Legislature(2007 - 2008)CAPITOL 106
04/02/2007 08:30 AM House OIL & GAS
| Audio | Topic |
|---|---|
| Start | |
| HB177 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 177 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
April 2, 2007
8:37 a.m.
MEMBERS PRESENT
Representative Vic Kohring, Chair
Representative Kurt Olson, Vice Chair
Representative Nancy Dahlstrom
Representative Jay Ramras
Representative Ralph Samuels
Representative Mike Doogan
Representative Scott Kawasaki
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Carl Gatto
COMMITTEE CALENDAR
HOUSE BILL NO. 177
"An Act relating to the Alaska Gasline Inducement Act;
establishing the Alaska Gasline Inducement Act matching
contribution fund; providing for an Alaska Gasline Inducement
Act coordinator; making conforming amendments; and providing for
an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 177
SHORT TITLE: NATURAL GAS PIPELINE PROJECT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/05/07 (H) READ THE FIRST TIME - REFERRALS
03/05/07 (H) O&G, RES, FIN
03/06/07 (H) O&G AT 3:00 PM BARNES 124
03/06/07 (H) -- MEETING CANCELED --
03/08/07 (H) O&G AT 3:00 PM BARNES 124
03/08/07 (H) -- MEETING CANCELED --
03/13/07 (H) O&G AT 3:30 PM HOUSE FINANCE 519
03/13/07 (H) Heard & Held
03/13/07 (H) MINUTE(O&G)
03/15/07 (H) O&G AT 3:00 PM BARNES 124
03/15/07 (H) Heard & Held
03/15/07 (H) MINUTE(O&G)
03/19/07 (H) O&G AT 8:30 AM CAPITOL 106
03/19/07 (H) Heard & Held
03/19/07 (H) MINUTE(O&G)
03/20/07 (H) O&G AT 3:00 PM BARNES 124
03/20/07 (H) Heard & Held
03/20/07 (H) MINUTE(O&G)
03/21/07 (H) O&G AT 5:30 PM SENATE FINANCE 532
03/21/07 (H) Heard & Held
03/21/07 (H) MINUTE(O&G)
03/22/07 (H) O&G AT 3:00 PM BARNES 124
03/22/07 (H) Heard & Held
03/22/07 (H) MINUTE(O&G)
03/23/07 (H) O&G AT 8:30 AM CAPITOL 106
03/23/07 (H) Heard & Held
03/23/07 (H) MINUTE(O&G)
03/24/07 (H) O&G AT 1:00 PM SENATE FINANCE 532
03/24/07 (H) -- Public Testimony --
03/26/07 (H) O&G AT 8:30 AM CAPITOL 106
03/26/07 (H) Heard & Held
03/26/07 (H) MINUTE(O&G)
03/27/07 (H) O&G AT 3:00 PM BARNES 124
03/28/07 (H) O&G AT 7:30 AM CAPITOL 106
03/28/07 (H) Heard & Held
03/28/07 (H) MINUTE(O&G)
03/28/07 (H) O&G AT 8:30 AM CAPITOL 106
03/28/07 (H) Heard & Held
03/28/07 (H) MINUTE(O&G)
03/29/07 (H) O&G AT 3:00 PM BARNES 124
03/29/07 (H) Heard & Held
03/29/07 (H) MINUTE(O&G)
03/30/07 (H) O&G AT 8:30 AM CAPITOL 106
03/30/07 (H) Heard & Held
03/30/07 (H) MINUTE(O&G)
03/31/07 (H) O&G AT 1:00 PM BARNES 124
03/31/07 (H) -- MEETING CANCELED --
04/02/07 (H) O&G AT 8:30 AM CAPITOL 106
WITNESS REGISTER
DON BULLOCK, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Reviewed proposed amendments to HB 177 and
responded to questions.
PATRICK GALVIN, Commissioner
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Reviewed proposed amendments to HB 177 and
responded to questions.
ANTONY SCOTT, Section Chief
Commercial Section
Central Office
Division of Oil & Gas
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on HB 177.
ACTION NARRATIVE
CHAIR VIC KOHRING called the House Special Committee on Oil and
Gas meeting to order at 8:37:14 AM. Representatives Doogan,
Ramras, Samuels, Kohring, Olson, Dahlstrom, and Kawasaki were
present at the call to order.
8:37:14 AM
HB 177-NATURAL GAS PIPELINE PROJECT
8:39:39 AM
CHAIR KOHRING announced that the only order of business would be
HOUSE BILL NO. 177, "An Act relating to the Alaska Gasline
Inducement Act; establishing the Alaska Gasline Inducement Act
matching contribution fund; providing for an Alaska Gasline
Inducement Act coordinator; making conforming amendments; and
providing for an effective date."
