Legislature(2005 - 2006)SENATE FINANCE 532

07/24/2006 01:30 PM Senate SPECIAL COMMITTEE ON NATURAL GAS DEV


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02:04:29 PM Start
02:04:29 PM SB3002
02:07:56 PM Jim Baldwin, Counsel to the Office of the Attorney General
03:06:57 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB3001 OIL/GAS PROD. TAX TELECONFERENCED
Scheduled But Not Heard
+= SB3002 STRANDED GAS AMENDMENTS TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
      SENATE SPECIAL COMMITTEE ON NATURAL GAS DEVELOPMENT                                                                     
                         July 24, 2006                                                                                          
                           2:04 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Ralph Seekins, Chair                                                                                                    
Senator Gary Wilken                                                                                                             
Senator Con Bunde                                                                                                               
Senator Fred Dyson                                                                                                              
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyda Green                                                                                                              
Senator Bert Stedman                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Thomas Wagoner                                                                                                          
Senator Ben Stevens                                                                                                             
Senator Albert Kookesh                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 3002                                                                                                            
"An  Act relating  to the  Alaska Stranded  Gas Development  Act;                                                               
relating to municipal impact money  received under the terms of a                                                               
stranded gas  fiscal contract; relating to  determination of full                                                               
and  true  value  of  property  and  required  contributions  for                                                               
education  in  municipalities  affected by  stranded  gas  fiscal                                                               
contracts; and providing for an effective date."                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 3001                                                                                                            
"An Act  relating to  the production  tax on oil  and gas  and to                                                               
conservation surcharges  on oil;  relating to  criminal penalties                                                               
for  violating   conditions  governing  access  to   and  use  of                                                               
confidential   information  relating   to  the   production  tax;                                                               
amending the  definition of 'gas'  as that definition  applies in                                                               
the  Alaska  Stranded  Gas  Development  Act;  making  conforming                                                               
amendments; and providing for an effective date."                                                                               
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                              
BILL: SB3002                                                                                                                  
SHORT TITLE: STRANDED GAS AMENDMENTS                                                                                            
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
07/12/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
07/12/06       (S)       NGD                                                                                                    
07/13/06       (S)       NGD AT 9:00 AM SENATE FINANCE 532                                                                      
07/13/06       (S)       Heard & Held                                                                                           
07/13/06       (S)       MINUTE(NGD)                                                                                            
07/14/06       (S)       NGD AT 9:00 AM SENATE FINANCE 532                                                                      
07/14/06       (S)       Heard & Held                                                                                           
07/14/06       (S)       MINUTE(NGD)                                                                                            
07/24/06       (S)       NGD AT 1:30 PM SENATE FINANCE 532                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM BALDWIN                                                                                                                     
Counsel to the Office of the Attorney General                                                                                   
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION  STATEMENT:     Testified   on  SB  3002   and  answered                                                             
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  RALPH  SEEKINS  called the  Senate  Special  Committee  on                                                             
Natural Gas Development meeting to  order at 2:04:29 PM.  Present                                                             
at the  call to order were  Senators Fred Dyson, Con  Bunde, Gary                                                               
Wilken, Kim Elton and Chair Ralph Seekins.                                                                                      
                                                                                                                                
                SB 3002-STRANDED GAS AMENDMENTS                                                                             
                                                                                                                                
2:04:29 PM                                                                                                                    
CHAIR SEEKINS announced  SB 3002 to be up for  consideration.  He                                                               
highlighted Section 2, amending AS 43.82.505.                                                                                   
                                                                                                                                
^Jim Baldwin, Counsel to the Office of the Attorney General                                                                     
JIM  BALDWIN, Counsel  to  the Office  of  the Attorney  General,                                                               
Department  of  Law,  indicated  Section 2  came  from  SB  2004,                                                               
considered by this  committee in the second special  session.  It                                                               
establishes the  method by which  impact funds payable  under the                                                               
fiscal  contract   are  anticipated   and  appropriated   into  a                                                               
permanent   account,  established   within   the  Department   of                                                               
Commerce,  Community  and   Economic  Development  (DCCED)  under                                                               
Section  3  of  the  bill.   To  avoid  the  prohibition  against                                                               
dedicated  funds, this  $125 million  for local  impacts will  be                                                               
available and the legislature may appropriate it.                                                                               
                                                                                                                                
