Legislature(2015 - 2016)BARNES 124
03/06/2015 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HB132 | |
| HB109 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 132 | TELECONFERENCED | |
| *+ | HB 109 | TELECONFERENCED | |
| + | HJR 8 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 6, 2015
1:02 p.m.
MEMBERS PRESENT
Representative Benjamin Nageak, Co-Chair
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
Representative Bob Herron
COMMITTEE CALENDAR
HOUSE BILL NO. 132
"An Act relating to the support of the Alaska liquefied natural
gas project by the Alaska Gasline Development Corporation."
- HEARD AND HELD
HOUSE BILL NO. 109
"An Act relating to the duties and powers of the attorney
general with respect to certain settlements directly related to
oil and gas leases; providing exceptions for certain tax and
regulatory matters; and providing for an effective date."
- MOVED CSHB 109(RES) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 8
Urging the federal government to empower the state to protect
the state's access to affordable and reliable electrical
generation.
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 132
SHORT TITLE: AGDC SUPPORT OF NATURAL GAS PROJECTS
SPONSOR(s): REPRESENTATIVE(s) CHENAULT
03/02/15 (H) READ THE FIRST TIME - REFERRALS
03/02/15 (H) RES, L&C
03/06/15 (H) RES AT 1:00 PM BARNES 124
BILL: HB 109
SHORT TITLE: OIL AND GAS LITIGATION SETTLEMENTS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/13/15 (H) READ THE FIRST TIME - REFERRALS
02/13/15 (H) RES, L&C, JUD
03/06/15 (H) RES AT 1:00 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE MIKE CHENAULT
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As the sponsor, introduced HB 132.
RENA DELBRIDGE, Staff
Representative Mike Hawker
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During the hearing on HB 132, answered
questions on behalf of Representative Chenault, prime sponsor.
MARY HUNTER GRAMLING, Assistant Attorney General
Oil, Gas & Mining Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Assisted in introducing HB 109 on behalf of
the administration, sponsor.
SUSAN POLLARD, Chief Assistant Attorney General
Legislation & Regulations Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Assisted in introducing HB 109 on behalf of
the administration, sponsor.
ACTION NARRATIVE
1:02:18 PM
CO-CHAIR BENJAMIN NAGEAK called the House Resources Standing
Committee meeting to order at 1:02 p.m. Representatives Seaton,
Johnson, Olson, Josephson, Hawker, Talerico, and Nageak were
present at the call to order. Representative Tarr arrived as
the meeting was in progress.
HB 132-AGDC SUPPORT OF NATURAL GAS PROJECTS
1:03:20 PM
CO-CHAIR NAGEAK announced that the first order of business is
HOUSE BILL NO. 132, "An Act relating to the support of the
Alaska liquefied natural gas project by the Alaska Gasline
Development Corporation."
1:04:18 PM
REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, as the
sponsor, introduced HB 132. He paraphrased from the following
sponsor statement [original punctuation provided]:
House Bill 132 affirms the policy direction for the
Alaska Gasline Development Corporation (AGDC).
The Legislature set this policy direction in 2013 when
creating AGDC, and in 2014 when approving AGDC's
involvement in the Alaska LNG [Liquefied Natural Gas]
Project in conjunction with SB 138.
HB 132 recognizes that AGDC is already engaged as a
partner on behalf of the State in the Alaska LNG
Project, which is the project most likely to deliver
the greatest benefit to Alaskans.
Because the Alaska LNG Project is most likely to
deliver the greatest benefits to Alaskans, House Bill
132 ensures that AGDC maintains its commitment to this
project and does not embark on a duplicative,
competing project, until the future of the Alaska LNG
Project is more certain. Per House Bill 132, AGDC
would be free to pursue other projects at the earliest
of three dates; 1) if a party to the Alaska LNG
Project withdraws, 2) if the Alaska LNG Project
proceeds into the Front-End Engineering and Design
(FEED) phase, and 3), July 1, 2017.
The legislation further recognizes that the State is
prudent to maintain its back-up plan, the ASAP [Alaska
Stand Alone Pipeline] project, in case the State's
partners in the Alaska LNG Project fail to commit to
the next development phase, FEED. Should that occur,
AGDC is poised to re-solicit gas buyers and gas
sellers, and to upgrade the ASAP proposal as supported
by the market.
To avoid a duplicative or competing project, the
legislation prohibits use of the Instate Natural Gas
Pipeline Fund to pay for work on a project that would
export more gas than it would deliver instate. House
Bill 132 also requires AGDC to have the written
consent of a gas owner/controller before attempting to
market that entity's gas to a third party.
Keys to megaproject success include the elimination of
competing objectives, and the alignment of
stakeholders along a single project. With the
unprecedented momentum to date of the aligned Alaska
LNG Project, contemplation of competing projects
increases risk and uncertainty that threaten success.
This legislation ensures that AGDC retain the course
set by the Legislature in creating AGDC and providing
a framework for AGDC to advance the state's interests
as a full participant in the Alaska LNG Project.
1:08:36 PM
REPRESENTATIVE JOSEPHSON said that in his review of the minutes
for House Bill 4 [passed into law in 2013, Twenty-Eighth Alaska
State Legislature], just about every hearing included reference
to the Alaska Gasline Inducement Act (AGIA) and if the limits on
AGIA were lifted. There was never any discussion of capping the
amount that could be exported at a number equal to what would be
consumed in Alaska. He asked whether this provision in HB 132
is a departure from what House Bill 4 intended.
REPRESENTATIVE CHENAULT deferred to Ms. Rena Delbridge to
answer, saying she was one of the architects of House Bill 4.
RENA DELBRIDGE, Staff, Representative Mike Hawker, Alaska State
Legislature, replied that House Bill 4 was specifically
structured to comply with the AGIA limitations of 500 million
cubic feet per day (MMCF/day), but to also be cognizant that in
the future the time would likely come at which that constraint
was no longer there on the volume. Thus, in House Bill 4 under
purpose, AGDC was told to pursue that 500 MMCF/day pipeline as
described in AGDC's project plan, with modifications as
necessary. Through testimony, "with modifications as necessary"
was intended to give AGDC an opening should the AGIA limitations
no longer apply to increase the volume of that in-state line.
Secondly, in House Bill 4, the ASAP Project under AGDC was never
contemplated as an LNG project. It was very narrowly a project
to get gas to Alaskans because producers with the gas were
working already on another project that at the time was a Lower
48 line, but also during that time was slowly transitioning into
an LNG project. Therefore the backup plan was really for the
legislature to consider the pressing needs of Alaskans in their
communities in having a low cost, reliable, secure gas source
and not concerned about export. While it was possible that
there might be an export tenant at the end of that line, that
was not part of the project.
1:11:20 PM
REPRESENTATIVE JOSEPHSON said it seems like HB 132 contemplates
export, so what is being talked about is amount of export.
MS. DELBRIDGE responded HB 132 contemplates export in the sense
of hope of avoiding a competing project to the Alaska LNG export
project. Announcements indicate the governor desires to make
that a pipeline that supports an LNG project that is not
affiliated with the pipeline. To avoid creating that competing
LNG project that in-state gas pipeline would be capped as to the
amount of gas going through the line that could go to export.
1:12:12 PM
REPRESENTATIVE HAWKER said the dialogue behind this bill is
whether it is advisable for the state to establish a state
sanctioned pipeline project to compete with the Alaska LNG
Project (AK LNG). The bill would put some significant
constraints around [the state's] ability to compete with the
Alaska LNG Project. He requested Ms. Delbridge to provide an
explanation regarding the difference in the concepts behind a
competing project and a backstop project.
MS. DELBRIDGE first clarified that while she is staff to
Representative Hawker, she is working with Representative
Chenault on HB 132. She answered that a backstop project is a
project that the legislature and state can go to in case the
number one priority project that seems to deliver the greatest
possible benefits fails to materialize, fails to meet
milestones. It is something to turn back to in that event. A
competing project is something that would likely run on parallel
courses, perhaps almost in a time sensitive competition to a
finish line to a point in time called the final investment
decision. A competing project will compete to meet that finish
line, as well as compete for resources, support, and focus. It
is something that if there are competing projects, it is
difficult potentially for a party such as the state that has two
competing projects to fully commit to one or the other. It is
of critical importance that all parties in a project be aligned
and committed to following through on a given project.
REPRESENTATIVE HAWKER said HB 132 proposes to preserve the
state's status quo for a certain period of time, which is that
there are two projects. One would be characterized as the
backstop project and the other as the main or priority project,
the Alaska LNG Project. He asked Ms. Delbridge whether this is
a fair characterization.
MS. DELBRIDGE agreed it is a fair characterization.
1:15:19 PM
REPRESENTATIVE HAWKER noted the state has a main project and a
backstop project, but now the governor is introducing a third
and competing project. He asked why the state would even want
to have the backstop project to the Alaska LNG Project.
MS. DELBRIDGE replied the state backup, ASAP, is an in-state
pipeline that would meet the needs of Alaskans. It would be
able to meet supply and demand within Alaska and take care of
things like getting reliable energy to Alaska's communities and
industrial projects, such as large-scale mines that are looking
for reasonably priced energy to continue with their planning
operations, and providing potentially lower-cost energy to much
of the state's population along the Railbelt and the pipeline
route. Maintaining that backup option is wanted to have it
ready to bring back on the table and ready to go. There are no
guarantees that the Alaska LNG Project is going to be built, but
everything is looking very favorable. A few weeks ago this
committee heard testimony from the Alaska LNG Project sponsor
group that talked about how optimistic the group is that things
are on the right track and proceeding as needed. However, there
are market realities and ensuring that the Alaska LNG Project
actually pencils out on a commercial basis once all of the
engineering work is done. It must be made sure that buyers are
lined up at a price that is acceptable to the project. So, it
is good to preserve an option for Alaskans in case the Alaska
LNG Project doesn't materialize commercially for the state and
the producers.