CHAIR KOHRING reminded the committee that a motion was pending
by Representative Dahlstrom to adopt as a working draft the
committee substitute (CS) for HB 177, 25-GH1060\E, Bullock,
3/30/07 [Version E]. Chair Kohring and Representative Doogan
had objected to the motion. Chair Kohring then asked for
discussion of the motion to adopt Version E.
REPRESENTATIVE DOOGAN removed his objection. There being no
further objection, Version E was before the committee as a work
draft. [The prior objection by Chair Kohring was treated as
withdrawn.]
8:40:09 AM
CHAIR KOHRING asked for amendments from the committee.
8:40:22 AM
REPRESENTATIVE DOOGAN moved Amendment 1, 25-GH1060\E.9, Bullock,
4/1/07, which read:
Page 7, lines 27 - 28:
Delete "AS 43.90.110(1) and (2)"
Insert "AS 43.90.110(a)(1)(A) and (B)"
Page 9, line 19, following "or is":
Insert "not"
Page 10, line 27:
Delete "AS 43.90.110(1)(B)"
Insert "AS 43.90.110(a)(1)(A) and (B)"
Delete "AS 43.90.140(9)"
Insert "AS 43.90.130(9)"
Page 13, line 27:
Delete "like"
Page 15, line 3:
Delete "written a"
Insert "a written"
Page 15, line 24:
Delete "required"
Insert "acquired"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN said that Amendment 1 is a series of
corrections to drafting errors. He noted that these corrections
are required since a committee substitute was not adopted by the
committee.
8:41:07 AM
REPRESENTATIVE SAMUELS removed his objection.
CHAIR KOHRING announced that hearing no further objection,
Amendment 1 was adopted.
8:41:27 AM
REPRESENTATIVE DOOGAN moved Amendment 2, 25-GH1060\E.5, Bullock,
4/1/07, which read:
Page 13, line 18:
Delete "licensee's net cost"
Insert "net amount of expenditures incurred and
paid by the licensee that are qualified expenditures
for the purposes of AS 43.90.110"
Page 16, line 30:
Delete "licensee's net costs"
Insert "net amount of expenditures incurred and
paid by the licensee that are qualified expenditures
for the purposes of AS 43.90.110"
Page 22, line 23:
Delete "reasonable costs"
Insert "expenditures incurred and paid by the
licensee that are qualified expenditures for the
purposes of AS 43.90.110"
Page 22, line 26, following "no":
Insert "additional"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN explained that the purpose of Amendment 2
is to ensure that the reimbursements made under the contract or
under the terms of abandonment are the qualified costs of the
licensee and not all costs.
8:42:24 AM
REPRESENTATIVE SAMUELS removed his objection.
8:42:36 AM
CHAIR KOHRING announced that hearing no further objection,
Amendment 2 was adopted.
8:42:45 AM
REPRESENTATIVE DOOGAN moved Amendment 3, 25-GH1060\E.6, Bullock,
4/1/07, which read:
Page 15, line 7, following "licensee.":
Insert "The commissioners may resume disbursement
on the date that the commissioners determine that the
license violation is cured."
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN explained that Amendment 3 adds a sentence
indicating that the commissioners may resume disbursement when a
license violation has been cured.
8:43:09 AM
REPRESENTATIVE SAMUELS asked whether an expiration date was
needed. He observed that correction of the violation may be
delayed by months or years. He suggested that this question
should be reviewed in the next committee, and then removed his
objection.
8:44:36 AM
CHAIR KOHRING announced that hearing no further objection,
Amendment 3 was adopted.
8:44:47 AM
REPRESENTATIVE DOOGAN moved Amendment 4, 25-GH1060\E.7, Bullock,
3/31/07, which read:
Page 20, line 25:
Delete "conclusion"
Insert "start"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN explained that the change in Amendment 4
provides for the tax rate to be revealed prior to open season
instead of at the conclusion of open season.
8:45:43 AM
REPRESENTATIVE SAMUELS removed his objection.
8:45:50 AM
CHAIR KOHRING announced that hearing no further objection,
Amendment 4 was adopted.
8:45:59 AM
REPRESENTATIVE DOOGAN moved Amendment 5, which read [original
punctuation provided]:
Sec 43.90.220(c)
After page 14, line 10
(c) After a license has been issued and before
conclusion of operations permitted by the license
[COMMENCEMENT OF COMMERCIAL OPERATIONS] the licensee
shall allow the commissioners to
[continue remainder of section as in bill]
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN informed the committee that Amendment 5
will extend the term of the state representative on the
licensee's governing board to throughout the operation of the
pipeline.
8:47:07 AM
DON BULLOCK, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency,
informed the committee that amendment 5 refers to page 14, line
11, not line 10.
