Legislature(2005 - 2006)SENATE FINANCE 532
08/04/2006 10:00 AM Senate SPECIAL COMMITTEE ON NATURAL GAS DEV
| Audio | Topic |
|---|---|
| Start | |
| Jim Whitaker, Chair, Alaska Gasline Port Authority | |
| Radoslav Shipkoff, Director, Greengate Llc | |
| Bill Walker, Alaska Gasline Port Authority | |
| Mr. Shepler and Mr. Harper, Legislative Consultants | |
| Donald Shepler, Greenberg Traurig, Llp | |
| Edward J. Twomey, Morrison & Foerster, Counsel to the Governor | |
| Jim Clark, Chief Negotiator, Office of the Governor | |
| Dr. Pedro Van Meurs, Consultant to the Governor | |
| SB3002 | |
| Bill Corbus, Commissioner, Department of Revenue | |
| Dennis Bailey, Legislative Legal Services | |
| Alaska Gasline Port Authority Presentation | |
| Jim Whitaker, Bill Walker and Radoslav Shipkoff for Agpa; Dr. Pedro Van Meurs, Consultant to Governor | |
| Roger Marks, Economist, Department of Revenue | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB3002 | TELECONFERENCED | |
SB 3002-STRANDED GAS AMENDMENTS
CHAIR SEEKINS called the meeting back to order at 3:50 and
announced SB 3002 to be up for consideration. He reminded
committee members that the proposed committee substitute (CS),
Version F as amended, had failed to move from the committee
yesterday. He emphasized the importance of allowing the
commissioner enough time to prepare a summary of the public
comments he received in response to the proposed contract and
the preliminary findings and determinations and to accomplish
the rest of the tasks in AS 43.82.430(a).
3:53:00 PM
CHAIR SEEKINS said he wanted to give the commissioner enough
time to gather the aforementioned information and respond to the
comments, prepare a list of amendments, and to make his final
findings and determinations as to whether the proposed contract
and any proposed amendments meet the requirements and purposes
of the chapter. He then moved to adopt CSSB 3002(NGD), Version
Y, as the working document. There being no objection, it was so
ordered.
3:53:28 PM
SENATOR DYSON asked if his implication was that last night's
bill failed because it gave the commissioner 60 days.
CHAIR SEEKINS answered no, that was just a part of the bill that
failed.
SENATOR DYSON asked him to explain the rationale for using 120
days.
CHAIR SEEKINS replied that he didn't think there was a hurry and
wanted an adequate job. This allows a maximum timeframe for the
commissioner to do that. They know that 30 days isn't enough; 60
days is questionable and 120 days is a maximum.
3:55:45 PM
SENATOR DYSON expressed concern about getting the results back
in time for the legislature to ratify it.
SENATOR BEN STEVENS asked Senator Dyson if he was ready to
ratify a contract.
SENATOR DYSON responded that he was if he could see it.
SENATOR BEN STEVENS asked how they could complete a contract if
they won't pass the amendments to enable it to be completed.
SENATOR DYSON replied, "I guess under the same regime that's
allowed it to be negotiated over the last year and a half - not
having the amendments hasn't stopped that process. "
SENATOR BEN STEVENS said he was encouraged to hear Senator Dyson
was ready to ratify a contract when it was presented to the
legislature.
SENATOR DYSON replied that it wouldn't be a rubber stamp and not
being able to see it is part of what's holding it up. He was
also interested in seeing the LLC and the fiscal interest
finding.
SENATOR BEN STEVENS noted that they all are interested in seeing
those.
3:57:16 PM
CHAIR SEEKINS said they had attempted to address other issues in
terms of fiscal certainty, work commitments, and Alaska hire and
had chosen not to give the Administration any direction on that
in terms of the law. So, he wanted to give them the extra time
to be able to work on those issues.
3:57:38 PM
^Bill Corbus, Commissioner, Department of Revenue
BILL CORBUS, Commissioner, Department of Revenue, noted the
public comment period had closed July 24 with a little over
2,000 comments; they were in the form of written comments,
emails, verbal comments made at the public hearings. About 25
written comments were very scholarly and well-prepared,
including a 50-page document. He received comments from
legislators, public interest groups, and people with direct
commercial association with the project other than producers. He
was in the process of analyzing them and putting together a
response. Certainly, he said 30 days is unrealistic to do
justice to the public comments. He said the Administration
supports the chairman's proposed amendment.
4:00:13 PM
SENATOR STEDMAN asked what direction the legislature is giving
the Administration. Was it going to renegotiate anything it
wanted and then come back and find it doesn't have support for
some of it?