1:17:21 PM
REPRESENTATIVE OLSON asked whether AGDC can statutorily do the
liquefaction component.
MS. DELBRIDGE responded AGDC has the ability to participate in
the liquefaction facility in conjunction with an Alaska natural
gas pipeline project, an Alaska liquefied natural gas project.
Right now AGDC's ability to do liquefaction pertains directly to
a project that brings in the Prudhoe Bay and the Point Thomson
gas; it was loosely defined as the Alaska LNG Project without
having a proper project name to reference to. There is nothing
that statutorily prohibits AGDC from participating in that for
the Alaska LNG Project.
REPRESENTATIVE OLSON asked whether this would also be the case
with the governor's proposed new plan.
MS. DELBRIDGE answered that, to her knowledge, statements made
to date indicate that the administration doesn't intend to have
AGDC participate in liquefaction in the new project. It is one
of the many details that remains to be seen. She advised that
Legislative Legal and Research Services should be consulted as
to whether AGDC could do that in conjunction with an in-state
natural gas pipeline.
REPRESENTATIVE OLSON said this begs the question then of who.
MS. DELBRIDGE replied she believes that statements made to date
by the administration have indicated that a third party separate
from the project would. Theoretically that could be anyone
having title to the gas at the end of a pipeline and that also
has the financial wherewithal to build, maintain, and operate a
liquefaction facility. Presumably that party would then liquefy
the gas, store it, and ship it to the party's end-user clients
where they would get money for the LNG.
1:19:20 PM
REPRESENTATIVE SEATON noted that in its legislative updates AGDC
has said there is no longer the constraint of 500 MMCF/day so
the pipeline that AGDC is developing is for 1.6 billion cubic
feet per day (BCF/day) through the existing pipe with the
existing structure, which could be expanded to 2.5 BCF/day by
changing the pipe material. He concluded that this backstop
pipeline of 1.6 BCF/day means there would have to be export
because there is not that much in-state usage. He asked whether
HB 132 would therefore constrain AGDC from doing any work on
this larger sized backstop project.
MS. DELBRIDGE responded the sponsors don't believe it does
because currently AGDC is not pursuing the ASAP Project as part
of an LNG project; AGDC is still working on engineering and
design to take a project to an open season at which AGDC would
determine who wants to sell gas and who wants to buy gas. At
that point it would be known potentially if there is a customer
for export that was larger than half the volume of the line.
However, the legislature's intent with Senate Bill 138 was to
encourage AGDC to slow down some of the work on the backup plan
because, in passing Senate Bill 138, the legislature was
essentially endorsing the state's participation as a priority in
the Alaska LNG Project. So, yes, theoretically the line that
AGDC is engineering without the AGIA limitations could carry a
much larger volume; as well, it could carry the smaller volume.
That volume ultimately would depend on who is there to buy the
gas and who is there to sell the gas and at that point AGDC
would know if a customer was intending it for export. It would
not feed an export facility, though.
1:22:24 PM
REPRESENTATIVE SEATON expressed his concern that the wording in
HB 132 could possibly constrain AGDC's work going forward on the
current project should AGDC find that 500 MMCF/day is uneconomic
and must therefore go to a project size of 1.6 or 2.2 BCF/day.
Based on AGDC's reports to the legislature, he said he thinks
the bill would prevent work on the current AGDC project. He
urged the wording be looked at carefully to avoid any unintended
consequences.
MS. DELBRIDGE answered that the sponsors will re-evaluate the
wording. She offered her belief that from the sponsors'
position part of this becomes a judgement call for the
legislature as to whether it wants AGDC to proceed with another
project that would involve liquefaction until it is known
whether The Alaska LNG Project is going forward. That is why
that majority for export language prohibiting an increase in the
size would go away at those points in time coming up when it is
known what the future of the Alaska LNG Project will likely be.
At that point in time the legislature would be able to have AGDC
go ahead and upsize the backup plan to however big the market
could support.
1:24:27 PM
REPRESENTATIVE HAWKER said Representative Seaton's question
segues into his next concern as the committee talks about what
AGDC was at the end of the last legislature and what this new
third option is. He requested Ms. Delbridge to address what is
known by the sponsors about this third and competing option.
MS. DELBRIDGE replied very little is known about this third and
competing option announced [by Governor Walker]. To date, [the
governor's] press releases are where things have been relayed.
An opinion piece laid out an initial concept, followed by a
press conference, and that is where the sponsors gleaned these
details. Generally speaking it sounds like the third option
would be taking the in-state ASAP line and increasing its size
to one that would feed an independent non-affiliated export
facility, thus creating an LNG project in which the state would
only be involved in the midstream - the gas treatment processing
and the pipeline - with third party separate ownership of the
LNG export facility. The intent was clearly stated [by the
governor] that these two would both proceed at the same time on
parallel tracks and that whichever project is first to produce a
solid plan and at conditions acceptable to the state will get
the state's full support. Responding to Representative Hawker,
she confirmed that this is a quote from the governor's opinion
piece, and added that the governor gave a little more detail in
some press conferences. It is unknown exactly how long the
state would pursue both these competing trajectories, she said.
At one point it was mentioned it would probably be until one
reaches a final investment decision, which means it would go
through FEED and involve a lot of permitting and people with gas
committing gas to the projects.
1:27:04 PM
REPRESENTATIVE JOHNSON related he heard the governor say that he
is going to wall off the two projects. However, he noted, part
of the reason [the legislature] set things up the way they are
is so that information could be shared and not be working
competitively, and whoever ended up with the best deal would
share the information. He inquired whether costs would now be
duplicated if the state goes through with competing lines.
MS. DELBRIDGE responded AGDC is the entity to ask about cost
estimates given it is the most knowledgeable about what has been
done to date that could be parlayed into a larger project
feeding an LNG facility. She said the legislature has invested
nearly $400 million in getting AGDC from its initial scoping and
design concepts surrounding the 500 MMCB/day line. That money
was intended to get AGDC just to open season where the
commercial support needed for the project would be firmed up.
Some level of redesign and potentially some reengineering would
be needed to expand the amount of gas going through AGDC's line.
If the line is 36 or 42 inches, additional compressors may be
needed. The original ASAP line had only one compressor station.
There may also need to be some reengineering on the gas
treatment facility on the North Slope, potentially to handle
LNG-grade instead of utility-grade gas. There might be some
permitting and right-of-way complications if looking at
additional compressors and land disturbance. Therefore, it is
difficult to put a cost estimate on it. She surmised, however,
that AGDC is working on that now.
1:29:11 PM
REPRESENTATIVE JOHNSON said he is not looking for a number as
much as he is looking for the ability to share what has already
been done. If the new project is walled off, he presumed, new
information would have to be created that may already be had in-
house. He asked whether the new project would have to start
from scratch.
MS. DELBRIDGE offered her belief that quite a bit of what AGDC
has accumulated, acquired, and built to date for ASAP could be
used as a basis for amending ASAP into something larger. That
said, the complications come related to the relationship between
ASAP and the Alaska LNG Project where AGDC is concerned. When
passing Senate Bill 138 last year the legislature was very
careful that in having the state pursue partnership in the
Alaska LNG Project that the state maintaining its backup plan
would not be wasting money, duplicating, being redundant in
resources, or growing government that way. Quite a few
agreements were reached between the Alaska LNG Project and AGDC
that would essentially govern what kind of information they can
share with each other and on what terms. Some of AGDC's
spending has been for work that would have to be done for the
ASAP Project but is also needed for the Alaska LNG Project, so
there is some sharing and reimbursement related to that.
1:31:00 PM
REPRESENTATIVE JOSEPHSON, in regard to redundancy and walling
off, said it seems like déjà vu from when the legislature
previously looked at the same kinds of questions; for example,
sharing of information, redundancy, and conflict between ASAP
and the Alaska LNG Project.
MS. DELBRIDGE answered that legislators certainly had quite a
few conversations in this committee and others related to that
exact matter. The difference at that point was that the state
was maintaining ASAP as a backup project that would not be in
direct competition with the Alaska LNG Project.
REPRESENTATIVE JOSEPHSON noted that as recently as this year
there has been an effort in committees to solicit testimony from
AGDC that it is indeed marching forward with House Bill 4 and
that that project is going just as strong as it otherwise would
have had there not been Senate Bill 138. He requested Ms.
Delbridge to respond in this regard.
MS. DELBRIDGE replied that over the past several months AGDC has
slowed some spending on the ASAP backup plan in response to a
requirement in an Administrative Order issued by the governor,
but AGDC had already started to do so prior to that. The
project is there and going well, but at this point it is not
something AGDC is proceeding with to an open season, the next
phase of that project. This is in part because the legislature
directed AGDC to pursue the Alaska LNG Project as a primary
objective until it is found out how that project went. She
suggested AGDC be asked about what it is moving forward and at
what rate.