2:07:56 PM                                                                                                                    
SENATOR BUNDE pointed out that  subsection (c) of Section 3 talks                                                               
about a nonprofit organization serving the unorganized borough.                                                                 
                                                                                                                                
CHAIR SEEKINS indicated that  organization was identified earlier                                                               
as the Tanana Chiefs.                                                                                                           
                                                                                                                                
SENATOR BUNDE asked how closely this treads on tribal issues.                                                                   
                                                                                                                                
CHAIR SEEKINS acknowledged it as a good question.                                                                               
                                                                                                                                
MR.  BALDWIN  related  his understanding  of  how  the  Municipal                                                               
Advisory Group  (MAG) designed this:   Among affected communities                                                               
in  the area,  there would  be one  sponsoring group,  the Tanana                                                               
Chiefs.   He said this was  related in testimony during  the last                                                               
special session, which considered an identical provision.                                                                       
                                                                                                                                
SENATOR BUNDE  voiced concern  that many  nonprofit organizations                                                               
in Alaska could convince someone  that there had been an economic                                                               
impact, even in regions remote from the pipeline.                                                                               
                                                                                                                                
CHAIR  SEEKINS   asked  whether  Senator  Bunde   was  suggesting                                                               
specifically designating that it be a single entity.                                                                            
                                                                                                                                
SENATOR BUNDE indicated flexibility as  to how it is handled, but                                                               
expressed concern that it is wide open.                                                                                         
                                                                                                                                
2:10:08 PM                                                                                                                    
MR.  BALDWIN   explained  the   genesis  of   Section  3.     The                                                               
administration  received it  as a  proposal from  MAG during  the                                                               
second  regular  session;  the   language  closely  followed  the                                                               
existing   National  Petroleum   Reserves-Alaska  (NPR-A)   grant                                                               
program.  During hearings in  the second special session, it came                                                               
out that  modifications were  needed.   Thus this  committee made                                                               
changes  with respect  to the  transparency  of the  grant-making                                                               
process,  including subsections  (e)  and (f),  the latter  being                                                               
where  the  public notice  requirements  are  imposed for  grants                                                               
received.   Public notice is  also required for the  intention to                                                               
make  grants, which  must sit  30  days before  final awards  are                                                               
made.  Another  change is a tighter standard  for determining the                                                               
amount  of  impact that  qualifies  for  a  grant, or  whether  a                                                               
particular impact qualifies; thus on  page 3, line 3, it requires                                                               
a direct or severe impact from gas-pipeline construction.                                                                       
                                                                                                                                
He  noted  "direct  or  severe  impact"  is  defined  on  page 4,                                                               
line 18,  to give  a standard  for eligibility  decisions by  the                                                               
granting agency.  It requires  a clearly demonstrable effect on a                                                               
community that  proximately contributes  to a material  change to                                                               
transportation,   infrastructure,   law  enforcement,   emergency                                                               
services, health  and human services,  education or  labor force.                                                               
Mr.  Baldwin  reminded  members  that  these  changes,  meant  to                                                               
provide  more  accountability  and   transparency,  were  in  the                                                               
version passed by  this committee and were  favorably received by                                                               
the Senate as a whole.                                                                                                          
                                                                                                                                
He also recalled testimony in  this committee on the purposes for                                                               
which  grants  may be  made;  those  purposes, proposed  by  MAG,                                                               
appear in subsection  (e), lines 16-19.  Mr.  Baldwin pointed out                                                               
that whereas  MAG had proposed  "or for  socio-cultural impacts",                                                               
this  committee  had  changed  "or"  to  "and"  in  the  previous                                                               
legislation.                                                                                                                    
                                                                                                                                
SENATOR  BUNDE restated  his concern,  that all  Alaskans in  the                                                               
unorganized  borough will  have some  socio-cultural impact  from                                                               
this multibillion-dollar construction project.                                                                                  
                                                                                                                                
2:16:30 PM                                                                                                                    
SENATOR  WILKEN  expressed  satisfaction   that  the  changes  to                                                               
SB 2004 were  retained in SB  3002; he  pointed out that  the big                                                               
change  between the  two  is in  Sections 1-14,  not relating  to                                                               
municipalities.     Returning   to  the   grants,  he   requested                                                               
confirmation that they are restricted  to $125 million, that this                                                               
program  doesn't continue  as long  as the  pipeline exists,  but                                                               
ends as soon as the impact fund is depleted.                                                                                    
                                                                                                                                