CHAIR SEEKINS replied he wasn't sure. He thought the committee
did some good work last night and its only alternative now is to
wait and see. "It's a trust me deal."
SENATOR STEDMAN asked if he was right to infer that this
extension would put it in to the end of November so they would
be dealing with this next January and February.
CHAIR SEEKINS replied that it wasn't his intent to do that, but
he didn't want to give the Administration an artificial boundary
that would hinder or delay or force it into a premature effort.
4:03:11 PM
SENATOR ELTON asked to hear what the commissioner considers his
duties are under AS 43.82.430(a)(2) and (a)(3). He asked if this
authorizes an extended period of time for the commissioner to
work on proposed amendments to the contract and to the Stranded
Gas Act, as well.
COMMISSIONER CORBUS replied yes; he would interpret it that way.
CHAIR SEEKINS added that in this timeframe, he and the other
parties would be renegotiating changes to what he would propose
as a final contract.
COMMISSIONER CORBUS replied that was correct. They have learned
that negotiations always take longer than they expect. He said
they badly need the extra time and commented that once
negotiations are consummated, they must incorporate the changes
in the fiscal interest finding.
CHAIR SEEKINS asked whether it is his opinion that negotiations
that take place inside a tight timeframe might put one party or
the other at a disadvantage.
COMMISSIONER CORBUS replied yes, particularly the state.
4:06:12 PM at ease 4:08:06 PM
CHAIR SEEKINS asked if there was any objection to adopting work
draft CSSB 3003(NGC), Version Y. There were no objections and it
was so ordered.
4:08:19 PM
SENATOR BEN STEVENS moved to adopt Amendment 6 and objected for
discussion purposes. He mentioned that it was drafted to Version
G, but he asked that members give the latitude to insert it in
the new Version Y.
OFFERED IN THE SENATE BY: SENATOR BEN STEVENS
TO: CSSB 3002(NGD) (24-GS2095\G)
Page 1, line 3, following "terms;":
Insert "providing for an advisory vote,treatment of
certain laws, and approval and ratification regarding
a stranded gas fiscal contract;"
Page 8, following line 8:
Insert new bill sections to read:
"*Sec. 14. AS 43.82.430(b) is amended to read:
(b)After considering the material described in
(a) of this section and securing the agreement of
the other parties to the proposed contract regarding
any proposed amendments prepared under (a) of this
section, if the commissioner determines that the
contract is in the long-term fiscal interests of the
state, the commissioner may execute [SHALL SUBMIT]
the contract [TO THE GOVERNOR].
Sec. 15. AS 43.82.430(c) is amended to read:
(c) The commissioner's final findings and
determination under (a) of this section and decision
regarding whether to execute the contract under (b)
of this section are final agency decisions under
this chapter.
Sec. 16. AS 43.82.440 is amended to read:
Sec. 43.82.330. Judicial review. An [A PERSON MAY
NOT BRING AN] action challenging the constitutionality
of a law authorizing a contract developed under this
chapter [ENACTED UNDER AS 43.82.435] or the
enforceability of a contract executed under a process
authorized by [A] law may not be brought [AUTHORIZING
A CONTRACT ENACTED UNDER AS 43.82.435] unless the
action is commenced within 120 days after the date
that the contract was executed by the state and the
other parties to the contract."
Renumber the following bill sections accordingly.
Page 11, line 30:
Delete all material and insert the following:
"*Sec.23. (a) AS 43.82.435 is repealed.
(b) AS 43.82.445 is repealed. "
Page 11, following line 30:
Insert new bill sections to read:
"*Sec. 24. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
APPROVAL AND RATIFICATION. Notwithstanding
AS 43.82.435, repealed by sec.23(a) of this Act,
the provisions of the Alaska Stranded Gas Fiscal
Contract between the State of Alaska and BP
Exploration (Alaska) Incorporated, ConocoPhillips
Alaska, Incorporated, and ExxonMobil Alaska
Production, Incorporated, as amended to conform
to the provisions of the Act, are approved, and
the process and procedures followed in
formulating that contract are ratified.
*Sec. 25. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
SUSPENSION OF OTHER LAW. The provisions of
the Alaska Stranded Gas Fiscal Contract between
the State of Alaska and BP Exploration (Alaska)
Incorporated, ConocoPhillips Alaska,
Incorporated, and ExxonMobil Alaska Production,
Incorporated, as amended to conform with the
provisions of the Act, are effective
notwithstanding the provisions of any other law,
including AS 43.82.200-43.82.270. Any
inconsistency between the Alaska Stranded Gas
Development Act (AS 43.82) and the fiscal
contract executed under AS 43.82 are cured and
authorized by this section.