1:33:16 PM
REPRESENTATIVE JOSEPHSON noted that some legislators think this
isn't a third project, but rather the first project that's
morphed with the lapsing of the AGIA limitation. He inquired
whether it is potentially true that it would be in the state's
best interest to have an alternative project for negotiating
leverage when the producers seek concessions from the state
later this year.
MS. DELBRIDGE responded that is potentially true in the sense
that that is up to individuals and what they perceive as the
state's competition and with whom the state will need
negotiating leverage. The sponsors have thought at length about
who the state's partners would be in an alternative LNG-geared
project, particularly in light of the governor's comments that
the state would need to bring in market as equity participants
in the project. There is a school of thought that says the
state is going to be negotiating against the producers on the
Alaska LNG Project for terms - yes. There is also the school of
thought that if the state brings into the project the people who
it will be selling gas to and wanting to negotiate a good deal
with, those people would then know the state's costs, goals, and
priorities, which would basically be pulling back the curtains
and may not be the course of action that is most prudent either.
A lot of gas buyers, particularly in Asia and Japan, have been
buying into LNG projects all around the world because it lets
them understand the project better and lets them feel like they
can negotiate greater reliability of supply as well as a better
price for the gas that they are buying. There is also the
question of who the state's competition really is in that
context. The sponsors evaluated some of the governor's comments
and realized it may not really be Exxon, BP, and Conoco that the
state is competing with on an LNG project level, as in whether
it is the British Columbia project that goes first or the Alaska
project that goes first. It very well may be those buyers who
have actually greater financial interest in the West Coast LNG
projects than the producer companies in Alaska do. Of 18
projects currently being proposed for getting gas off of Western
Canada, BP and Conoco have no interest in any of them, to her
knowledge, and Exxon has interest in one project that is
generally considered far down the list of the top three likely
projects to move forward. The parties that do have financial
ownership interest in those projects that are likely to move
forward off the West Coast are actually some of the Japanese
utility buyers and also some of the trading groups like
Mitsubishi. So, there is some concern that the state might want
to re-evaluate who it considers is its competition.
1:36:39 PM
REPRESENTATIVE HAWKER said a very clear statement was heard from
the governor that it is the state's producer partners that the
state would be competing with on the West Coast. He said he
doesn't think that holds up when the facts are examined. He
brought attention to a large notebook containing the minutes for
the committee's hearings last year on Senate Bill 138, saying
[the size of the notebook] shows how much time was spent going
over in detail all of the various aspects of where gas was going
to come from, how it was going to come, and what the financial
modeling would be. While going through the minutes, he said, it
struck him that the state's North Slope gas has been committed
to the Alaska LNG Project. He asked Ms. Delbridge whether that
same gas can be committed to a competing project. Additionally,
he pointed out, the U.S. Department of Energy (DOE) grants
export license permits for LNG facilities. He further asked
whether the DOE will allow the state to permit simultaneously
two facilities. He also asked whether the state can really
compete if it gets to the question of viability, or whether the
state is just throwing good money after bad.
MS. DELBRIDGE answered she will take the third question as
rhetorical. Regarding whether the state can commit North Slope
gas to a competing project if it has already been committed to
the Alaska LNG Project, she said the legislature probably cannot
commit that gas to any project if it is gas that has been leased
under contract to the North Slope producers; that will be up to
the producers to commit to a project. She advised that the
legislature will have to ask the producers as to what project
phase they feel they will have firmly committed their gas to the
project. She offered her understanding that if the producers
enter into a FEED decision they are committing their gas to this
project. The producers are working on marketing agreements and
are getting ready to sign some serious long-term agreements that
have implications. If their gas is committed to the Alaska LNG
Project the legislature is left with the state's royalty gas, if
the state in fact chooses to take royalty as gas. Given the
royalty gas is 12-16 percent, she said she doesn't know whether
that is enough to support another pipeline. As far as whether
the DOE would grant two export licenses simultaneously, she said
the Alaska LNG Project has applied to DOE for an export license.
Some standards have to be met for that: the applicant must have
gas that is being committed to the project; the project must
have some certainty of happening in the eyes of DOE; and there
needs to be an end site, land, for the LNG facility. Because
export licenses require things like gas, she said she doesn't
know that the legislature would be able to have another export
license for a different project; that would be an issue for the
DOE at some point.
1:40:46 PM
REPRESENTATIVE SEATON, in regard to having gas to sell, drew
attention to the bill, page 3, lines 23-24, which state: "The
corporation may not market gas owned or controlled by an entity
other than itself without express written consent from that
entity." He inquired whether this language means the state has
no gas because it hasn't committed to taking gas in-kind, and
that the state cannot go to open season or solicit market sales.
MS. DELBRIDGE replied this language is in the bill to provide an
important distinction. Under the ASAP and Alaska LNG projects
it has never been conceived that AGDC ever takes control or
ownership of the producers' gas or the state's gas. During the
committee's discussions of Senate Bill 138, the Department of
Natural Resources (DNR) and the prior administration were
adamant that full control over the state's gas was retained by
DNR; DNR is the resource manager and is responsible. So DNR, in
conjunction with the commissioner of the Department of Revenue
(DOR), would be making the decisions about what to do, how to
manage, and how to sell or dispose of the state's royalty gas.
1:42:14 PM
REPRESENTATIVE SEATON understood Ms. Delbridge to be saying that
the way the bill is written the state can go ahead and have an
open season and market a project's gas as long as it is not AGDC
marketing gas because AGDC will never own any gas.
MS. DELBRIDGE responded there are two different paths forward on
that for the two different projects. Only the ASAP, the in-
state pipeline, requires an open season. The Alaska LNG Project
is viewed as a federally regulated feeder pipeline straight to
an LNG facility. The committee heard extensive testimony about
keeping the supply chain intact from production to treatment to
pipe to facility, and the need to ensure there are no breaks in
that chain. So, as an LNG project, the Alaska LNG Project has
followed this format. For the ASAP Project, AGDC, with a
transportation service company, would put forth a proposal via
an open season to determine the demand for transportation
service and who wants to move the gas. It could be the gas
holder on the North Slope that wants to move the gas and then
sell it to someone. Or it could be that someone wants to buy
the gas on the North Slope from a producer and then pay AGDC to
move it. So, AGDC would not really have a marketing role in
that context, AGDC would simply be providing a transportation
service. In the Alaska LNG Project, the state will have a
significant amount of gas that it needs to do something with if
it takes its royalty gas as gas, and particularly if it chooses
to take its tax as gas. Senate Bill 138 specifically leaves
that authority within DNR in consultation with DOR. There has
always been the possibility and the option for DNR and DOR to
essentially contract with AGDC, which could then create a
marketing subsidiary to market the state's gas. That said,
nobody has stopped the state from marketing its gas. If the
state believes it has gas because it foresees a royalty-in-kind
decision or it assumes the Alaska LNG Project is moving forward
and so the state will also have tax gas, the state can start
marketing that gas today. To date the state has three
memorandums of understanding (MOUs) related to marketing. The
administration signed an agreement with the Japan Bank of
International Cooperation (JBIC), a financing entity for
utilities in Japan, to keep an open dialogue on what Alaska is
doing in terms of an LNG project and what the opportunities may
be. The former administration also signed an MOU with the
Japanese government's Ministry of Economy, Trade and Industry
(METI) to do the same thing. This administration signed a
cooperative agreement with Resources Energy, Inc. (REI), a
company that is looking to link Alaska's gas resource with
Japanese buyers. So, while those dialogues have been opened,
they only move forward as quickly as certainty is built in the
project. Not until the state is prepared to actually commit to
selling something through a project it is committed to building
is it able to get buyers to commit to buying on certain terms.
1:46:00 PM
REPRESENTATIVE SEATON said those agreements were made before
this would be a bill. He understood that if HB 132 was in place
it would limit AGDC from being the marketer and the state could
continue to market through the DOR and DNR.
MS. DELBRIDGE answered yes, unless AGDC receives the written
consent of DNR and DOR to go market the state's gas. She said
DNR currently has a one-year contract with consultant Audie
Setters, an industry marketing expert, to help the state develop
the infrastructure that will guide the state in how to market
its gas as LNG to get the best possible returns to the state.
1:47:18 PM
REPRESENTATIVE OLSON asked why it is in Alaska's best interest
to be first in the market on the state's gas rather than waiting
for the producers to do it. That way, he said, instead of
looking for somebody wanting to buy the gas at the cheapest
price the state would have somebody marketing the gas that wants
to get the highest price for it, which is in theirs as well as
the state's best interest.
MS. DELBRIDGE replied the committee has heard from multiple
experts talking about those kinds of consideration. There is a
lot that is going to go into marketing decisions, but there is a
lot built into Senate Bill 138 and the Heads of Agreement (HOA)
that it triggered that give the state a lot of options. Under
Representative Tarr's amendment to Senate Bill 138 last year, if
the state agrees to modify a lease and take its royalty in-kind
and adjust sliding scales, that producer, that leaseholder, must
have agreed that it will take the state's share of gas from that
lease and make available to the state the disposal of that gas
on the same terms as the producer. So, a lot of neat things are
built in, but Representative Olson is correct about being
careful on how the marketing is phased in, time-wise, with the
status of the project.
1:49:02 PM
REPRESENTATIVE HAWKER requested Ms. Delbridge to provide the
sponsors' position in regard to criticism that HB 132 would take
away the state's negotiating powers and is unconstitutional.