8:47:25 AM
PATRICK GALVIN, Commissioner, Department of Revenue (DOR),
expressed his concern about how to define "conclusion of
operations permitted by the license." He asked whether that
meant the entire length of operations of the pipeline.
8:48:05 AM
REPRESENTATIVE DOOGAN answered yes.
8:48:16 AM
COMMISSIONER GALVIN suggested a wording change from "permitted"
so that the intent would not be the length of time under the
permit, but the duration of the operation of the project.
8:48:51 AM
MR. BULLOCK said that the issue is the duration of the license
itself.
8:49:09 AM
COMMISSIONER GALVIN noted that the intent in establishing the
term of the license is that in order to be able to enforce the
expansion provisions that deal with the operations of the
pipeline, the term of the license does extend beyond the
commencement of commercial operations. The language needs to
make a clear reference to "operations of the project."
8:50:07 AM
MR. BULLOCK suggested that conceptually it will read, "so long
as the terms of the license continue to apply."
REPRESENTATIVE DOOGAN asked Commissioner Galvin whether it was
the same.
8:50:44 AM
COMMISSIONER GALVIN answered yes.
8:50:51 AM
MR. BULLOCK said:
So that the amendment would read, subject to some
minor editing, "After a license has been issued and
before", then new language, "and so long as the terms
of the license continue to apply," and then back to
the original language ...
8:51:50 AM
REPRESENTATIVE SAMUELS removed his objection.
8:52:01 AM
CHAIR KOHRING announced that hearing no further objection,
Amendment 5 was adopted, as amended.
8:52:11 AM
REPRESENTATIVE DOOGAN moved Amendment 6, which read [original
punctuation provided]:
Sec 43.90.200(e)
After page 13, line 20
(e) The transfer of any certificate of public
convenience and necessity or transfer under (d) of
this section as the result of failure to comply with
(a), [OR] (b), or (c) of this section is at no cost to
the state or the state's designee. [A TRANSFER UNDER
(C) OF THIS SECTION IS AT THE LICENSEE'S NET COST.]
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN said that Amendment 6 would require that
if the licensee failed to go forward, the material that was
produced under the terms of the license would transfer to the
state at no cost to the state.
8:53:26 AM
REPRESENTATIVE SAMUELS removed his objection.
8:53:34 AM
COMMISSIONER GALVIN advised the committee that the state wants
to balance the state's interest in its investment and the
interest of a commercially responsive applicant that fails to
get commitments. The perception that the state will gain
materials from the failed applicant without compensation may be
too great a risk for potential applicants to undertake.
8:55:01 AM
The committee took an at-ease from 8:55 a.m. to 8:57 a.m.
REPRESENTATIVE DOOGAN noted that Amendment 6 should read "line
14", not "line 20."
CHAIR KOHRING announced that the amendments will be identified
as conceptual amendments. Hearing no objection to the
amendment, [Conceptual] Amendment 6 was adopted.
8:58:08 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 7, which read
[original punctuation provided]:
Sec 43.90.210 Amendment of or modification
to the project plan. Subject to the approval of the
commissioners and the coordinator, a licensee may
amend or modify its project plan if the amendments or
modifications are necessary as a result of changed
circumstances outside the licensee's control and not
reasonably foreseeable before the license was issued.
An amendment or modification approved under this
section must be consistent with the requirements of AS
43.90.140 and may not diminish the net present value
to the state of the project.
Sec. 43.90.450 Assignments. (a) A licensee
may transfer all or part of the license, including the
rights and obligations arising under the license, if
(1) the transfer is approved in writing in
advance by the commissioners; and
(2) the transfer does not increase or
diminish the obligations created by the license or
diminish the net present value of the license to the
state.
[continue rest of Sec. 43.90.450 as in bill]
REPRESENTATIVE RAMRAS objected.
REPRESENTATIVE DOOGAN informed the committee that HB 177
establishes assessment criteria that are essentially a net
present value calculation and the likelihood to succeed. This
amendment will ensure that modifications, amendments, or
assignments do not change the assessment under which the license
was awarded.
8:59:38 AM
COMMISSIONER GALVIN told the committee that the state recognizes
the substantive change in this amendment. At the point when the
commissioners are making determinations on amendments or
assignments, the state will consider all the values to the state
that may be affected, not just the economic effect. The state
does not strongly object, but Commissioner Galvin said it would
prefer have broader discretion.
9:00:45 AM
REPRESENTATIVE RAMRAS maintained his objection.
A roll call vote was taken. Representatives Samuels, Doogan,
Olson, and Kohring voted in favor of [Conceptual] Amendment 7.
Representatives Ramras, Kawasaki, and Dahlstrom voted against
it. Therefore, [Conceptual] Amendment 7 was adopted by a vote
of 4-3.
