Legislature(2005 - 2006)BUTROVICH 205

04/26/2006 08:30 AM JUDICIARY

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08:44:35 AM Start
08:45:00 AM SB316
10:39:43 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
          SB 316-COURT REVIEW OF STRANDED GAS DECISION                                                                      
8:45:00 AM                                                                                                                    
CHAIR RALPH SEEKINS announced SB 316 to be up for consideration.                                                                
LARRY OSTROVSKY, Chief Assistant  Attorney General, Department of                                                               
Law (DOL), introduced himself.                                                                                                  
8:46:03 AM                                                                                                                    
SENATOR GRETCHEN GUESS stated her  confusion on page 3, lines 6-7                                                               
was the intent  behind the findings and  determinations relied on                                                               
by  the  Legislature. She  asked  whether  these were  the  final                                                               
findings  and if  the  chapter should  refer  back to  430(a)(3),                                                               
which states the commissioner's findings.                                                                                       
CHAIR SEEKINS  stated his  dilemma was that  it appears  that the                                                               
commissioner  goes through  the  entire process  of developing  a                                                               
contract, gathers information, analyzes it  and comes up with his                                                               
final findings.  So now  there are  several findings;  whether or                                                               
not it  complies with the law,  whether or not it  meets the best                                                               
financial interest of the state.                                                                                                
MR. OSTROVSKY  interjected those  two would be  incorporated into                                                               
one finding.                                                                                                                    
CHAIR SEEKINS stated those two things have to be determined.                                                                    
SENATOR GUESS  countered that was  implied but  .430(a)(3) states                                                               
what is  to be  determined is whether  the proposed  contract and                                                               
amendments meet the requirements and purposes of the Chapter.                                                                   
CHAIR SEEKINS agreed.                                                                                                           
SENATOR  GUESS  said fiscal  interest  is  not mentioned.  It  is                                                               
implied but not specified.                                                                                                      
CHAIR SEEKINS  said .430(b) would indicate  that the commissioner                                                               
has to have  a contract that is in the  long-term fiscal interest                                                               
of the state.                                                                                                                   
SENATOR  GUESS asserted  that is  just the  hurdle to  submit the                                                               
contract to the governor.                                                                                                       
CHAIR SEEKINS referred to .400(a)(1-2)  and said the commissioner                                                               
has to  make preliminary  findings and  a determination  that the                                                               
proposed contract terms  are in the long-term  fiscal interest of                                                               
the state.                                                                                                                      
SENATOR HOLLIS FRENCH agreed.                                                                                                   
CHAIR SEEKINS said  along with that, as soon  as the commissioner                                                               
makes the preliminary  finding under .310(f), the  entire body of                                                               
information other  than the  information that  is required  to be                                                               
kept confidential becomes a public document.                                                                                    
8:52:35 AM                                                                                                                    
MR.  OSTROVSKY  said  that  is   correct  but  the  Stranded  Gas                                                               
Development Act (SGDA) says it  becomes a public document subject                                                               
to whatever privileges might exist under law.                                                                                   
CHAIR SEEKINS  said at this  point even the documents  that might                                                               
not  agree  with the  commissioner's  final  findings are  public                                                               
documents under the Public Information Act.                                                                                     
8:54:04 AM                                                                                                                    
SENATOR FRENCH referred  to the public documents and  said it was                                                               
important to  keep in mind  the difference between those  and the                                                               
"universe  of information  you can  acquire through  the discover                                                               
process when challenging a finding."                                                                                            
CHAIR  SEEKINS asked  Mr. Ostrovsky  the distinction  between the                                                               
MR.  OSTROVSKY  said  with  respect  to  certain  documents,  for                                                               
example attorney-client privilege, there would be no difference.                                                                
CHAIR SEEKINS asked about internal memorandums.                                                                                 
MR. OSTROVSKY said that would be part of the public documents.                                                                  
CHAIR  SEEKINS asked  about  a  memorandum from  the  DOL to  the                                                               
MR.   OSTROVSKY   responded   ordinarily  that   would   not   be                                                               
8:56:00 AM                                                                                                                    
SENATOR FRENCH asked who would decide what is discoverable.                                                                     
MR. OSTROVSKY responded, "A judge."                                                                                             