MR.  BALDWIN affirmed  that, explaining  that based  on the  law,                                                               
there  is no  other source  of  money for  this particular  fund.                                                               
Although the proposed  changes to AS 43.82.505 set  up a conduit;                                                               
the statute could sit there as a "dead letter," he noted.                                                                       
                                                                                                                                
CHAIR  SEEKINS  surmised  there  would be  attempts  to  make  it                                                               
ongoing.                                                                                                                        
                                                                                                                                
SENATOR WILKEN  recalled proposed  state and  federal legislation                                                               
to  put impact  funds  in  place, to  be  funded  by the  revenue                                                               
streams, but said that is a discussion for another day.                                                                         
                                                                                                                                
MR. BALDWIN pointed out that  AS 43.82.505 talks about a contract                                                               
term that provides for the impact fund.                                                                                         
                                                                                                                                
SENATOR BUNDE inferred the impact  would begin when there is some                                                               
activity relating  to construction.   However,  Sections 1  and 2                                                               
are  retroactive  to January  1,  2004.    Saying it  seems  like                                                               
another  large,   open  door,  he   asked  why  that   length  of                                                               
retroactivity was proposed.                                                                                                     
                                                                                                                                
MR. BALDWIN  replied that  the January 2004  date is  intended to                                                               
cover  the  period  during  which  the  administration  has  been                                                               
negotiating  to  place  these  kinds   of  terms  in  the  fiscal                                                               
contract.  Thus  the fact that this term was  negotiated and that                                                               
this structure  was set  up would be  retroactively covered.   It                                                               
isn't  intended to  create any  eligibility other  than what  has                                                               
already been negotiated.                                                                                                        
                                                                                                                                
SENATOR  BUNDE  said that  seems  reasonable,  but perhaps  there                                                               
should  be  clarification   that  retroactivity  doesn't  include                                                               
claims for any activity prior to actual construction.                                                                           
                                                                                                                                
CHAIR SEEKINS asked  the reason for making  the terms retroactive                                                               
under  the Alaska  Stranded Gas  Development  Act ("Stranded  Gas                                                               
Act").                                                                                                                          
                                                                                                                                
MR.  BALDWIN  replied that  he  believed  retroactivity was  more                                                               
legally  significant for  some  contract  provisions in  previous                                                               
legislation.                                                                                                                    
                                                                                                                                
CHAIR SEEKINS suggested it was SB 2003.                                                                                         
                                                                                                                                
MR.  BALDWIN   said  for  this  particular   contract  provision,                                                               
retroactivity isn't  as important; it  was made that  way because                                                               
it was  negotiated during that  period of time.   The goal  is to                                                               
ensure what was done is covered against a potential claim.                                                                      
                                                                                                                                
2:22:07 PM                                                                                                                    
CHAIR  SEEKINS  recalled  discussion   in  the  Senate  Judiciary                                                               
Standing Committee, which  he chairs.  He  gave his understanding                                                               
that the contract must be negotiated  to meet the purposes of the                                                               
Stranded Gas Act,  not necessarily to comply with  the Act itself                                                               
to the  letter, and that it  will meet a loose  interpretation of                                                               
establishing fiscal  terms to  get this  stranded gas  to market.                                                               
He  opined  that  if  the legislature  authorized  signing  of  a                                                               
contract,  likely  the  language  would  include  the  following:                                                               
"Notwithstanding  any other  provision  of  law, the  legislature                                                               
hereby  authorizes the  administration  to  execute the  attached                                                               
contract."   Chair Seekins  asked whether  any exercises  to make                                                               
the Stranded Gas Act retroactive would just be extra work.                                                                      
                                                                                                                                
MR.   BALDWIN   replied  he'd   thought   about   the  need   for                                                               
retroactivity  while  working  on  these bills  over  time.    He                                                               
acknowledged Chair  Seekins' point  as a  good one,  that perhaps                                                               
this has  been "overlawyered" to  preclude potential  for someone                                                               
to  reach back  and allege  that  whatever was  done was  without                                                               
proper authority.   The  question will  be whether  the operative                                                               
effect  of  the  contract  and   the  attending  obligations  are                                                               
properly  authorized   after  the  contract  is   signed.    Thus                                                               
retroactivity might not be needed.                                                                                              
                                                                                                                                