MS. DELBRIDGE responded the sponsors don't understand how HB 132
would diminish the state's negotiating powers. Is the state
negotiating with the producers and so it needs a competing
project? It is difficult to fully understand what is intended
when people are saying that. Additional feedback has been
solicited to try to understand this new approach so that the
sponsors can have greater clarity on that. If it's negotiating
powers in relation to being able to market the state's gas or
someone else's gas, then, yes, the bill makes sure that AGDC can
only market gas that it has permission to market. The sponsors
don't believe that that curtails the state's powers to negotiate
terms with a project. As far as being unconstitutional, she
understood there is concern that HB 132 would prohibit Alaska
from developing its resources for the greatest benefit of
Alaskans. She said the bill directs AGDC to continue on the two
courses that the legislature has already seen fit to commit the
state to after hours of testimony and process. The number one
purpose of AGDC in pursuing any project is to do so in a manner
that generates the greatest possible benefits for Alaskans. It
further encourages AGDC to do projects that bring economic
benefit and that maximize the value of the state's gas back to
the treasury.
1:51:32 PM
REPRESENTATIVE HAWKER said the bill is trying to find clarity
and interpretation. Earlier this week the sponsors heard
horrific criticisms of HB 132, he related. After the
administration announced its competing project the sponsors of
the bill approached the administration and requested in writing
some clarity on these positions so this sort of confusion could
be avoided. However, he continued, the response to this request
did not provide any clarity.
REPRESENTATIVE CHENAULT confirmed that on February 20, 2015, the
sponsors sent a letter to Governor Walker in which a number of
questions were asked in regard to the project. The March 2,
2015, response did not answer any of the questions. He said the
committee has the ability to put these letters on the record.
MS. DELBRIDGE stated she will provide the aforementioned letters
to the committee after today's hearing.
1:53:29 PM
REPRESENTATIVE TARR addressed the date of July 1, 2017, included
in the bill, saying she is concerned with including a hard date
in case there is any slippage in the timeline.
MS. DELBRIDGE answered the dates are in there for a reason and
the sponsors struggled with what is the right date and how long
to wait before moving forward on the state's backup. She
explained that by July 1, 2017, it will be known what is
happening with the Alaska LNG Project and whether there is any
dissolution. Provisions within the agreements under which the
parties are working today allow for how to dissolve and what to
do with assets developed by the project. Then the state could
move forward. If the parties enter the FEED decision, which is
expected as early as first quarter 2016, then it is known what
is happening with the Alaska LNG Project and it seems reasonable
that AGDC's options going forward would not be curtailed at that
point; the horse will have been picked. July 1, 2017, is the
ultimate backstop in case things get drawn out. If time is
needed beyond first quarter 2016, the agreements give the
parties up to a year to iron out any lingering issues that are
going to be the deciding factor for them to invest into FEED.
During that time, finalizing or bringing to the next level a
preliminary marketing agreement may be wanted so it is known
what is needed to make that next commitment. Therefore that
sounded like a reasonable time period that went past the second
quarter 2017 when that drop deadline seems to be.
REPRESENTATIVE TARR recalled that some advance funding was given
and July 1, 2017, would be the 2018 fiscal year (FY). She asked
whether that date coincides with when the previously allocated
funds would run out.
MS. DELBRIDGE replied she does not know when the Alaska LNG
Project funding runs out. She offered to get that information
to the committee. For the ASAP Project, she said the
appropriations simply went to the in-state natural gas pipeline
fund and AGDC can draw on that fund as needed, aside from the
current Administrative Order that curtails some of that.
1:57:25 PM
REPRESENTATIVE JOHNSON related that the question he most gets
asked is a competing line versus a backstop. The administration
has proposed a competing project, he said, while his conception
of the ASAP Project is that it is a backup plan. He requested
Ms. Delbridge to discuss the difference between a competitive
project and a backstop project.
MS. DELBRIDGE responded:
Your backstop is something where you're essentially
saying if X happens or if X does not happen, then I
have Y to move forward on. It's an either or, you're
looking for one to be successful or not, for some sort
of point to be reached before you go to your fallback.
The fallback in this case was conceived as strictly a
line that gets gas to Alaskans. It had to have an
open season, which means it would be financed on the
backs of the long-term commitments from sellers and
buyers and shippers of gas rather than on a state
subsidy or a state equity infusion. A competing
project ... is something that you're looking to move
forward on parallel tracks. That you're looking to
see whose [project] you can push forward farthest.
You're looking for advantage, you're looking to see
which one turns up something optimal to you in the
end. What that is defined as right now, as in what
ends up being the "best project," we don't really
know. There is certainly concern from the sponsors
that the state competing with this other private
sector project that the state is a partner in, there
is ... an understanding that we've invested state
resources in advancing one project and wanting to
protect the progress of that project in that context
and also protect the value of those state resources
that have been invested in it to date. Competing
could deter from that in some ways, in the sponsors'
eyes.
REPRESENTATIVE JOHNSON noted the state is partners in the Alaska
LNG Project.
MS. DELBRIDGE said the state is a 25 percent partner from the
gas treatment plant (GTP) through the pipeline midstream all the
way to the liquefaction, with TransCanada as the state's agent
in the midstream.
REPRESENTATIVE JOHNSON maintained what the governor is proposing
is that the state is competing against itself.
MS. DELBRIDGE stated, "In a partial project ... that's the way
that it's been portrayed."
2:00:20 PM
REPRESENTATIVE HAWKER said the state has equity in the Alaska
LNG Project. He asked whether the statement that the state has
a minority position in the Alaska LNG Project is an accurate
statement.
MS. DELBRIDGE answered the state is a full 25 percent owner with
three other 25 percent owners. The only way to conceive of the
state as a minority partner is to lump together as one entity
the other three partners, Exxon, BP, and Conoco. Those familiar
with the industry understand that those three companies have
very divergent interests and don't always agree on things and
are not acting as one entity in this project, but as three very
distinct and separate entities, some absolutely with their own
unique circumstances in the Alaska LNG Project related to where
gas comes from when.
REPRESENTATIVE HAWKER suspected that collusion by those three
entities would involve a certain amount of fair trade concerns
and anti-competitiveness.
MS. DELBRIDGE replied she imagines so, particularly when it
comes to the interaction with the marketplace.
2:01:51 PM
REPRESENTATIVE HAWKER said that under the Alaska LNG Project the
state has 25 percent in the GTP, the pipeline, and the
liquefaction facility. As best as can be understood, the
competing project concept is to have the GTP up north, the pipe,
and then let a third party own all of the LNG facilities.
Referring to last year's arguments in favor of the Alaska LNG
Project, he noted that an LNG facility is where very low-value
gas is converted to high-value LNG. Even if the state were to
embark on a competing project, he continued, the question is why
the state would give up the component of the project that makes
the most money.
MS. DELBRIDGE replied that is the crux of which the sponsors are
having a difficult time trying to figure out. It was very clear
through Senate Bill 138 testimony that that liquefaction
facility and the state's participation as a 25 percent owner
commensurate with the amount of gas the state was able to move
in this project of its own was truly the place to increase and
build on the value of the state's gas. To provide that gas to
someone else to do from there would be the state potentially not
maximizing the value. Because so many details are missing
[about the competing project], it is difficult to make absolute
statements in that context. The third party ownership coupled
with the concerns of bringing market buyers in as equity owners
in the entire GTP and pipeline and the discussion of potentially
selling them part of the state's gas share is going to have
implications on what the state ultimately reaps from its gas
from a project.
2:04:16 PM
CO-CHAIR TALERICO remarked that at some juncture the state will
get to a level where it cannot try to sell the same gas through
three different projects. There needs to be a clear path to
move forward, he said. He surmised there is a big advantage to
people that already have a vested interest and substantial
investment to be part of a partnership, rather than to pursue
someone that doesn't have that vested interest at this point.
MS. DELBRIDGE responded the sponsors believe that is correct in
that context. Senate Bill 138 provided the structure for the
state's participation in the Alaska LNG Project. The state was
able to work together with the companies that have a vested
interest in working long term in Alaska in a framework that
allowed everyone, through a lot of negotiation, to get what they
need out of things with the mutual goal of getting Alaska's gas
into market and having returns to both the companies and the
state. The alternative is to partner with people who have money
to pay for the infrastructure and want to buy gas or LNG, but
their tie to Alaska would not be necessarily that long-term
vested interest in additional North Slope development and
leaseholds except for through their current participation in the
project.
2:06:24 PM
REPRESENTATIVE JOSEPHSON stated that if he had the Senate Bill
138 vote before him again he would again vote yes and he would
vote yes tomorrow as well. He recalled that enalytica, the
consulting firm hired by the legislature for its expertise, has
said many times that half of these projects will fail. He also
noted that yesterday's lead article in Larry Persily's daily
download of worldwide LNG activity stated that British Columbia
will not be exporting LNG for 40 years because of various
problems. He inquired as to what to tell his constituents if
they say the state isn't creating a bonafide alternative as
allowed by House Bill 4 when it freed the state from AGIA, and
that the state is relying on something and its only fallback is
500 MMCF/day, which gets the state closer to a state income tax
or a state sales tax because the state must have the revenue
shown by enalytica and DOR, which is somewhere over $3 billion.