SENATOR   FRENCH  asked   what,  besides   documents,  could   be                                                               
MR. OSTROVSKY replied depositions and testimony.                                                                                
SENATOR  FRENCH  recognized  that testimony  and  depositions  is                                                               
something  the  committee has  not  explored  but could  be  very                                                               
MR. OSTROVSKY  responded normally that  type of discovery  is not                                                               
used in administrative challenges because  the court looks to the                                                               
record to see where the  record supports the decision. The burden                                                               
is on the agency to show that the record supports the decision.                                                                 
CHAIR  SEEKINS posed  a hypothetical  situation  of two  opposing                                                               
models and asked whether both of  the models would be made public                                                               
MR. OSTROVSKY said he didn't see why not although there could be                                                                
problems with confidentiality. In that case the court could                                                                     
fashion a protective order for the confidential data.                                                                           
9:00:04 AM                                                                                                                    
CHAIR SEEKINS reference AS 40.25.110 and read the statute.                                                                      
     Sec. 40.25.110.  Public records  open to inspection and                                                                    
     copying; fees.                                                                                                             
          (a) Unless specifically provided otherwise, the                                                                       
     public  records  of all  public  agencies  are open  to                                                                    
     inspection by the public  under reasonable rules during                                                                    
     regular  office hours.  The public  officer having  the                                                                    
     custody  of public  records shall  give on  request and                                                                    
     payment of  the fee  established under this  section or                                                                    
     AS 40.25.115 a certified copy of the public record.                                                                        
          (b) Except as otherwise provided in this section,                                                                     
     the fee for  copying public records may  not exceed the                                                                    
     standard unit  cost of  duplication established  by the                                                                    
     public agency.                                                                                                             
          (c) If the production of records for one                                                                              
     requester  in a  calendar  month  exceeds five  person-                                                                    
     hours, the  public agency  shall require  the requester                                                                    
     to pay  the personnel  costs required during  the month                                                                    
     to  complete   the  search   and  copying   tasks.  The                                                                    
     personnel costs  may not exceed  the actual  salary and                                                                    
     benefit  costs  for  the  personnel  time  required  to                                                                    
     perform  the search  and copying  tasks. The  requester                                                                    
     shall  pay the  fee before  the records  are disclosed,                                                                    
     and the  public agency  may require payment  in advance                                                                    
     of the search.                                                                                                             
          (d) A public agency may reduce or waive a fee                                                                         
     when the  public agency  determines that  the reduction                                                                    
     or  waiver is  in the  public interest.  Fee reductions                                                                    
     and waivers  shall be  uniformly applied  among persons                                                                    
     who are  similarly situated. A public  agency may waive                                                                    
     a fee of  $5 or less if  the fee is less  than the cost                                                                    
     to the public agency to arrange for payment.                                                                               
          (e) Notwithstanding other provisions of this                                                                          
     section   to  the   contrary,  the   Bureau  of   Vital                                                                    
     Statistics and  the library archives in  the Department                                                                    
     of  Education and  Early  Development  may continue  to                                                                    
     charge  the  same  fees  that  they  were  charging  on                                                                    
     September  25, 1990,  for  performing record  searches,                                                                    
     and  may  increase the  fees  as  necessary to  recover                                                                    
     agency expenses on the same  basis that was used by the                                                                    
     agency   immediately   before   September   25,   1990.                                                                    
     Notwithstanding  other provisions  of  this section  to                                                                    
     the  contrary, the  Department of  Commerce, Community,                                                                    
     and  Economic Development  may continue  to charge  the                                                                    
     same fees  that the  former Department of  Commerce and                                                                    
     Economic Development was charging  on July 1, 1999, for                                                                    
     performing  record  searches  for  matters  related  to                                                                    
     banking,   securities,   and  corporations,   and   may                                                                    
     increase  the  fees  as  necessary  to  recover  agency                                                                    