He  further responded  that the  state and  other parties  to the                                                               
contract will  be concerned  with whether  the contract  is valid                                                               
and  enforceable  under  state  law  from  the  date  when  their                                                               
obligations come  due.  Drafters  of these  provisions, including                                                               
himself, have worried  that, as part of the  whole development of                                                               
the contract under  the Stranded Gas Act,  the administration has                                                               
had to  depart from  the Act  in the kind  of terms  proposed for                                                               
consideration by the public and  the legislature.  Thus there has                                                               
been   concern   about   covering  this   retroactively,   though                                                               
Mr. Baldwin reiterated  that he doesn't believe  it is absolutely                                                               
legally  necessary.   He also  pointed  out that  there are  vote                                                               
requirements and so forth in the legislature.                                                                                   
                                                                                                                                
He requested the ability to reflect  on this matter and come back                                                               
before  the  committee   prior  to  a  decision   on  whether  to                                                               
eliminated retroactivity.   Mr.  Baldwin cautioned it  could have                                                               
serious effects if there were  no retroactivity, and suggested it                                                               
might not help, but probably wouldn't hurt.                                                                                     
                                                                                                                                
CHAIR SEEKINS acknowledged this  contract doesn't meet the letter                                                               
of the law, but  said that is why it is  a proposed contract, and                                                               
why the legislature needs to decide  whether to change the law to                                                               
accommodate  some  of  those  deviations.     He  emphasized  the                                                               
legislature's  ability to  squelch  any claim  that the  contract                                                               
doesn't comply with the law, by changing the law accordingly.                                                                   
                                                                                                                                
2:28:53 PM                                                                                                                    
SENATOR BUNDE  observed it is easier  to hit a bull's  eye if the                                                               
target  is drawn  after the  shot  is made.   That  might be  the                                                               
attempt here, he suggested.                                                                                                     
                                                                                                                                
MR. BALDWIN turned  to Section 4, noting it was  requested by MAG                                                               
to  extend  MAG's life  until  after  final distribution  of  the                                                               
impact  money.   That group  is given  an advisory  role for  the                                                               
grant program as  well, in the preceding section, and  he said it                                                               
makes  sense that  MAG  be around.   Existing  law  needed to  be                                                               
changed, since MAG was set to  expire on the date of final action                                                               
on the application for which the group was appointed.                                                                           
                                                                                                                                
SENATOR BUNDE asked  whether the intent is that  the expenses for                                                               
reimbursement  are limited  to typical  per diem  given to  other                                                               
advisory groups.                                                                                                                
                                                                                                                                
MR. BALDWIN said he believed that to be "our understanding."                                                                    
                                                                                                                                
SENATOR BUNDE interpreted that to be the intent for the record.                                                                 
                                                                                                                                
2:31:58 PM                                                                                                                    
MR. BALDWIN explained  that Section 5 fixes a problem  in how the                                                               
Foundation  Formula  is calculated.    He  said Eddy  Jeans,  who                                                               
testified  6/5/06   on  SB 2004   but  wasn't   available  today,                                                               
understands  its  inner workings.    A  problem had  been  raised                                                               
because a  payment in lieu of  taxes (PILT) is considered  by the                                                               
state assessor  to be a  contractual payment, not a  tax; without                                                               
other direction  from the  legislature, this  effectually changes                                                               
how the assessor calculates the  full and true value for purposes                                                               
of the Foundation Formula.                                                                                                      
                                                                                                                                
He  reminded members  that this  problem was  identified for  two                                                               
municipalities  in  particular:    Valdez  and  the  North  Slope                                                               
Borough.  Mr.  Baldwin said it involves the way  they are allowed                                                               
to  determine the  required local  contribution  for purposes  of                                                               
calculating  their  public  school  funding.   Section  5  allows                                                               
development of  regulations so  the PILT is  treated the  same as                                                               
the tax.   The effort  is to leave  the parties in  basically the                                                               
same position as before the fiscal contract entered the picture.                                                                
                                                                                                                                