9:01:33 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 8, which read
[original punctuation provided]:
Sec 43.90.130(7)
page 6, line 24
Delete "15 percent of"
Replace with "15 percent above"
Page 6, line 30
Delete "15 percent of"
Replace with "15 percent above"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN relayed that the intent of [Conceptual]
Amendment 8 is to clarify that the 15 percent rolled-in rate is
15 percent above the original rate.
9:02:28 AM
COMMISSIONER GALVIN noted that the state does not object to
[Conceptual] Amendment 8; however, the administration will be
submitting additional amendments to this language in another
committee.
9:02:54 AM
REPRESENTATIVE SAMUELS removed his objection.
9:03:04 AM
CHAIR KOHRING announced that hearing no further objection,
[Conceptual] Amendment 8 was adopted.
REPRESENTATIVE DOOGAN stated that [Conceptual] Amendment 9 is
delayed at this time.
9:03:22 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 10, 25-
GH1060\E.2, Bullock, 3/31/07, which read:
Page 15, line 27, following "licensee":
Insert "(1)"
Page 15, line 29, following "revocation":
Insert "; and
(2) shall deliver to the state all project
data, engineering designs, contracts, rights-of-way,
and other work product of the licensee that is related
to the licensed project."
Page 16, following line 30:
Insert a new subsection to read:
"(e) Notwithstanding (b)(2) of this section, if
the arbitration panel makes a final determination
under (b) of this section that the project is not
uneconomic and the
(1) commissioners disagree with that
determination, the state may terminate the license and
compensate the licensee in the amount equal to three
times the total of the reasonable costs that the
licensee has incurred in developing the licensee's
project through the date the commissioners notify the
licensee of the termination; or
(2) licensee disagrees with that
determination, the state may terminate the license at
the request of the licensee and, if the license is
terminated, the state shall pay the licensee the
actual amount of qualified expenditures incurred and
paid by the licensee through the date the license is
terminated and the licensee shall transfer to the
state all project data, engineering designs,
contracts, rights-of-way, and other work product of
the licensee that is related to the licensed project."
REPRESENTATIVE RAMRAS objected.
REPRESENTATIVE DOOGAN explained that [Conceptual] Amendment 10
is an attempt to clarify the sections in the bill regarding
abandonment. Abandonment can be the result of an arbiter's
decision or due to other factors. The language in [Conceptual]
Amendment 10 gives the state the right to terminate an agreement
with an unwilling partner when an arbiter has ruled in the
state's favor.
9:04:55 AM
COMMISSION GALVIN further explained that [Conceptual] Amendment
10 has two parts. The first section of [Conceptual] Amendment
10 [line 1 through line 9] pertains to the violations section,
and adds language requiring assignation of data. The state, he
noted, feels [Conceptual] Amendment 10 is duplicative.
9:06:19 AM
MR. BULLOCK opined that the first section of [Conceptual]
Amendment 10 involves a structural change and applies to a
situation in which the commissioners have revoked the license.
By this amendment, the licensee may not reapply for the license.
In addition, if a license is revoked, the licensee is required
to transfer existing property and data.
9:07:46 AM
COMMISSIONER GALVIN questioned whether the legislature wants to
mandate the requirement that all of the data will be assigned to
the state after a license is revoked. He noted that HB 177, as
written, allows the commissioners to revoke a license without
requiring the transfer of the data.
9:08:31 AM
REPRESENTATIVE DOOGAN asked why the state would not require
transfer of the data.
9:08:46 AM
COMMISSION GALVIN responded that, although the state may want
the data, the basis of the violation may not warrant its claim.
He explained that the state and the applicant are sharing
potentially 50 percent of the cost and the violation may come at
a time when it is inappropriate for the state to take 100
percent of the work product. This amendment, he said, may not
be considered a commercially reasonable term by applicants. The
state is trying to attract companies by considering the
protection of their interests.
9:11:24 AM
REPRESENTATIVE SAMUELS expressed his belief that if a company is
in default, the state would not want to pay, again, for work
that has already been completed.
9:12:02 AM
COMMISSIONER GALVIN pointed out that the first section of
[Conceptual] Amendment 10 refers to line 1 through line 9, and
pertains to a violation, not abandonment of the project. He
repeated his concern that companies will interpret this
amendment as giving the state the right to take data at will and
not at the discretion of the commissioners.
9:13:33 AM
REPRESENTATIVE SAMUELS remarked:
So, explain to me then without it, they'll just tell
you "no." You can request all you want to, and
they'll just not turn anything over to you.
9:13:52 AM
COMMISSIONER GALVIN responded that the language in AGIA gives
the commissioners the authority to impose remedies, including
assignation to the state of all project data. The distinction
is that, if the commissioners revoke the license, the licensee
is automatically required to transfer the data.