     expenses on the same basis  that was used by the former                                                                    
     Department   of  Commerce   and  Economic   Development                                                                    
     immediately before July 1, 1999.                                                                                           
          (f) Notwithstanding other provisions of this                                                                          
     section to  the contrary, the  Board of Regents  of the                                                                    
     University of Alaska may  establish reasonable fees for                                                                    
     the   inspection  and   copying   of  public   records,                                                                    
     including record searches.                                                                                                 
          (g) Notwithstanding other provisions of this                                                                          
     section to the contrary, the  board of directors of the                                                                    
     Alaska  Railroad Corporation  may establish  reasonable                                                                    
     fees for the inspection  and copying of public records,                                                                    
     including record searches.                                                                                                 
          (h) Notwithstanding other provisions of this                                                                          
     section  to  the  contrary,  the  judicial  branch  may                                                                    
     establish  by  court  rule   reasonable  fees  for  the                                                                    
     inspection  and copying  of  public records,  including                                                                    
     record searches.                                                                                                           
          (i) Electronic information that is provided in                                                                        
     printed form  shall be made available  without codes or                                                                    
     symbols, unless  accompanied by  an explanation  of the                                                                    
     codes or symbols.                                                                                                          
CHAIR  SEEKINS  said  Senator  French  was,  "getting  more  into                                                               
interrogatories  more  than  he is  discoverable  documents."  He                                                               
asked   Senator    French   whether   he   meant    to   indicate                                                               
SENATOR FRENCH  said he was  talking about "strictly  paper." The                                                               
point is  discovery is  a broader inquiry  than a  public records                                                               
CHAIR  SEEKINS  agreed.  If all  the  public  documents,  models,                                                               
analysis,  and  working paper  were  public  documents; they  are                                                               
public  as  soon  as  the   commissioner  makes  his  preliminary                                                               
findings, he reiterated.                                                                                                        
MR.  OSTROVSKY   interrupted  to  say  the   universe  of  public                                                               
documents is  broader. Under the SGDA,  the commissioner releases                                                               
all the extra  reports but there is a universe  of documents that                                                               
become public record.                                                                                                           
SENATOR GUESS  said she interprets  (f) to be much  narrower than                                                               
"every  public   document"  because  anyone  could   say  certain                                                               
discussions or documents weren't relevant to the decision.                                                                      
CHAIR SEEKINS  opined if it  weren't something that  was relevant                                                               
to the conversation, it wouldn't have been confidential.                                                                        
MR.  OSTROVSKY said  normally all  documents in  state government                                                               
are public records  but some documents are  covered by privilege.                                                               
The Stranded  Gas Development Act  puts a layer of  protection on                                                               
certain  documents  for  a  limited   period  of  time  to  allow                                                               
negotiations to go forward. Those  are the documents that reflect                                                               
and incorporate  state strategy. The commercial  documents do not                                                               
necessarily lose their confidentiality  but the Act outlines that                                                               
those   documents  are   public  records   once  a   contract  is                                                               
9:06:07 AM                                                                                                                    
CHAIR SEEKINS  asked whether language  in the Act  should clearly                                                               
state that all of the documents are public.                                                                                     
MR. OSTROVSKY  said there is  a limited protection for  a limited                                                               
time. Once there is a proposed contract that disappears.                                                                        
CHAIR  SEEKINS noted  once the  findings  become preliminary  the                                                               
public  comment and  legislative review  period commences  with a                                                               
minimum of 30 days.                                                                                                             
MR. OSTROVSKY said that is correct.                                                                                             
CHAIR  SEEKINS continued  during that  30 days,  any person  that                                                               
wants to could get copies of the documents.                                                                                     
MR. OSTROVSKY  informed the committee  the commissioner  is under                                                               
the  affirmative  duty to  release  all  of the  documents  under                                                               
.410(2) and the Legislature is also able to see those.                                                                          
CHAIR  SEEKINS asked,  "The  Legislature is  allowed  to see  the                                                               