He indicated  he'd been  advised that  with this  authority, they                                                               
could  fix   the  problem  identified  by   the  state  assessor.                                                               
Referring to  a two-page spreadsheet  from Steve Van  Sant, State                                                               
Assessor, labeled  "Local School Funding Worksheet"  and provided                                                               
during  discussion   of  Amendment 14  to  SB   2004  on  6/5/06,                                                               
Mr. Baldwin requested  its incorporation  into the  record, since                                                               
it outlines the impact of failure to fix this problem.                                                                          
                                                                                                                                
CHAIR  SEEKINS  highlighted  the  need  to  cross-reference  some                                                               
issues with SB 2004.  He requested a definition of "community."                                                                 
                                                                                                                                
MR. BALDWIN replied it isn't in  this bill, but there are various                                                               
definitions in the statutes relating to DCCED.                                                                                  
                                                                                                                                
CHAIR SEEKINS  suggested perhaps part of  Senator Bunde's concern                                                               
relates to  what constitutes a  community and whether it  gets to                                                               
the   question   of   tribal  communities   versus   incorporated                                                               
communities.    For example,  does  a  large family  qualify  for                                                               
impact  funds  under  this  section because  of  proximity?    He                                                               
offered details relating to impacts  from pipelines in Alaska and                                                               
Canada,  highlighting the  need  to define  community and  socio-                                                               
cultural impacts.                                                                                                               
                                                                                                                                
SENATOR BUNDE recalled a couple  who'd worked on the oil pipeline                                                               
and then  later requested assistance  in readjusting to  a normal                                                               
salary in Anchorage.  He said it needs more definition.                                                                         
                                                                                                                                
2:39:59 PM                                                                                                                    
MR.  BALDWIN  expressed  willingness  to look  at  more  specific                                                               
language to  satisfy the aforementioned  concern, but  stated the                                                               
intention:     to  provide   a  means   of  meeting   impacts  on                                                               
unincorporated   communities   that   lack   the   structure   or                                                               
recognition by the  state as a municipality or  borough, to reach                                                               
villages and other communities that  aren't under the traditional                                                               
government structure recognized in Title 29.                                                                                    
                                                                                                                                
SENATOR  BUNDE  remarked that  any  group  with 10  students  can                                                               
qualify as  a school, and  reiterated the  need to flesh  out the                                                               
definition of  "community."   He also suggested  this is  a great                                                               
opportunity to encourage incorporation.                                                                                         
                                                                                                                                
CHAIR SEEKINS  asked whether the  concern is mitigating  the fact                                                               
that communities might  have to pay more in wages  to keep public                                                               
employees  from  leaving  their  jobs to  work  on  the  pipeline                                                               
construction.                                                                                                                   
                                                                                                                                
MR. BALDWIN  answered by referencing  the broadly  stated purpose                                                               
in subsection (e),  page 3, of SB 3002, requiring  a showing of a                                                               
direct and proximate  result of development of  the gas pipeline.                                                               
If that case  can be stated and proved, he  said, it seemed there                                                               
could be impact funds for such a purpose.                                                                                       
                                                                                                                                
CHAIR  SEEKINS  asked  what  happens  when  the  impact  fund  is                                                               
depleted and a community must  find another funding source to pay                                                               
its police and firefighters at the inflated wage.                                                                               
                                                                                                                                
MR. BALDWIN surmised they'd have to resolve it some way.                                                                        
                                                                                                                                
CHAIR SEEKINS asked  whether impact funds would  be required, for                                                               
instance, to provide a transition to a lower wage.                                                                              
                                                                                                                                
SENATOR  BUNDE  said as  he  reads  it, the  one  who  has to  be                                                               
convinced of an impact is the commissioner.                                                                                     
                                                                                                                                
MR.  BALDWIN  agreed  that  the   commissioner  is  the  ultimate                                                               
decision maker,  as clearly stated in  the bill.  Because  of how                                                               
the  process works,  however, the  commissioner  must make  these                                                               
decisions  in  the light  of  day,  giving  notice of  the  grant                                                               
proposals received and  the proposed awards, and  waiting 30 days                                                               
before actually making  the awards.  It is  the transparency this                                                               
committee  thought  was  important   during  the  second  regular                                                               
session,  Mr.  Baldwin  recalled,  noting  it  was  an  amendment                                                               
proposed by Senator Wilken.                                                                                                     
                                                                                                                                