*Sec. 26. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
ADVISORY VOTE. At the 2006 general election
to be held on November 7, 2006, in substantial
compliance with the election laws of the state,
the lieutenant governor shall place before the
qualified voters of the state a question advisory
to the governor and the commissioner of revenue.
Notwithstanding other laws relating to
preparation of the ballot proposition, the
question shall appear on the ballot in the
following form:
QUESTION
Shall the commissioner of revenue sign and make
binding upon the State of Alaska the Alaska
Stranded Gas Fiscal Contract between the State of
Alaska and BP Exploration (Alaska) Incorporated,
ConocoPhillips Alaska, Incorporated, and
ExxonMobil Alaska Production, Incorporated?
Yes [ ] No [ ]"
Renumber the following bill sections accordingly.
Page 12, line 7:
Delete "Sections 2-14 and 17-20"
Insert "Sections 2-13, 17, 20-22, and 23(b)"
Page 12, following line 9:
Insert new bill sections to read:
"*Sec. 29. CONDITIONAL EFFECT. Sections 14-16,
23(a), and 24 of this Act take effect only if a
majority of the votes cast in the 2006 general
election on the ballot proposition in sec. 26 of
the Act favor execution by the commissioner of
revenue and binding effect on the State of Alaska
of the Stranded Gas Fiscal Contract between the
State of Alaska and BP Exploration(Alaska)
Incorporated, ConocoPhillips Alaska,
Incorporated, and ExxonMobil Alaska Production,
Incorporated.
*Sec. 30. If secs. 14-16, 23(a), and 24 of this
Act take effect under sec. 29 of this Act, they
take effect on the date that the director of
elections certifies the results of the 2006
general election."
Page 12, line 10:
Delete "This"
Insert "Except as provided in sec. 30 of the
Act, this"
SENATOR BEN STEVENS said he agreed with the Chair's and Senator
Stedman's comments about the work that was completed on the
issues before the committee. He said he wouldn't reoffer the
amendments they had already voted on, but if any other member
offered those amendments, he would vote for them again. He was
offering this amendment that hadn't been voted on. He explained:
It puts the ability to execute the contract at the
discretion of the commissioner, it would remove
legislative approval upon a vote of the general
public, and the sections that have a meaningful change
to the Stranded Gas Act are all contingent on a
conditional effect in Section 29.
Mr. Chairman, I think that the actions that we have
taken previously on these subjects to address work
commitments, to address fiscal certainty on oil, to
address fiscal certainty on gas, to address public
project labor agreements, to address sovereignty
agreements, to address collateral and arbitration
clauses, to address calculation of educational
funding, to address payment in lieu of taxes to
municipalities, all the issues that we've done for the
last two special sessions are without any standing
now. And so, from my position the only standing we
have for those to be incorporated in the contract is
to give the commissioner - empower the commissioner -
to get those enacted.
We heard comment that there's concern that 120 days
may be too long for the public period before the
contract comes before us, but if we don't give the
commissioner the authority to negotiate, we'll never
get what we expect to see from the product of the
negotiation. This is a simple amendment that says one
thing: the legislature can't make a decision on
changing the Stranded Gas Act to enable negotiation to
go forward; let the public make the decision.
4:11:29 PM
SENATOR DYSON asked if this amendment passes and the people vote
and the Governor executes the contract, what would be the
provisions for modifying the Stranded Gas Act to come into
conformity with the contract.
SENATOR BEN STEVENS replied that those provisions would be
included in Section 25 of the amendment, the enabling
legislation.
SENATOR DYSON asked if the contract would supercede state law on
any difference between it and the conditions of the contract.
SENATOR BEN STEVENS replied that is correct.
4:12:48 PM
CHAIR SEEKINS said no matter what pathway they take, if the
legislature ever authorizes the execution of the contract under
the current law, the authorizing bill would more than likely
read "notwithstanding any other provision in law," which is
often put in statute to keep lawsuits from happening.
4:14:24 PM
SENATOR BEN STEVENS responded that there had been a lot of
discussion about the concept of whether the negotiators have
been working within the bounds of the law and as a result the
state has lost standing in the contract.