MS. DELBRIDGE replied that Representative Josephson will answer
his constituents as he sees fit with what he believes from all
of the body of evidence before him and Mr. Persily's oil and gas
briefings. The sponsors' concern is that if industry is unable
to make the Alaska LNG Project commercially viable, then the
state probably isn't going to be able to either. If the
producers cannot make it economic and commercial and do this
project, the state could consider it, but the state may end up
in a difficult position. If the state wants to do this so
badly, what gives would the state have to make to make this
project happen that diminish the value that the state gets back
from it? That's why the backup plan looked to an in-state-only
line. People in Alaska need lower cost reliable energy that
will also let economies grow and industry start. That is why to
date the state hasn't taken ASAP into an LNG project backup type
scheme. If the Alaska LNG Project doesn't work economically and
commercially in its current component, might industry and the
partners decide that they need to downsize it somewhat? Maybe.
Might they decide that the market simply isn't there at the
price required to pay for the $45-$65 billion in infrastructure
to get the gas to the markets? It's possible. And at that
point it would be hard to imagine a scenario in which the state
could change those dynamics in a meaningful way without giving
up the value that the state needs in return.
2:09:34 PM
REPRESENTATIVE OLSON said he thinks the small diameter line
would be reliable, but asked whether it would be affordable.
MS. DELBRIDGE responded it depends on who is using the gas from
that line, what they are paying now, and what they expect to be
paying in the future. The ASAP line started truly coming
together when House Bill 369 passed in 2010. That bill told
this group to study an in-state line to see if it could be done
economically. Fairbanks [still] has tremendously high prices
and at the time Southcentral was looking at some real supply
concerns, to the point that utilities were in a working group to
talk about how to import LNG to Southcentral. At the time the
direction to this team under House Bill 369 was essentially that
it has to be economic. Can it beat the anticipated cost of
importing LNG to Southcentral Alaska? That estimated cost in
2011 was $16 or more at the burner tip; the cost that customers
of ENSTAR Natural Gas Company were paying was around $9. This
line could get gas to Southcentral at $9-$11 depending on the
engineering features, which seemed to be in the realm of
economic. The benefits to Fairbanks were potentially more
significant given their burner tip cost was around $23. She
said AGDC has upgraded some of those estimates and while she
doesn't know what the current estimates are she thinks the price
of gas in that small line has increased a little bit over time,
which is to be expected because of the several hundred million
dollars a year of inflation on project costs for every year
waited. She offered her belief that the legislature was
convinced in passing House Bill 4 that a small line would never
be built unless it was economic because buyers and sellers were
needed to make the line happen.
2:12:09 PM
REPRESENTATIVE SEATON recalled that when House Bill 138 was
before the committee he proposed an amendment that would have
provided the state with access to all the information that was
developed should the Alaska LNG Project not proceed on time. He
said he offered the amendment because he was worried that if the
producers decided not to go forward and yet never made a
cancellation decision, the state would be stopped and unable to
go forward. While the administration then negotiated to get
that same thing, it negotiated that any party has access to all
the information for free if that goes forward. That's been one
of the problems with AGDC working on information that would be
available to the Alaska LNG Project - AGDC is 100 percent state
funded and yet the information would all flow to the Alaska LNG
Project. He surmised that what is being done now is that AGDC
is only doing those things for the project for which it is under
contract and being reimbursed such that the state is only
putting in its 25 percent of the costs. He requested Ms.
Delbridge to address why it is being said it would be redundant
work if any work is done "on planning AGDC."
MS. DELBRIDGE answered AGDC is currently doing some mutually
beneficial work for which it is being reimbursed by the Alaska
LNG Project. Less than $10 million of work is going on that way
and is generally geared toward gathering data along the right-
of-way that is necessary to support the filings with the Federal
Energy Regulatory Commission (FERC). The sponsors' current
concern with redundancy is their fear that if ASAP becomes
something other than an in-state backstop, and thus somewhat of
a competing project, the state's partners in the Alaska LNG
Project may require additional firewalls and regulations
governing what data can be shared, how, and on what terms to
avoid their data on the Alaska LNG Project paid for by them
being used by the state via AGDC on a competing project. So, if
what is being developed via the Alaska LNG Project cannot be
used by the state, even though the state is paying for that as a
partner, the state would be forced to also develop it on its own
if the state is going to be using it for a competing project,
unless there is some agreement that can be hammered out between
AGDC and the Alaska LNG Project partners allowing AGDC to work
on a competing project.
2:15:35 PM
REPRESENTATIVE SEATON brought attention to page 2, lines 30-31,
of the bill which state that the corporation may not plan or
take any step to develop an in-state gas pipeline that intends
to export more than 50 percent of the gas. He understood Ms.
Delbridge to be saying that AGDC could still work on the current
pipeline of 1.6 BCF/day because that pipeline according to AGDC
is uneconomic without export of most of that volume. He asked
whether it is being said that [legislators] will kind of hide
from this and work will continue on that pipeline pretending it
is somehow economic if none of the gas is exported.
MS. DELBRIDGE offered her belief that AGDC has all along said
export or some other large-scale industrial end anchor. Export
of LNG out of Cook Inlet is an obvious answer as an end anchor,
but other things could be significant anchors, such as customers
like a large mining operation or the reopening of Agrium. She
said [the sponsors] will want to follow up on the concern with
AGDC and with attorneys because the sponsors' intent is that
ASAP, an in-state line as big as mandated by supply and demand,
is still on the back burner.
2:17:31 PM
REPRESENTATIVE JOHNSON recalled the governor saying in the press
conferences that the market came to Alaska in 2012. He said he
would like some clarity on why the market came to Alaska in 2012
but a pipeline isn't being built.
MS. DELBRIDGE replied she will provide a brief overview, but
noted there is a limit as to what is publically available about
that event. She said TransCanada was the state's licensee under
AGIA and per the statute held an open season in 2010 that was
ultimately unsuccessful. According to TransCanada's Tony Palmer
there were significant, but not sufficient, bids to move
forward. Under AGIA, TransCanada was required, up to a certain
point in the project process, to hold a re-solicitation of the
market every two years. A formal open season wasn't required,
but TransCanada had to open a nonbinding window where people
could express interest. So, in 2012 TransCanada held one of
those solicitations of interest. At the same time, however,
plans were already kind of shifting to an LNG option. In late
2011 the former governor asked the parties - TransCanada, Exxon,
BP, and Conoco - to start working together and to look at an LNG
option. So, when TransCanada held that 2012 solicitation of
interest, it put out two options in its advertising all over the
world. One asked about interest in a Lower 48 pipeline, which
was supported by at least three years of Exxon's and
TransCanada's work; it had a tariff, route design, and volume.
The other asked about interest in an LNG export project in
Alaska; it had no tariff, no design, and no volume. She related
that she heard from TransCanada that the Lower 48 option had no
more interest, but there was some market interest from the
producers and from potential buyers in looking at an LNG
alternative. Governor Walker has said that he, working through
the Alaska Gasline Port Authority (AGPA), submitted a letter,
presumably representing clients in the marketplace, that had
interest in a certain level of capacity should TransCanada go
with that LNG line. She offered her belief that to date that
letter has never been released and is confidential and therefore
it is unknown who the players were, how formal of an agreement
they were interested in entering into, and the volumes, terms,
and price. She understood that outside of what was involved in
that AGPA letter, there were some others that floated interest
but said they wanted to be involved but didn't have gas and that
to get involved they would need to find a gas supply.
2:21:41 PM
REPRESENTATIVE TARR noted that the state is a partner in the
Alaska LNG Project, that ASAP is different, and that this third
option is being described as the merchant model and is bringing
in the buyers to help with the financing. However, the third
option, she said, is a bit different than what Ms. Delbridge was
talking about in regard to pulling back the curtains, but it may
have some of the same challenges in that financing mechanism.
She requested Ms. Delbridge to compare the financing mechanism
of the third option to the other two options and the strengths
and weaknesses among the three.
MS. DELBRIDGE said she will briefly discuss the three different
options, but for the relative strengths and weaknesses she must
defer to expert analysts. She said the Alaska LNG Project
model, with four owners and four pieces of pipe so to speak,
would each be generally able to finance their share of the
project as the owners individually saw fit providing they were
bringing to the project what was needed. As currently
contemplated, the owners of the gas would own a slice of the
project commensurate with the amount of gas that each planned to
ship in it. In the ASAP Project, AGDC was strictly providing a
transportation option, like a railroad that provides shipping
for customers. In that case AGDC would be able to sign on
shippers in long-term firm commitments promising to pay for that
pipeline space whether or not they shipped, and then AGDC would
be able to take that to the market and finance based on those
long-term commitments. Regarding the third concept, she said
not much is yet known. What has been heard is that [the state]
would bring in the market for equity in the project and also
sell them gas; the parties would be brought in and would own a
piece, similar to the Alaska LNG Project where Exxon, BP,
Conoco, and the state are owning a piece of the project. In a
way the state is doing that right now with TransCanada on the
midstream in the Alaska LNG Project - Alaska is giving up a
little piece of its ownership in exchange for something
provided. If Mitsubishi was brought in, for example, an
ownership percentage would be given up in exchange for
Mitsubishi providing additional capital for that piece of the
project. She said there are different levels around the world
for most projects. Utilities are buying what she has heard
described as "slivers" of ownership, just enough to be part of a
project and understand what is going on, not a voting share.
There are instances where utility consortiums, Mitsubishi, or
co-ventures have bought more than just slivers, maybe 16 percent
or higher, and in those cases she said she thinks the terms of
each individual deal would disclose how much of an actual
working partner they end up being.