confidential documents that would not be public records?"                                                                       
MR. OSTROVSKY said yes.                                                                                                         
CHAIR SEEKINS assumed  there was a responsibility on  the part of                                                               
the Legislature to keep the documents confidential.                                                                             
MR. OSTROVSKY agreed.                                                                                                           
CHAIR SEEKINS  stated his concern  that a person  could challenge                                                               
the  preliminary findings  based  on  discovering some  documents                                                               
that  they  believe should  have  been  used in  determining  the                                                               
contact but weren't.                                                                                                            
9:09:54 AM                                                                                                                    
SENATOR FRENCH said  the reason he asked Mr.  Ostrovsky about the                                                               
final findings was to let everybody  know that was the trigger to                                                               
which people could present a challenge.                                                                                         
CHAIR SEEKINS  mentioned after the legislative  review and public                                                               
comment,  the  commissioner  submits his  final  findings.  Under                                                               
current law, he  has to determine whether the  contract meets the                                                               
requirements of the  law and also determine that  the contract is                                                               
in the long-term fiscal interest of the state.                                                                                  
MR.  OSTROVSKY  reminded  the committee  that  after  the  public                                                               
comment period,  the commissioner  might need to  renegotiate the                                                               
contract.  At that  point  in  time it  becomes  a "final  agency                                                               
SENATOR GUESS  asked the difference  between "final  findings and                                                               
determinations" and "final agency decision."                                                                                    
MR.  OSTROVSKY said  none. The  final agency  decision is  what a                                                               
person  would file  an appeal  from. Findings  and determinations                                                               
are final agency decisions.                                                                                                     
9:15:06 AM                                                                                                                    
CHAIR   SEEKINS  reminded   the  committee   that  in   1998  the                                                               
Legislature called  "time out" and  inserted themselves  into the                                                               
process. The Legislature now becomes  the final body to determine                                                               
whether or not it meets the requirements of the Chapter.                                                                        
SENATOR  GUESS  said  the  law  currently  reads  such  that  the                                                               
Legislature  gets  the  contract  to review  but  not  the  final                                                               
findings and determination.                                                                                                     
CHAIR SEEKINS  said he could  not imagine that they  wouldn't get                                                               
the final findings.                                                                                                             
9:18:22 AM                                                                                                                    
CHAIR  SEEKINS asked  what other  information the  Legislature is                                                               
allowed to look at other than the commissioner's findings.                                                                      
MR.  OSTROVSKY  said,  "Whatever  it chooses  to  look  at."  The                                                               
Legislature often hires its own experts.                                                                                        
CHAIR SEEKINS  said the information  brought to us by  the expert                                                               
would constitute a recommendation.                                                                                              
MR. OSTROVSKY agreed.                                                                                                           
CHAIR  SEEKINS asked  whether the  findings  of the  commissioner                                                               
would be any more than that.                                                                                                    
MR. OSTROVSKY said essentially no.                                                                                              
9:20:15 AM                                                                                                                    
CHAIR SEEKINS said, "That's our dilemma."                                                                                       
SENATOR  GUESS  didn't see  the  dilemma.  It's a  decision,  she                                                               
CHAIR  SEEKINS said,  "Our decision  is not  challengeable unless                                                               
it's unconstitutional."                                                                                                         
SENATOR GUESS said  she thought the committee  was more concerned                                                               
about the timing issue.                                                                                                         
CHAIR  SEEKINS said,  "You're right."  He asked  whether the  law                                                               
should  be  able to  say,  "the  Legislature can't  consider  the                                                               
contract because  the findings and  recommendations are  going to                                                               
be in litigation."                                                                                                              
SENATOR GENE  THERRIAULT said the commissioner's  power and right                                                               
to ignore  the law is  different than the Legislature's  power to                                                               
[indisc] the law.                                                                                                               
9:23:37 AM                                                                                                                    
CHAIR SEEKINS referred to .430(a)(3) and read:                                                                                  
     (3) make final findings and a determination as to whether                                                                  