It's my opinion that the people that have been
negotiating this contract, the commissioner of
revenue, the members of the DNR staff, the members of
the Administration staff, have one thing in common and
that is to get a project that's in the best interest
of the state. And we continually are saying to the
Administration and saying to our lead negotiators,
'You're going outside of the law and you're giving
away the state's assets.' And I have yet to see that
come to reality. We in the legislature have done
nothing but criticize the negotiation in terms of what
they've produced and I think that the fact that a
project is before us for ratification - granted it's
not ready for ratification - we still haven't seen key
components of it - but because of the fact that they
have produced something that is to the benefit of the
state, which is a project to move forward, is an
example of the work that they've done. I've had it to
the point where I can't listen to it anymore about the
fact that the legislature or the Administration has
given away state's rights. I just don't think it's
justified any longer! And we can continue to sit as a
legislature and say, 'We need more. Why did you give
this away; why did you give that away.' And we're not
making progress. So, the amendment does one thing. If
we can't make progress, let the general public take
the progress. By the way, this doesn't take away the
fact that we can do it before the November 7 election.
The other thing that this doesn't do - it's
irregardless of who is in control after the elections.
It lays all the responsibility on the general public
to say if nothing is done by November 7, should we
vote to ratify or not.
4:17:13 PM
SENATOR DYSON said the Administration has always been very clear
with the legislature that if there were changes to be made to
the Stranded Gas Act, they would deal with them at the
appropriate time after they negotiate the contract. "That's the
process we've been in. At no point have I ever said that they
were operating outside of the law and an intimation that I was
saying so is unfathomable."
CHAIR SEEKINS said he didn't interpret it that way.
SENATOR BEN STEVENS said he could interpret his comments any way
he wants, but that's not what he intended to say.
4:18:51 PM
CHAIR SEEKINS invited Dennis Bailey to sit with the committee.
SENATOR STEDMAN said he comes from a district that is as far
from this gas line project as one can get, but the people there
are very interested in monetizing the resource and moving the
state forward. They are not afraid of deciphering complex issues
and making the correct decision. He supported Amendment 6 and
was glad it was before them today because the people he had
talked to in his district about it didn't want to vote. "They
want a gas contract and if there's inaction in the legislature,
that can be taken care of in the ballot box."
4:20:53 PM
SENATOR ELTON diverted attention to Sections 23 and on and
Sections 14, 15, and 16. He had asked for someone to be
available from Legislative Affairs [Mr. Bailey] to see if his
view of those sections is correct. He thought it read as
follows: "Section 14 authorizes the commissioner to execute the
contract." He asked if this bill passes with this amendment,
would that authorize the commissioner to execute the contract
the day it is signed.
SENATOR BEN STEVENS said that was not correct. Section 23(a),
which removes legislative ratification until after a vote of the
people, doesn't go into effect.
CHAIR SEEKINS said the entire process of Section AS 43.82.430
with fiscal findings and final determinations would become an
agency decision, which are challengeable under the
Administrative Procedures Act, as the Judiciary Committee
discussed. Then it would not become effective until it was
ratified by a vote of the people. He asked Senator Stevens if he
was correct.
SENATOR BEN STEVENS responded it was most important to first
understand Section 29 [Amendment 6] on page 3, which lay out the
dates the sections take effect. Sections 14, 15, 16, 23, and 24
are all conditional on a positive vote on a general ballot.
Nothing is significantly altered until that point.
4:23:52 PM
SENATOR ELTON agreed with the sponsor that Section 29 provides a
conditional effect, but that doesn't necessarily allay his
concern. He asked, assuming SB 3002 is passed as amended in this
manner, and that the commissioner recognizes that he can execute
a contract, but it may not take effect because of the
conditional dates in Section 29, what the need was for Sections
14, 15, and 16.
4:25:57 PM
^Dennis Bailey, Legislative Legal Services
CHAIR SEEKINS asked for an explanation of Section 43.82.440 -
Judicial review.
SENATOR BEN STEVENS deferred to Mr. Dennis Bailey.
DENNIS BAILEY, Attorney, Legislative Legal Services, agreed with
the understanding expressed by Senator Ben Stevens that Sections
14, 15, 16 don't take effect until after a public vote. In
Section 30, after the director of elections certifies the
results, the commissioner has the authority to sign the
contract. The timing there is currently 30 days after the public
comment period, which has already occurred. So, his reading is
if there was a positive vote, Section 29 would make Sections 14,
15, and 16 effective; Sections 14 and 16 would become effective
after the certification and then the commissioner could sign the
contract. He thought the 120 days referred to after the date the
contract was executed by the commissioner.
SENATOR ELTON asked if the commissioner could not sign the
contract until after the certification of the election.
MR. BAILEY replied that was right - that is what Section 30
says.