2:25:13 PM
REPRESENTATIVE TARR said that raises a challenge in that the
state cannot force the producers to sell their gas and so the
state would be limited to its roughly 25 percent share. She
inquired whether that has enough potential given there would be
many fewer slivers to sell under that and how the state might
force a situation that would make that other gas available for
sale. She said she cannot picture how the alignment would work
in terms of getting enough gas to have a project.
MS. DELBRIDGE replied she thinks the sponsors would agree with
aforementioned. In particular, the gas must have been committed
to the project in order to have the sellers involved in
contracts that allow any individual owner to provide the capital
and the financing and everything else that goes into making a
project happen. The state's share on its own is not even 25
percent unless industry elects to pay its tax as gas for certain
leases, so the state could have as little as half of that at its
disposal. The sponsors agree it would be difficult to support
another project based on only the state's share of gas.
2:26:50 PM
REPRESENTATIVE OLSON asked whether he heard Ms. Delbridge
correctly that the results of the responses to the AGPA open
season were never released to the public.
MS. DELBRIDGE explained it was a TransCanada solicitation of
interest in which Governor Walker, through AGPA in his capacity
as AGPA's counsel, she believes, submitted a letter voicing
interest. To her knowledge, that actual letter has not been
made available.
REPRESENTATIVE OLSON inquired whether the committee could get a
copy of this letter, given this period of transparency.
MS. DELBRIDGE answered that the sponsors or the committee can
make that request.
REPRESENTATIVE CHENAULT stated the committee co-chair can
request a copy and, if received, can distribute it to members.
CO-CHAIR NAGEAK directed staff to request the information.
REPRESENTATIVE JOHNSON commented that the committee could save
itself a lot of time if the administration is in possession of a
letter that would finance the pipeline. He said he would like
to see the letter and whether there is a market.
2:29:21 PM
CO-CHAIR NAGEAK held over HB 132.
The committee took an at-ease from 2:29 p.m. to 2:31 p.m.
HB 109-OIL AND GAS LITIGATION SETTLEMENTS
2:31:41 PM
CO-CHAIR NAGEAK announced that the next order of business is
HOUSE BILL NO. 109, "An Act relating to the duties and powers of
the attorney general with respect to certain settlements
directly related to oil and gas leases; providing exceptions for
certain tax and regulatory matters; and providing for an
effective date."
2:31:52 PM
MARY HUNTER GRAMLING, Assistant Attorney General, Oil, Gas &
Mining Section, Civil Division (Juneau), Department of Law
(DOL), on behalf of the administration, sponsor, thanked the
committee for hearing HB 109.
SUSAN POLLARD, Chief Assistant Attorney General, Legislation &
Regulations Section, Civil Division (Juneau), Department of Law
(DOL), said the governor submitted HB 109 for the legislature's
consideration due to his concerns over development of oil and
gas leases. The bill relates to the authorities and the powers
and duties of the attorney general (AG) with regard to civil
litigation related to oil and gas leases under the Alaska
National Interest Lands Conservation Act (ANILCA). In the
instances where a development oil and gas lease gets to civil
litigation, the bill would place in statute requirements that
the attorney general make determinations that any settlement is
necessary to the issues at litigation. This excludes unrelated
matters and does not alter other procedures required by the law.
2:33:55 PM
MS. HUNTER GRAMLING noted the bill has a zero fiscal note. She
provided a sectional analysis, explaining Section 1 of the bill
amends AS 43.05.070, related to the compromise of a tax or
penalty. She explained that AS 43.05.070 is found within the
Department of Revenue (DOR) statutes for the administration of
tax. This statute generally provides that before the Department
of Revenue may compromise a tax or penalty, the approval of the
attorney general is required. Section 1 adds a new subsection
(c) to clarify that the requirements set forth later in the bill
in AS 44.23.020(i) would not apply to the attorney general's
approval of a compromise of a tax or penalty. This provision is
necessary to clarify that the existing ability of the attorney
general on approval of a compromise of a tax or penalty is
unchanged. Section 2 of the bill amends AS 44.23.020(d). This
is the section of statute relating to the Department of Law and
the general powers and duties of the attorney general. Section
2 provides conforming language to indicate that the attorney
general has the existing broad settlement powers except as
otherwise provided in the new subsection (i), which is in
Section 3 of the bill. Section 3 amends AS 44.23.020 by adding
new subsections (i), (j), and (k). New subsection (i) would
require the attorney general before finalizing a settlement
directly related to an oil and gas lease under ANILCA to make
three determinations: 1) that the settlement before the
attorney general is limited to matters necessary to settle the
action; 2) excludes matters unrelated to the action; and 3) does
not alter constitutional, statutory, or regulatory procedures
required by law. New subsection (j) clarifies that the
requirement for a determination in new subsection (i) would not
apply to the attorney general in matters related to the function
of the Department of Law and the attorney general as a party
before the Regulatory Commission of Alaska (RCA). Subsection
(j) also clarifies that the requirements in new subsection (i)
would not apply to the attorney general in matters related to an
oil and gas pipeline or products pipeline under the Regulatory
Commission of Alaska or another regulatory agency. She noted
that "the Regulatory Commission of Alaska or another regulatory
agency" is a term of art here because that language is found in
the production tax statutes as well; "another regulatory agency"
is generally interpreted to mean the Federal Energy Regulatory
Commission (FERC). Subsection (j) clarifies that the authority
of the attorney general to settle matters before the Regulatory
Commission of Alaska and the Federal Energy Regulatory
Commission would be unchanged by HB 109. New subsection (k)
adds a definition for oil and gas lease and references the
definition found in the production tax statutes at AS 43.55.900.
This definition was chosen so it is clear that when HB 109 in
Section 3 references oil and gas leases it means an oil and gas
lease and potentially a gas-only lease. Section 4 adds an
applicability section that would be in uncodified law. Section
4 clarifies that the determinations in new subsection (i) would
apply prospectively and would not have any retroactive effect.
Section 5 provides for an immediate effective date of the bill.
She pointed out that Section 3, subsection (i), is the meat of
the bill. The other sections primarily give additional clarity
of what the bill does not do. It does not relate any criminal
matters arising out of an oil and gas lease. It does not relate
to any tariff litigation or tax issues. It is a narrowly
targeted bill to address primarily the governor's concerns about
oil and gas lease development cases.
2:39:30 PM
REPRESENTATIVE JOSEPHSON asked why the demarcation of concern
with oil and gas lease cases and not all sorts of cases.
MS. POLLARD replied it is limited to oil and gas leases in
recognition of the vital importance of oil and gas leasing to
the state and the reality that the state is a leaseholder with
the lessees. Because it is a long-term relationship the state
will be having lease discussions 40 years from now. Some
issues, particularly the oil and gas development issue, are
capable of continuing because the state will be in the process
of managing the development. The Department of Natural
Resources will need to continue to assure that leases are
developed in accord with the lease terms. Due to the great
public importance of this, and that much of the leasing is a
fairly well-known public process within that competitive bid and
findings for leases, the administration thinks it is wise to
limit it to just oil and gas leases because the potential issue
here is that the administration wants to recognize the
importance of that issue to the state. The administration also
recognizes that this is, for the Department of Law, somewhat of
a limitation on the attorney general's authority. It is saying
in statute for the attorney general in a settlement negotiation,
and a settlement with typically very, very broad authority, to
take a pause and to really consider when entering these
settlements the three issues brought up in the bill.
2:41:26 PM
REPRESENTATIVE JOSEPHSON concluded that in effect the governor
is asking to surrender some power here to other policy makers
and to the people.
MS. POLLARD responded she is not sure she would put it quite in
those [words], but that might be a conclusion that folks would
make. The way the administration has described it internally is
that it is just a pause, "just a recognition that in the oil and
gas world, ... particularly at the time this bill applies,
because ... the provisions of this bill don't come into effect
unless you are already in litigation, you are already in a civil
action by just trying to settle this and ... settlements
themselves are difficult anyway." The administration feels that
while this pause and consideration is being put in the statute
to emphasize the importance of oil and gas development, it does
so in a way that is not overly limiting or that would delay
projects in any way.
2:42:35 PM
REPRESENTATIVE HAWKER agreed the entire substance of the bill is
really involved in Section 3 which basically imposes three
findings. The word in in this section is "determine" that it is
limited to certain issues, does not include anything unrelated,
and does not alter constitutional, statutory, or regulatory
procedures required by law. He inquired whether these are the
only criteria that are relevant. He said he doesn't see
anything that says the attorney ought to determine that the
settlement is in the best interest of the state, and inquired
whether that is irrelevant.
MS. HUNTER GRAMLING replied it isn't an irrelevant consideration
but said that that general provision is probably found elsewhere
in AS 44.23.020. The attorney general is already to defend the
state constitution and the constitution of the U.S. The general
legal requirements for the attorney general to follow are laid
out in statute, this is just additional instruction particular
for oil and gas lease litigation.
2:44:11 PM
REPRESENTATIVE HAWKER opined that these are extremely broad and
are things already in statute. He asked whether this bill
really does anything that isn't already provided for as part of
the attorney general's responsibilities in reviewing state
settlements. He said he would be surprised to find that the
attorney general would not take into consideration whether
something alters constitutional, statutory, or regulatory
procedures, or looking to see that the settlement related to the
issues necessary to settle it, and didn't already make sure that
the settlement didn't go to things that had no nexus to the
settlement. He further asked whether he is missing something.