the proposed contract and any  proposed amendments prepared under                                                               
(2)  of this  subsection meet  the requirements  and purposes  of                                                               
this chapter.                                                                                                                   
He  said  it wasn't  certifying  that  they  meet;  it is  as  to                                                               
"whether" they meet.                                                                                                            
SENATOR GUESS noted that is a final agency decision.                                                                            
9:27:11 AM                                                                                                                    
SENATOR  GUESS asked  Mr. Ostrovsky  whether  certification is  a                                                               
term of art in statute.                                                                                                         
MR. OSTROVSKY said, "Not that I'm aware of."                                                                                    
JIM BALDWIN, Attorney, said there  are instances where duties are                                                               
[indisc]  in terms  of certification.  It  is usually  associated                                                               
with taking an oath.                                                                                                            
CHAIR  SEEKINS  asked Mr.  Baldwin  whether  the commissioner  is                                                               
required to certify that his findings are correct and complete.                                                                 
MR. BALDWIN replied  the commissioner would have  to note whether                                                               
or not changes would need to be made to the Act.                                                                                
9:30:12 AM                                                                                                                    
SENATOR   GUESS   countered   if  the   final   findings   aren't                                                               
challengeable,  (if the  legislative approval  of the  contact is                                                               
the final say), why have the Stranded Gas Act at all?                                                                           
MR. BALDWIN  said it is  important to  keep in mind  the complete                                                               
picture of the  SGDA and what is worth challenging  at the end of                                                               
the day.  A person will  always have the constitutional  right to                                                               
challenge a contract.                                                                                                           
SENATOR  GUESS said  everyone  on the  committee  would take  the                                                               
constitutionality issue off  the table. Nobody wants  to slow the                                                               
process  down  but the  question  is  whether  to take  away  the                                                               
public's ability to challenge.                                                                                                  
CHAIR SEEKINS asked Mr. Baldwin whether  a law could be passed to                                                               
specify a block  of time for a right to  challenge something on a                                                               
constitutional basis.                                                                                                           
MR.  BALDWIN responded  that would  have the  potential of  being                                                               
challenged.  However, there  are  instances where  the court  has                                                               
limited things  for review,  such as  redistricting of  the state                                                               
where the  court requires that  constitutional issues  be brought                                                               
within 60 days.                                                                                                                 
9:36:08 AM                                                                                                                    
SENATOR FRENCH  agreed with Mr.  Baldwin. In the civil  arena the                                                               
courts can limit a person's constitutional challenges.                                                                          
CHAIR SEEKINS commented the committee  has come down to the final                                                               
question  of whether  or not  the challenge  to the  final agency                                                               
decision could be moved to the final step of the process.                                                                       
MR.  OSTROVSKY  reported  the  DOL   believes  that  because  the                                                               
Legislature retained a  role in the process,  the agency decision                                                               
under  SGDA  becomes  but  a component  of  the  final  contract.                                                               
Hypothetically  speaking,  the  Legislature's decision  could  be                                                               
independent of the commissioner's.                                                                                              
9:40:00 AM                                                                                                                    
SENATOR FRENCH  said if it  is broader then  there is no  harm or                                                               
imposition  on  the system  to  allow  a  full challenge  to  the                                                               
commissioner's  findings.  He  said   the  main  concern  of  the                                                               
committee is whether  or not there could be a  court case against                                                               
their finding. The final findings  and determination is a term of                                                               
art that the  courts are comfortable working with,  but the final                                                               
findings and  determination of the  Legislature is brand  new, he                                                               
said, and he expressed concern with  how a judge would proceed on                                                               
a legal challenge.                                                                                                              
MR. OSTROVSKY replied  the DOL would consider  the final findings                                                               
of the  commissioner just a step  in the process but  not a final                                                               
step.  The challenge  would  be at  the end  of  the process,  he                                                               
SENATOR  FRENCH  said he  was  concerned  about  a "kink  in  the                                                               
system."  There  is still  an  executive  act function  once  the                                                               