9:14:41 AM
REPRESENTATIVE DAHLSTROM asked Representative Doogan to consider
dividing [Conceptual] Amendment 10.
REPRESENTATIVE DOOGAN said yes.
REPRESENTATIVE DAHLSTROM suggested [Conceptual] Amendment 10
would include line 1 through line 9.
9:15:13 AM
REPRESENTATIVE SAMUELS requested that the committee hear
Commissioner Galvin's comments prior to dividing the amendment.
9:15:24 AM
COMMISSIONER GALVIN deferred the question to Antony Scott.
9:16:10 AM
ANTONY SCOTT, Section Chief, Commercial Section, Central Office,
Division of Oil & Gas, Department of Natural Resources, opined
that generally, if a project is deemed to be uneconomic, it is
not a commercially reasonable or normal procedure to require a
company to release the product that it has developed.
9:17:39 AM
REPRESENTATIVE DOOGAN expressed his opinion that commercially
normal does not describe a situation in which one partner pays
50 percent of the cost, yet does not have rights to the work
product. This amendment attempts to make a claim to the work
product for which the state has paid. Otherwise, he added, the
state could be empty-handed.
9:18:30 AM
COMMISSIONER GALVIN reiterated that AGIA provides the
opportunity to obtain data under different circumstances. The
distinction is that events may be outside of the licensee's
control. At no point, he said, does the state have to pay
twice, but will pay a reasonable portion. This will balance the
appearance that the state can, at any time, revoke the license
and seize the work product without just payment.
9:21:18 AM
REPRESENTATIVE DOOGAN pointed out that [Conceptual] Amendment
10, line 21, states that "the state shall pay the licensee the
actual amount of qualified expenditures incurred ... through the
date the license is terminated." This language, he continued,
is simply to encompass all possible situations.
9:22:03 AM
COMMISSIONER GALVIN clarified that the discussion is moving from
the violation revocation portion of the amendment to the
abandonment portion. The first part, under subsection (e)
applies to the situation in which the state determines the
project to be uneconomic, the licensee disagrees, and the
arbitration panel agrees with the licensee. This amendment
would obligate the state to pay three times the damages and
would establish a demand price. The state, Commissioner Galvin
explained, would prefer a negotiated withdrawal from the
arrangement. Subsection (e)(2), would be enforced when the
licensee requests termination of its license, the state
disagrees and the state is upheld by arbitration. In that
circumstance, the licensee is obligated to continue with the
project or will be in violation of its lease, and thereby,
subject to remedies. He stressed that the state is better
protected without the amendment.
9:25:20 AM
REPRESENTATIVE RAMRAS compared HB 177 to a request for proposal
(RFP). Ultimately, he said, we want to attract applicants and
[Conceptual] Amendment 10 may be too rigid to attract the best
applicant. He maintained his objection to [Conceptual]
Amendment 10 and asked for further clarification of the division
of the amendment.
9:28:21 AM
MR. BULLOCK added that two things are happening in the
amendment. The AGIA, he explained, was created to induce a
builder to build the pipeline project. The state's interest is
expressed through the license and even if the pipeline is deemed
uneconomic by the state, the pipeline developer may continue the
project unburdened by the requirements of the license.
Therefore, the gas pipeline may continue even when the license
is abandoned. In this case, the work product is still of value
to the licensee and the requirement of [Conceptual] Amendment 10
may impair an ongoing pipeline project.
9:30:26 AM
REPRESENTATIVE SAMUELS moved that the committee divide the
question. He suggested [Conceptual] Amendment 10A will be line
1 through 9.
The committee took a brief at-ease.
CHAIR KOHRING announced that Representative Dahlstrom had
previously made a motion to designate line 1 through 9 as
[Conceptual] Amendment 10A and to designate line 10 through 24
as [Conceptual] Amendment 10B. Chair Kohring called for
discussion on [Conceptual] Amendment 10A.
9:31:52 AM
REPRESENTATIVE SAMUELS affirmed that he will vote "yes" on
[Conceptual] Amendment 10A. He remarked:
You don't ask for it, and then they sell it ... so you
invested $25 million, they invested $25 million, they
got $50 million out there, you didn't ask for it back
... for whatever reason ... And you don't know ... I
would rather say going into this that they're going to
deliver this. ... I'm going to vote "yes", I
understand the commissioner's point. ... I'd just
rather say here's the rule.
COMMISSIONER GALVIN affirmed that Representative Ramras's
interpretation of the amendment is correct. [Conceptual]
Amendment 10A is favorable to the state and will be seen as
subjecting the licensee to the discretion of the commissioners.