CHAIR SEEKINS added that was 120 days after final execution by
all parties.
MR. BAILEY replied yes.
4:29:01 PM
SENATOR BEN STEVENS removed his objection to the amendment.
SENATOR ELTON objected saying he was going to vote no, because
he disagreed with any assertion that the legislature has been
dilatory. He, personally, had started with a minimal amount of
knowledge, and while he wouldn't say he is an expert in
petroleum economics, he has greatly increased his knowledge from
there. He was now prepared to make a decision on what is good
for state after seeing the contract and the LLC and he wouldn't
vote against the contract just because it contains some elements
he didn't like.
4:32:56 PM
CHAIR SEEKINS recognized Senator Elton's attendance and
participation as having been stellar.
SENATOR STEDMAN said he had no hesitation in taking the contract
to the voters.
4:33:57 PM
SENATOR WAGONER said it's a matter of having the background and
knowledge to be able to vote. His constituents have said they
don't want to vote on this issue; it's a matter for the
legislature to decide.
4:34:37 PM
SENATOR DYSON said he identified with Senator Elton's remarks.
He said our founding fathers set up our government as a
constitutional republic in which elders are elected to take care
of the people's business and the time and resources were set up
to allow them to do that. He was a "strong no vote on this."
4:36:41 PM
SENATOR HOFFMAN said Alaskans want a gas line; it's a financial
key to our future and our children's future. He was sent to
Juneau to make those decisions; that is why he supported the
Stranded Gas amendments. They haven't done their job here and he
doubted that they would this session. He still wanted to get the
job done, but it seemed that they were being placed in a box and
they would let the window of opportunity slip by. He was glad
the Governor had kept legislature here to get its work done. He
said this issue is critical to the financial well-being of the
state and if this is the best chance to get a gasline built, if
the legislature can't do the work in one regular session and
three special sessions, maybe they should adopt the amendment
and send it to the people to vote on. "I believe they will make
the right decision and get the gasline built."
4:40:50 PM
SENATOR OLSON spoke against the amendment and in support of
letting the legislature make the decisions.
4:43:09 PM
CHAIR SEEKINS said he didn't know if this was the right time to
put it to a vote before the people and he would vote no on the
amendment.
4:45:58 PM
SENATOR BEN STEVENS provided closing comments on Amendment 6
saying there are 89 days until November 7 and it doesn't remove
the legislature's authority then. He stated that the project
needed to move to the next phase.
4:48:30 PM
SENATOR ELTON maintained his objection.
A roll call vote was taken. Senators Hoffman, Senator Ben
Stevens, and Stedman voted yea; Senators Kookesh, Olson, Wilken,
Elton, Wagoner, and Seekins voted nay; so, Amendment 6 failed by
a vote of 3 yeas and 7 nays.
SENATOR WILKEN moved to adopt Amendment 13.
AMENDMENT 13
TO SB 3002
BY SENATOR GARY WILKEN
"An Act amending the time allowed under the Alaska
Stranded Gas Development Act, for the commissioner of
revenue to summarize public comments, propose
amendments, if any, and make findings; and providing
for an effective date."
CHAIR SEEKINS objected for a discussion.
SENATOR WILKEN said he thought Version Y was good, but he was a
little concerned that the title didn't define what the bill
does, which could lead to delays over the next six days as this
takes what could be a tortured path through the legislature.
4:50:24 PM
MR. BAILEY said he had no difficulty with this amendment since
it was similar to the title on the original CS.
4:51:17 PM
CHAIR SEEKINS removed his objection and asked if there was
further objection.
SENATOR STEDMAN objected and said he would prefer to leave the
title the way it is.
CHAIR SEEKINS declared that as the introducer of this particular
CS, he didn't intend it to have an open title nor was there any
discussion with any other person in the other body about the
title.
4:52:35 PM
SENATOR STEDMAN maintained his objection.
A roll call vote was taken. Senators Kookesh, Dyson, Wilken,
Elton, and Wagoner voted yea; Senators Ben Stevens, Stedman,
Hoffman and Seekins voted nay; so, by a vote of 5 yeas and 4
nays, Amendment 13 was adopted.
4:53:32 PM
SENATOR WILKEN asked Commissioner Corbus if this would allow him
to collect and synthesize information for after the election. He
asked if that was his intent.
COMMISSIONER CORBUS replied that it was their intent to get all
this work done before the election.
4:54:15 PM
SENATOR BEN STEVENS moved to report CSSB 3002(NGD) Version Y as
amended out of committee with individual recommendations. There
were no objections and it was so ordered.
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