Legislature is  finished and so  in order to minimize  the amount                                                               
of challenges  that can be  brought, he  wanted to make  sure the                                                               
committee establishes the correct place for a challenge.                                                                        
9:45:38 AM                                                                                                                    
CHAIR SEEKINS agreed  that the challenge should  take place after                                                               
the execution of the contract.                                                                                                  
9:50:57 AM                                                                                                                    
SENATOR THERRIAULT added  that nobody knows how  long the Supreme                                                               
Court would  take to make a  decision on the challenge.  He asked                                                               
whether the contract could go forward while the court decides.                                                                  
MR. OSTROVSKY  replied the court would  remand the commissioner's                                                               
CHAIR  SEEKINS  suggested the  language,  "any  challenge to  the                                                               
findings and  determination forwarded by the  commissioner or the                                                               
Legislature can not delay consideration of the contract."                                                                       
SENATOR THERRIAULT added  the contract would still be  able to be                                                               
forwarded to the Legislature to begin their process.                                                                            
9:53:49 AM                                                                                                                    
SENATOR  HUGGINS  said   the  point  is  "is   the  threshold  of                                                               
constitutionality too high?"                                                                                                    
SENATOR GUESS asked  the reason for maintaining  the Stranded Gas                                                               
Development Act. If the contract is  good to go, why bother going                                                               
through the process of amending the Act, she asked.                                                                             
MR. OSTROVSKY responded it was all  part of the process. The SGDA                                                               
requires the  administration with something they  normally aren't                                                               
required to  do when they  present something to  the Legislature.                                                               
He said there is a purpose for it.                                                                                              
CHAIR SEEKINS called a brief recess at 10:06:00 AM.                                                                           
10:20:35 AM                                                                                                                   
CHAIR SEEKINS  called the  committee back  to order.  He informed                                                               
the committee  that he was going  to ask the drafter  of the bill                                                               
to  clarify   the  language  that   any  challenge   can't  delay                                                               
consideration of  the contract  by the  Legislature and  that the                                                               
contract is  challengeable for only  120 days after  execution of                                                               
the contract.                                                                                                                   
SENATOR  GUESS questioned  when the  challenge would  happen. The                                                               
current language doesn't allow for  a challenge before the review                                                               
of the Legislature.                                                                                                             
CHAIR SEEKINS  referred the committee  to section .410(2)  in the                                                               
Act and said he wants that language  to line up with Section 2 of                                                               
the bill.                                                                                                                       
10:26:30 AM                                                                                                                   
JOMO STEWART, Fairbanks, testified in  opposition to the bill. He                                                               
said it  is a  bad bill and  it would not  serve the  purpose the                                                               
committee is seeking.  The record shows that  the Legislature was                                                               
invited into  the process by  the Administration in 1998  yet was                                                               
not required  to participate. It chose  to do so and  that is not                                                               
an  "abomination" as  it has  been referred  as several  times in                                                               
this  committee.  It  is  an established  practice  to  have  the                                                               
Legislature involved in issues involving resource development.                                                                  
10:30:32 AM                                                                                                                   
MR.  STEWART  continued  it  has been  stated  several  times  in                                                               
committee that the Legislature has  some kind of final power over                                                               
the contract  and that  is not  the case.  The final  decision of                                                               
whether or not the contract is  in the best interest of the state                                                               
and should be carried further  is under the governor's authority.                                                               
He encouraged the committee to bury the bill.                                                                                   
10:37:32 AM                                                                                                                   
SENATOR HUGGINS  asked Mr.  Ostrovsky to  comment on  the pending                                                               
suit in reference to the gas pipeline.                                                                                          
MR. OSTROVSKY replied the Port  Authority has filed an anti-trust                                                               
action  in  federal court  against  British  Petroleum and  Exxon                                                               
Mobil but did not elaborate.                                                                                                    
CHAIR SEEKINS held the bill in committee.                                                                                       

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