He said that he agreed with Representative Samuels that the
administration needs to work on how to protect the state and
also acknowledge a licensee's interest. Commissioner Galvin
noted that he would prefer if this amendment is not adopted.
9:35:27 AM
A roll call vote was taken. Representatives Doogan, Kawasaki,
Olson, and Samuels voted in favor of [Conceptual] Amendment 10A.
Representatives Ramras, Dahlstrom, and Kohring voted against it.
Therefore, [Conceptual] Amendment 10A was adopted by a vote of
4-3.
9:36:13 AM
REPRESENTATIVE DOOGAN expressed his offense at the suggestion
that the state will pirate work products during this project.
In consideration that this is the committee of first referral,
Representative Doogan withdrew [Conceptual] Amendment 10B.
9:37:05 AM
REPRESENTATIVE RAMRAS commented that the state sometimes rules
by unintended consequences.
9:38:03 AM
REPRESENTATIVE SAMUELS also commented that he is troubled by the
three times damages set in the bill. In addition, he noted that
all parties will have different standards for the term
"uneconomic" and defining the term will be difficult.
9:38:57 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 11, which
said [original punctuation provided]:
Sec 43.90.900
Add after page 23, line 7
(17) "project labor agreement" means a completed
collective bargaining agreement between the licensee
and an appropriate Alaskan entity setting out the
terms and conditions of employment on the project,
including wages and benefits, no strike/no lockout
provisions, safety rules, dispute resolution
procedures, and use of hiring facilities in Alaska.
(renumber accordingly)
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN explained that [Conceptual] Amendment 11
attempts to define "project labor agreement" as stated in the
proposed Committee Substitute, page 8, line 20. He observed
that the goals of a project labor agreement are supported by the
committee and that the term is not legally defined in statute.
9:40:44 AM
REPRESENTATIVE SAMUELS agreed that a project labor agreement is
needed and is currently a part of AGIA. He expressed his
reluctance to limit the language describing a project labor
agreement without sufficient knowledge of the ramifications of
[Conceptual] Amendment 11. He maintained his objection.
9:42:12 AM
A roll call vote was taken. Representatives Doogan and Kohring
voted in favor of [Conceptual] Amendment 11. Representatives
Kawasaki, Olson, Dahlstrom, Samuels, and Ramras voted against
it. Therefore, [Conceptual] Amendment 11 failed by a vote of 2-
5.
9:42:18 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 12, 25-
GH1060\E.3, Bullock, 4/1/07, which read:
Page 1, line 4, following "coordinator;":
Insert "repealing the Alaska Stranded Gas
Development Act;"
Page 27, following line 26:
Insert new bill sections to read:
"* Sec. 5. AS 44.37.011(a) is amended to read:
(a) This section applies to administrative
appeals or petitions for reconsideration of a decision
in an administrative appeal to the commissioner of
natural resources, except for those administrative
appeals or petitions done under AS 38.35 [OR
AS 43.82]. If a conflict occurs between this section
and other state law existing at the time of enactment
of this section, the provisions of this section
control.
* Sec. 6. AS 29.10.200(54), 29.10.200(55);
AS 29.45.810; AS 29.46.010(b); AS 36.30.850(b)(38);
AS 43.20.072(g), 43.20.073(g); AS 43.82.010,
43.82.020, 43.82.100, 43.82.110, 43.82.120, 43.82.130,
43.82.140, 43.82.150, 43.82.160, 43.82.170, 43.82.180,
43.82.200, 43.82.210, 43.82.220, 43.82.230, 43.82.240,
43.82.250, 43.82.260, 43.82.270, 43.82.300, 43.82.310,
43.82.400, 43.82.410, 43.82.420, 43.82.430, 43.82.435,
43.82.440, 43.82.445, 43.82.500, 43.82.505, 43.82.510,
43.82.520, 43.82.600, 43.82.610, 43.82.620, 43.82.630,
43.82.640, 43.82.900, 43.82.990; secs. 1, 2, and 10,
ch. 104, SLA 1998; and sec. 1, ch. 4, SLA 2003 are
repealed."
Renumber the following bill sections accordingly.
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN informed the committee that [Conceptual]
Amendment 12 repeals the Alaska Stranded Gas Development Act.
He noted that testimony from the industry indicates their
interest in complying with the Alaska Stranded Gas Development
Act rather than AGIA. Repeal of this act, Representative Doogan
said, will remove that option.
9:43:15 AM
REPRESENTATIVE SAMUELS questioned the possibility that this
repeal will have unintended consequences to the detriment of the
state.
9:44:09 AM
MR. BULLOCK answered that he has looked at other references in
the statutes and has concluded that all of the related statutes
were drafted uniquely. He expressed his belief that, to the
best of his research, there will be no repercussions.
9:45:43 AM
REPRESENTATIVE SAMUELS maintained his objection.
