project is  not  economically                                                              
feasible without taking  such action.  Furthermore,  it allows the                                                              
Alaska Railroad  Corporation (ARRC) to issue tax-exempt  bonds for                                                              
the project.                                                                                                                    
                                                                                                                                
CHAIRMAN TORGERSON  mentioned the commissioners of  the respective                                                              
agencies  and  noted that  under  SB  360, companies  must  agree,                                                              
before  receiving any  benefits, to  train and  hire Alaskans  and                                                              
use Alaskan  businesses in the  construction and operation  of the                                                              
project,  consistent with  constitutional provisions.   They  also                                                              
must complete  a study on in-state  demand and submit a  plan that                                                              
must  be  approved  by  RCA;  complete  a  study  on  natural  gas                                                              
resources  in northern  Alaska; and  submit  a plan  that must  be                                                              
approved  by  RCA  to  maximize access  to  the  project  so  that                                                              
competition   for   Alaskan  oil   and   gas  can   be   promoted.                                                              
Furthermore,  they must update  the studies  after ten  years, and                                                              
they  must  agree to  the  provisions  in the  right-of-way  lease                                                              
[providing]  for  in-state  use   of  gas  and  expansion  of  the                                                              
project.                                                                                                                        
                                                                                                                                
Number 1329                                                                                                                     
                                                                                                                                
CHAIRMAN  TORGERSON characterized  SB  360 as  a  carrot-and-stick                                                              
approach  intended to  bring everybody  to  the table.   He  noted                                                              
that it  would be  heard [by  the Senate  Resources Committee]  on                                                              
Monday  [4/15/02],  when the  commissioners  and  so forth,  along                                                              
with  the oil  companies, if  ready, would  testify by  invitation                                                              
only; he  expressed the hope  of moving  it from committee  at the                                                              
following hearing so  it could go to the Senate  Finance Committee                                                              
for debate.  Again  suggesting that SB 360 is the  vehicle to use,                                                              
he acknowledged  that it is major  legislation to get  through the                                                              
process in  the time  remaining.  He  concluded the discussion  of                                                              
SB 360  by encouraging members of  the Joint Committee  on Natural                                                              
Gas Pipelines to read it and provide any suggestions.