MS. POLLARD responded she doesn't believe Representative Hawker
is missing anything. She said the question is typical of the
few questions the administration has been getting about this
bill. In regard to Representative Hawker's earlier statement
about the best interest of the state, she said that the topic
sentence of what the chief legal officer of the state does is
always in the best interest of the state. The bill would then
bring it down to this subset of items that are not currently in
statute. The administration's desire is to have something that
is within the statute to make clear that in these particular
kinds of settlements in such an important area, that the
attorney make a determination. It doesn't say "written
determination," it's "determination" - a pause, a consideration,
a checking off of the boxes that all of these conditions are
considered in entering that settlement.
2:46:18 PM
REPRESENTATIVE HAWKER maintained that this legislation was
inspired by the administration's concern that the Point Thomsen
settlement had been entered into illegally, that it did not meet
all the necessary requirements for a proper settlement. Until
starting discussion on this bill, it had been the position of
the Department of Law that the Point Thomson settlement did not
violate the constitution or any state law. He asked whether the
Department of Law has changed any of its previous positions on
the legality of the Point Thomson settlement, given it is now
presenting this bill.
MS. POLLARD answered the department sees this bill as a going
forward bill for how potential settlements will be handled.
Regarding the aforementioned 2012 settlement, there is currently
no issue related to that settlement and the Department of Law
typically wouldn't comment on something like that if there were
litigation. She said the Department of Law did defend the
settlement and the Department of Law would defend settlements
entered in by the attorney general on behalf of state agencies.
2:48:09 PM
REPRESENTATIVE HAWKER stated there is no longer any challenge or
litigation related to that settlement so it seems to him there
would be the freedom to discuss it. He noted that Ms. Pollard
said the department defended the settlement, but didn't say the
department still held the position talking about going forward.
He again asked whether the Department of Law still believes that
the Point Thomson settlement was legitimate. He further asked
whether there is concern at the Department of Law that there has
been a practice of the attorney general entering into
settlements that violate the law and so this bill is needed.
MS. POLLARD replied yes, the administration believes there is a
need for this bill and it has been crafted in a way that
provides the protections and the indications in the statutes
that will help in future settlements assure that everything is
considered, and, in particular, when talking about these long-
term types of settlements or issues with oil and gas leases.
REPRESENTATIVE HAWKER said, "We are talking circles here because
if you do believe that there was no problem with the Point
Thomson settlement and there has been no practice in the past of
the AG entering into settlements that violate state law, I fail
to see a need for the bill." However, he added, the legislature
often does things that it doesn't see a need for. He said the
House Judiciary Standing Committee will be able to sort this out
much better than he can.
2:50:08 PM
REPRESENTATIVE JOHNSON said he sees circular logic in what the
administration is saying here. The administration is saying it
wants everything to be considered, but certain things are being
taken off the table to not be considered. The administration is
saying everything should be considered but then saying that this
is to limit the powers of the attorney general to some extent.
When talking in his office it was said that a settlement does
not set any type of precedent and so [the state] is not locked
into doing the same thing again in the future for any other
settlements. Settlements are agreements between two parties and
are not like a court case where there is a ruling. He asked
whether this is accurate.
MS. POLLARD responded that in describing the bill it is hard to
describe exactly because a balance is trying to be found between
recognizing the need for great care in entering into settlements
related to oil and gas matters. She said she realized as the
words came out of her mouth that limiting the attorney general
was incorrect; it isn't really limiting and she was trying to
find the best word for this. The administration is attempting
to strengthen the statutes in this oil and gas litigation area
so that future settlements related to oil and gas development on
state land don't bypass any legal obligation.
MS. HUNTER GRAMLING added that HB 109 recognizes there are
different approaches to settlement negotiation and that
generally the attorney general does have broad powers to settle
and, if needed, enter into more global-type settlement
agreements. However, HB 109 reflects policy decision that some
more sideboards are needed for civil litigation of oil and gas
lease issues. There is potential that it could speed up
negotiation when it is known ahead of time what the limits of
authority are.
2:53:05 PM
REPRESENTATIVE JOHNSON remarked that when dealing with the
producers the state is dealing with the most "lawyered-up
companies on the planet" and he therefore doesn't understand why
the state would want to take anything off the table or put on
sideboards when negotiating. He said he would think the state
would want to be able to approach that with the full force of
law, the full power of the attorney general using every tool in
the state's toolbox, as opposed to putting sideboards on it. He
said the sideboards might have the opposite effect of slowing
down the process knowing there is only a narrow window for a
settlement as opposed to the state having all of its power to be
brought forward. He said he doesn't think there has been any
real justification for doing this, but he won't hold up the bill
because the House Judiciary Standing Committee is the best place
to handle the bill.
2:54:33 PM
REPRESENTATIVE OLSON returned to Representative Josephson's
first comments, and said he can see situations where this could
apply to the telecommunications industry, the mineral industry,
fishery issues, and utilities. He inquired as to why not make
this applicable across the board.
MS. HUNTER GRAMLING answered the administration submitted this
bill to address a particular policy concern that it had. She
said she thinks the Department of Law would generally be opposed
to expanding it to apply to other areas, not that those other
areas aren't important but there may be unintended consequences.
REPRESENTATIVE OLSON said another situation that comes to mind
is the Trans-Alaska Pipeline System balancing. He said he
doesn't feel comfortable with the bill in its current form. He
noted that some time ago the committee requested that one of the
attorney generals who had handled the state's defense come give
the committee a wrap-up, but a different person came who didn't
address the issues that the committee was looking for.
2:55:57 PM
REPRESENTATIVE JOSEPHSON stated that relative to Point Thomson,
constitutionality, and the governor's opinion, he understood
that the governor as a civilian opposed the settlement while the
previous administration found it acceptable. He surmised this
is well known.
MS. POLLARD replied that if Representative Josephson is saying
the governor did not support the settlement, she cannot speak
about the litigation.
MS. HUNTER GRAMLING stated she thinks it fair to say that
attorneys can have good faith differing interpretations. This
bill isn't to address that, it is to look at going forward. It
may be that going forward, if this bill were to pass, different
attorneys general would take different interpretations of when a
determination is required, but this is the particular policy
choice at this time.
REPRESENTATIVE JOSEPHSON said he is reminded of Rule of Evidence
408 which talks about what is shared in settlement. He surmised
Rule 408 would apply relative to the question about whether a
current administration thinks something was proper or improper.
The nature of the settlement is immaterial at this point, the
settlement is over and any lawsuit has been withdrawn, and DOL
is looking to a new day.
MS. HUNTER GRAMLING believed Rule of Evidence 408 is more
targeted towards admitting settlement negotiations as evidence
in litigation, so HB 109 doesn't impact that court rule at all.
REPRESENTATIVE JOSEPHSON said the spirit of the rule is that
discussions in settlement are for the settling parties and, in
that sense, answering the merits or demerits of that settlement
is beyond the scope of this bill.
MS. POLLARD responded she would agree with that as a general
matter. As a specific matter, she noted that Ms. Gramling was
not with the Department of Law at the time of the settlement.
2:58:45 PM
REPRESENTATIVE SEATON said that as a legislator he appreciates
HB 109 because he doesn't think that the attorney general, when
faced with a case, should reach out and change other statutes
because the settling party wanted to come in and change
something else. If the state does that in a settlement, that is
overriding the legislature's authority to create statutes. The
same applies to regulatory processes that weren't part of the
settlement, because then it would be having the attorney general
override legislative authority as well as the authorities of
regulatory bodies. However, he continued, he is more concerned
with broadening this out, given "the Ketchikan lawsuit," a
current civil suit. Unless the attorney general is constrained
to the portions of the lawsuit, the attorney general might get
in and determine to change the funding formula to make this
settlement work with this settling party. He said he wants to
ensure that this is more like a limited conference where it can
be settled between the two parties' positions and cannot reach
out beyond and pull in new things, which is what he thinks this
accomplishes for oil and gas. He offered his hope that the
House Judiciary Standing Committee will broaden this so that the
attorney general in settlements of lawsuits can only function
within the parameters of the state's position and the litigant's
position and cannot be leveraged or encouraged to change other
factors. While he thinks that should be the attorney general's
constraint right now, it isn't because a law doesn't have to be
violated in a settlement to change another law because the law
isn't being violated, it is just making the exception to that
law for that lawsuit. Therefore, these are extremely valuable
determinations for the legislature to ensure that this applies
to all settlements because otherwise the attorney general and
the administration could be preempting legislative authority.
He said he thinks the context of HB 109 is right in looking at
going forward and not looking back at past settlements. He
again urged that the House Judiciary Standing Committee broaden
this authority to look at other civil litigations and ensure
settlements do not go beyond the boundaries or sideboards of the
settlement. He said he does not look at the bill as
constraining the state's ability to settle but as a sideboard to
settle within the bounds of the lawsuit and not reach out and
change other statutes or regulatory processes. He inquired
whether there is anything in his aforementioned statements that
the Department of Law would like to dispute.
MS. POLLARD answered that often litigation is because people
have a disagreement over a statutory interpretation. So, care
must be taken about any kind of broadening because oftentimes
the parties are going to do the best they can within the
settlement so that everybody can go forward. The judgement in
there is that that's less of a risk than continuing on with the
settlement. She reiterated that the Department of Law doesn't
think this would be as manageable in other areas as is being
done here with the limiting to oil and gas lease issues that the
Department of Natural Resources is handling. This is in part
because going forward it is more predictable types of issues
happening for future settlements, where in other areas it is
very difficult to actually tell what is going to end up being
within litigation.