REPRESENTATIVE RAMRAS expressed his concern that repealing this
act may be premature and that he will vote against the
amendment.
9:48:08 AM
REPRESENTATIVE DAHLSTROM asked for a vote.
REPRESENTATIVE DOOGAN withdrew [Conceptual] Amendment 12.
9:49:15 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 13, 25-
GH1060\E.4, Bullock, 4/1/07, which read:
Page 9, lines 12 - 29:
Delete all material and insert:
"Sec. 43.90.150. Disclosure of submitted
information. Notwithstanding AS 40.25, all information
submitted to the commissioners under this chapter is
public information; however, the information is not
subject to disclosure before the commissioners publish
the notice required under AS 43.90.160(a)."
Page 9, line 30:
Delete "(a)"
Page 10, line 1, following "AS 43.90.140":
Insert "and all applications rejected by the
commissioners under AS 43.90.140(a) and (c)"
Page 10, lines 2 - 9:
Delete all material.
Page 27, lines 23 - 25:
Delete
"(A) proprietary or a trade secret in
accordance with AS 43.90.150;
(B)"
Insert "submitted to the commissioners under
AS 43.90 and"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN explained to the committee that
[Conceptual] Amendment 13 changes the proprietary information
and trade secrets, referenced in HB 177, to indicate that there
will be no proprietary information and trade secrets as part of
the applications. He said that one reason for this change is to
eliminate government secrecy. In addition, exclusion of
proprietary information will prevent proper public review of the
application and will also prevent the legislature from properly
evaluating the commissioners' award of the license.
9:52:12 AM
REPRESENTATIVE RAMRAS expressed his opposition to [Conceptual]
Amendment 13. He observed that there is already a certain
amount of rigidity in the AGIA application process and that he
is comfortable with AGIA without requiring additional
disclosures by the applicants.
9:53:59 AM
COMMISSIONER GALVIN spoke of the intention of the administration
to provide an open and transparent application process.
However, the producers successfully argued that they need some
protection for their creative ideas during the development phase
of the application. The administration, he said, was convinced
to try to better balance the interests of all parties. He noted
that the Committee Substitute [CS] will require the successful
applicant to make all information public. The administration is
supportive of a provision to allow the legislature access to
proprietary information in order to make its review of the
successful application. However, the administration feels
[Conceptual] Amendment 13 is damaging to the AGIA process.
9:57:17 AM
REPRESENTATIVE SAMUELS remarked:
...you'll come forward with a licensee, and, extreme
examples, "Can't tell [the legislature] why we picked
them, [because] it's all proprietary." ... I can
understand that that is true proprietary information
... How do we balance that when you come forward and
say "We picked the winner." ... and for applicant "A"
and "B" there is no proprietary information, but
applicant "C" is the one you picked? ...
9:58:29 AM
COMMISSIONER GALVIN assured the committee that the legislature
will have the proprietary information needed during the review
of the successful application. In the end, the public will see
all of the information. He added that rejected applications
will not be disclosed to the public unless a challenge is filed
to protest the decision of the commissioners.
10:00:21 AM
REPRESENTATIVE DOOGAN expressed his belief that the public and
the legislature may not be able to meaningfully review the
applications for projects that do not get the license. He
reiterated that an unsuccessful applicant that does not file a
protest will not reveal proprietary information.
10:01:33 AM
COMMISSIONER GALVIN stressed that the legislature will see all
of the information from all of the applicants. However,
proprietary information will not be made public unless
contested.
10:02:11 AM
REPRESENTATIVE DOOGAN withdrew [Conceptual] Amendment 13.
10:02:53 AM
REPRESENTATIVE DAHLSTROM called the committee's attention to CS
Version E, page 9, line 19 and asked if the word "not" should be
deleted.
10:03:40 AM
REPRESENTATIVE DOOGAN assured Representative Dahlstrom that the
language in the CS was corrected by [Conceptual] Amendment 1.
10:03:52 AM
REPRESENTATIVE DOOGAN moved [Conceptual] Amendment 14, 25-
GH1060\E.1, Bullock, 3/31/07, which read:
Page 18, line 10:
Delete "and 43.90.320"
Page 18, lines 12 - 13:
Delete "and 43.90.320 are"
Insert "is"
Page 18, line 14:
Delete "inducement."
Insert "inducement; royalty credit. (a) A person
qualified for resource inducement under AS 43.90.300
is entitled to a credit of 10 percent against the
person's royalty obligation to the state for North
Slope gas shipped through firm transportation capacity
the person acquired during the first binding open
season."
Reletter the following subsections accordingly.