SENATOR BUNDE expressed concern that  other impact money has been                                                               
used to  provide community centers,  for instance.   He suggested                                                               
it is  preferable to tighten  it up, even  to the point  of being                                                               
"overlawyered,"  since  ultimately  one   person  will  make  the                                                               
decision.                                                                                                                       
                                                                                                                                
2:45:44 PM                                                                                                                    
SENATOR WILKEN suggested perhaps  striking "community" on page 4,                                                               
line 19,  in subsection  (j),  and  inserting "municipalities  or                                                               
nonprofit organizations  serving the unorganized  borough", since                                                               
"community" only appears in that  one place; he opined that might                                                               
clear up the need for a definition.                                                                                             
                                                                                                                                
He also cautioned that the impact  money won't last long, if past                                                               
municipal  grant programs  are any  indication.   While this  was                                                               
modeled  after NPR-A,  it will  serve far  more people.   Senator                                                               
Wilken surmised the $125 million would  be gone in the first year                                                               
or two,  leaving communities to  deal with impacts on  their own.                                                               
At the  same time, however,  those places would have  an enhanced                                                               
tax base because of expansion.                                                                                                  
                                                                                                                                
MR.  BALDWIN pointed  out there  is a  payment schedule  covering                                                               
more  than two  years, laid  out in  the fiscal  interest finding                                                               
(FIF) and the contract.   It starts six years out  and goes for a                                                               
period after that.  He offered to get that information.                                                                         
                                                                                                                                
SENATOR WILKEN asked whether it is metered out per year.                                                                        
                                                                                                                                
MR. BALDWIN affirmed that.                                                                                                      
                                                                                                                                
SENATOR  WILKEN  asked  how the  retroactive  effective  date  of                                                               
January 1, 2004, raised as an  issue by Senator Bunde, relates to                                                               
the FIF.                                                                                                                        
                                                                                                                                
2:49:40 PM                                                                                                                    
MR. BALDWIN answered that retroactivity  has no bearing on it, to                                                               
his belief,  because this  will occur  in the  future.   The $125                                                               
million won't become available all at  once.  He recalled it will                                                               
start at project sanction, though  he wasn't certain.  It relates                                                               
to when construction  actually begins, and comes  in annually for                                                               
a period after that.  There  are provisions for inflation if it's                                                               
delayed  and goes  beyond  nine years.    Mr. Baldwin added  that                                                               
retroactivity  is  an  issue  being  considered  because  of  the                                                               
question of  whether there  was power at  the time  to negotiated                                                               
that kind of provision; he suggested it is a lawyers' issue.                                                                    
                                                                                                                                
SENATOR WILKEN announced he would look at the FIF.                                                                              
                                                                                                                                
MR.  BALDWIN, in  response to  Senator Bunde,  said the  contract                                                               
states  that if  payment  of  the money  is  delayed because  the                                                               
project is delayed  somewhat - beyond nine years,  as he recalled                                                               
- then an  inflation factor applies after the ninth  year.  Until                                                               
that date, however, the $125 million isn't inflated.                                                                            
                                                                                                                                
SENATOR  BUNDE  suggested if  the  project  is delayed,  however,                                                               
there won't be any money; it will be moot.                                                                                      
                                                                                                                                
2:52:35 PM                                                                                                                    
SENATOR  ELTON  recalled  testimony  from  MAG  and  offered  his                                                               
understanding  that  the  changes  in  this  bill  reflect  MAG's                                                               
recommendations.   He suggested it  would be helpful at  a future                                                               
meeting to have  someone from MAG answer the  questions raised by                                                               
Senator Bunde, for  example, or provide a  letter affirming their                                                               
comfort with the language in the bill.                                                                                          
                                                                                                                                
CHAIR SEEKINS related  his understanding that MAG  is strictly an                                                               
advisory group, and that the  commissioner doesn't have to comply                                                               
with MAG's advice.  He held SB 3002 over.                                                                                       
                                                                                                                                
The committee took an at-ease from 2:52:56 PM to 3:00:48 PM.                                                                
                                                                                                                                
CHAIR SEEKINS discussed the committee's schedule.                                                                               
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Seekins  adjourned the Senate Special  Committee on Natural                                                               
Gas Development meeting at 3:06:57 PM.                                                                                        

Document Name Date/Time Subjects