3:04:22 PM
REPRESENTATIVE SEATON appreciated Ms. Pollard's answer, but said
in looking at the Ketchikan school lawsuit, if it would be
easier to settle by going over and changing things in the
foundation formula, that should be the legislature's prerogative
to create and change that and he would not like to see the state
get into the situation where those kinds of expansions are
allowed. He added he is not saying that the current attorney
general would do that, but it is a going forward thing that is
important and he is glad it is being brought forward.
REPRESENTATIVE JOHNSON disagreed with Representative Seaton,
saying this is the appropriate committee to introduce the
amendment given that many of the leases are regarding land and
water. If the House Judiciary Standing Committee disagrees with
the amendment, he continued, it can take the amendment out. He
said he has a problem with singling out a single industry. If
the legislature is going to treat regulations and settlements,
the legislature should be consistent. He agreed with
Representative Seaton that the legislature doesn't want the
attorney general circumventing the statute or the constitution.
He urged the committee to make the amendment today or bring it
before the committee on another day.
3:06:47 PM
CO-CHAIR NAGEAK opened public testimony on HB 109, then closed
it after ascertaining no one wished to testify.
3:08:13 PM
REPRESENTATIVE HAWKER moved to adopt Amendment 1, labeled 29-
GH1126\A.1, Nauman, 3/5/15, which read:
Page 1, line 2:
Delete "directly related to oil and gas leases"
Page 1, lines 13 - 14:
Delete "directly related to an oil and gas lease
under AS 38.05.005 - 38.05.990 (Alaska Land Act)"
Page 2, line 7:
Delete "related to an oil and gas pipeline or
products pipeline"
Page 2, lines 9 - 10:
Delete all material.
REPRESENTATIVE SEATON objected for purposes of discussion.
3:08:55 PM
REPRESENTATIVE HAWKER explained Amendment 1, saying he thinks
all of the committee members have the concern that the state
needs to treat all of its resource settlements similarly. He
said he is not comfortable with the sponsor's characterization
that the bill was being limited to oil and gas because of the
importance of the oil and gas industry and that the oil and gas
industry involves long-term relationships. He said long-term
relationships occur in the geothermal, mining, and timber
industries. Mining is an industry that has the potential for a
lot of settlements that could be very material to the State of
Alaska, the Pebble Mine being an example. The spirit of
Amendment 1 is that it leaves the same requirement that the
attorney general make findings. The amendment leaves Section 3
intact except it makes this legislation applicable to all
settlements that come under the purview of the attorney general.
He said this committee is making decisions based on resource
concerns and the House Judiciary Standing Committee is the
proper place for the discussion of the legal details.
3:11:30 PM
REPRESENTATIVE SEATON drew attention to lines 8-9 of Amendment 1
relating to page 2, line 7, of the bill. He pointed out that
this subsection of the bill is an exception that it does not
apply to certain things, and said he is therefore unsure that is
a deletion the committee really wants to make.
The committee took a brief at-ease.
3:12:49 PM
REPRESENTATIVE SEATON moved to adopt Amendment 1 to Amendment 1
to delete lines 8-9. There being no objection, Amendment 1 to
Amendment 1 was adopted.
3:13:27 PM
REPRESENTATIVE SEATON requested an explanation of lines 11-12 of
Amendment 1, which propose to delete all material on page 2,
lines 9-10, of the bill.
REPRESENTATIVE HAWKER replied that this is a new section of
statute and these lines in the bill state, "For the purpose of
this section, 'oil and gas lease' has the meaning given in AS
43.55.900." He explained that since the term "oil and gas
lease" is being eliminated from the bill it doesn't need to be
defined.
3:14:08 PM
CO-CHAIR NAGEAK inquired whether there is any further
discussion. There being no further discussion, Co-Chair Nageak
stated that Amendment 1 has been amended.
3:14:25 PM
REPRESENTATIVE JOSEPHSON noted that the Department of Law
earlier stated its position in this regard, but requested that
DOL be invited to comment on the amendment and again explain its
position.
MS. POLLARD stated DOL does not support Amendment 1 and believes
it is premature. When DOL drafted this bill it was done in
conjunction with discussions with the Department of Natural
Resources; it was felt that the bill was limited and spoken
about with the agency that it would affect. She suggested this
amendment could have unintended consequences and said it has not
been discussed in a general matter with anybody else in the
Department of Law.
3:16:25 PM
REPRESENTATIVE HAWKER said he understands the concern of the
sponsor, but said the amendment is offered as a House Resources
Standing Committee jurisdictional item, one that is a matter of
policy statement. In supporting this amendment he said he wants
to make the policy statement that all resource settlements are
of equal concern and magnitude and deserve equal consideration
by the attorney general. For example, a mining settlement
related to Pebble Mine should not be less important than an oil
and gas settlement. He further noted that this should also be
looked at by the House Judiciary Standing Committee.
MS. POLLARD understood what Representative Hawker is saying, but
stated she has not been able to vet these potential changes and
therefore it is premature for her to say that this amendment
would be acceptable to the Department of Law.
3:18:18 PM
REPRESENTATIVE SEATON drew attention to language in the bill on
page 1, lines 1-2, which states, "with respect to certain
settlements". He inquired whether the word "certain" should be
deleted now that "directly related to oil and gas leases" has
been removed.
REPRESENTATIVE HAWKER replied he is comfortable with leaving
that sort of detail to Representative Gruenberg [of the House
Judiciary Standing Committee].
3:19:04 PM
REPRESENTATIVE SEATON understood, then, that as the bill is
being looked at now the specification to "certain" is not still
restrictive to oil and gas.
REPRESENTATIVE HAWKER responded that this is for settlements
that the attorney general is settling; certain settlements as
opposed to the universe of all settlements in the world. The
word "certain" here is not overly restrictive nor overly
permissive. He added that the bill would still retain the
concern that it does not involve settlements under the
jurisdiction of the Regulatory Commission of Alaska, so
"certain" is a limitation indicating that it is not the entire
universe of all possible settlements that exist in the world.
3:20:19 PM
CO-CHAIR NAGEAK announced the committee has dispensed with the
amendment. [Amendment 1, as amended, was treated as adopted.]
3:20:31 PM
REPRESENTATIVE HAWKER moved to report HB 109, as amended, out of
committee with individual recommendations and the accompanying
zero fiscal note.
REPRESENTATIVE JOSEPHSON objected, recalling that when the
governor came before the committee the governor said he was
going to file this bill. Although there is litigation on all
sorts of subjects, the Point Thomson matter lasted years, he
pointed out. There were 23 years when requests to develop the
field were made and ignored. Many Alaskans believed that what
was achieved was no different than what should have been
achieved decades before. Incorporated in that settlement was
tax and other issues that were arguably extraneous to developing
the field. He said he thinks this could be a step too far to
enable the attorney general the job he or she is allowed to do,
particularly in a strong governor model like Alaska's. For all
he knows, the state could need another 20 attorneys general if
HB 109 is passed. Therefore, given his uncertainty, he must
object.
3:22:58 PM
REPRESENTATIVE SEATON said the meat of the bill on page 2 states
that a settlement: is to be limited to issues necessary to
settle the action, does not include matters unrelated to the
action, and does not alter constitutional, statutory, or
regulatory procedures required by law. He opined that all three
of those things need to be there for every settlement. If a
settlement is going to do any of those three, then it should be
a settlement that is proposed to the legislature and should get
legislative approval if it is altering statute or altering
constitutional or regulatory procedures. He said he doesn't
think it limits the authority of the attorney general to propose
a settlement, but if it is going beyond the confines of what the
action is, then it should have to come back to the legislature.
That is why, he continued, he will be supporting this.
3:25:06 PM
REPRESENTATIVE JOSEPHSON stated that if all of the settlements
were reviewed by a court of law he wouldn't be particularly
concerned because no court can adjust the rules of court up to a
point or the statutes or constitution. A court will come as
close as it can but it will not cross the line. He said he
thinks this will also impede the DNR commissioner's authority
because the DNR commissioner plays a pivotal role as essentially
an adjudicator of some of these disputes, and the committee has
not vetted what that means to the job of the attorney general
and to the DNR commissioner. He maintained his objection.
CO-CHAIR TALERICO agreed with Representative Seaton and said
rather than seeing more attorneys general he fears the
legislature would be doing legislation eventually for each and
every industry in the state to level this playing field and make
this consistent. This will provide a level of consistency that
would stretch throughout all of the industries in the state. He
said he therefore supports this amendment.
3:27:15 PM
REPRESENTATIVE JOHNSON said this conversation raises flags to
him because he is wondering what settlements have been contrary
to statute, constitution, or regulation given he didn't know
that could even be an option. He said this goes back to his
original statement that he is unsure this law is needed, but he
thinks this amendment is needed if this law is to go forward.
He offered his strong support for the amendment and the
legislation.
REPRESENTATIVE JOSEPHSON maintained his objection.
3:27:46 PM
CO-CHAIR NAGEAK requested a roll call vote on reporting HB 109,
as amended.
A roll call vote was taken. Representatives Hawker, Johnson,
Olson, Seaton, Talerico, and Nageak voted in favor of reporting
HB 109, as amended. Representative Josephson voted against it.
Therefore, CSHB 109(RES) was reported out of the House Resources
Standing Committee by a vote of 6-1.
3:28:53 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:29 p.m.