Page 19, line 11, following "production":
Insert "; and
(4) the procedure for a person to take the
credit provided in (a) of this section"
Page 19, line 13:
Delete "(d)"
Insert "(e)"
Page 19, line 16:
Delete "(a)"
Insert "(b)"
Page 19, line 22:
Delete "(e)"
Insert "(f)"
Page 19, line 31:
Delete "(c)"
Insert "(d)"
Page 20, line 10:
Delete "(a)"
Insert "(b)"
Page 20, line 15:
Delete "(c)"
Insert "(d)"
Page 20, line 17:
Delete "(c)"
Insert "(d)"
Page 20, line 19, through page 21, line 10:
Delete all material.
Page 23, line 14:
Delete "and the gas production tax exemptions
under AS 43.90.320"
REPRESENTATIVE SAMUELS objected.
REPRESENTATIVE DOOGAN informed the committee that [Conceptual]
Amendment 14 is offered to solve the constitutional problem of
freezing the tax rate by moving the inducements to royalty
regulation. He expressed his hope that subsequent committees
will consider an amendment to AGIA that will be upheld by the
Alaska Supreme Court. He added that this inducement is within
the legislature's power to grant.
10:05:20 AM
REPRESENTATIVE SAMUELS acknowledged the value of this
discussion. However, he said he felt that the issue has not
been thoroughly researched and he will not support [Conceptual]
Amendment 14.
10:06:25 AM
COMMISSIONER GALVIN confirmed that the intent of this amendment
has been discussed previously by other committees. The state is
considering all approaches that will withstand a possible
constitutional challenge to AGIA and there will be further
discussion in subsequent committees.
10:07:26 AM
REPRESENTATIVE DAHLSTROM asked whether the attorney general was
invited to testify on this subject.
10:08:00 AM
CHAIR KOHRING observed that this issue will be addressed by the
House Resources Standing Committee.
10:08:22 AM
COMMISSIONER GALVIN recommended that [Conceptual] Amendment 14
be set aside for a later committee to address.
10:08:54 AM
MR. BULLOCK explained to the committee that the constitution
says the power to tax cannot be contracted away or suspended.
Exceptions are subject to Article 9, section 4, and have to be
made by general law. He continued to say that if the state
grants an exception, the exception is then subject to revision.
The intent in the governor's bill is to freeze the tax rate by
ten years without taking away the legislature's ability to
respond to fiscal needs. He further explained that royalty
leases are contracts and are not subject to Article 9, section
4. A royalty credit or enactment of a law to exempt some of the
gas production from taxes may be an inducement that would
withstand a possible constitutional challenge. Mr. Bullock
opined that the state can not limit its taxing powers.
REPRESENTATIVE DOOGAN stated that this issue should be flagged
for the next committee to ensure that there is additional
discussion of this issue. He then withdrew [Conceptual]
Amendment 14.
10:12:49 AM
REPRESENTATIVE SAMUELS moved [Conceptual] Amendment 15, 25-
GH1060\E.8, Bullock, 4/1/07, which read:
Page 11, line 31:
Delete "chairs of the legislative standing
committees having jurisdiction over natural resources"
Insert "presiding officer of each house of the
legislature"
Page 12, lines 11 - 14:
Delete "receiving a determination from the
commissioners under AS 43.90.180, the House standing
committee and the Senate standing committee having
jurisdiction over natural resources"
Insert "the presiding officer of each house of
the legislature receives a determination from the
commissioners under AS 43.90.180, the rules committee
of each house of the legislature"
Page 12, line 14:
Delete "bill in their respective chambers"
Insert "resolution"
Page 12, line 16:
Delete "bill"
Insert "resolution"
Delete "becomes law"
Insert "is approved by both houses of the
legislature within 90 calendar days after the last
date a presiding officer of a house of the legislature
receives a determination from the commissioners under
AS 43.90.180"
Page 12, lines 17 - 18:
Delete "effective date of the Act"
Insert "date a resolution passes"
CHAIR KOHRING objected.
REPRESENTATIVE SAMUELS offered an amendment to Amendment 15,
which he identified as Conceptual Amendment 15. Conceptual
Amendment 15 deletes page 1, line 14 through 20, and page 2,
line 1 through 5, of the amendment. Representative Samuels
explained that Conceptual Amendment 15 instructs the
commissioners to deliver their determination to the presiding
officer in each body of the legislature and removes the
reference to the standing committees.
10:14:20 AM
MR. BULLOCK further explained that legislative approval raises
the issue of the separation of powers and whether the executive
branch can enter into a contract without consultation with the
legislature. A resolution passed by the legislature can not
have a substantive effect on a party not in the body. Under the
original bill, the commissioners will recommend a license
application to the legislature and, following no action by the
legislature within 30 days, the contract will be issued.
Conceptual Amendment 15 requires the legislature to take action
to approve the license. Mr. Bullock continued to say that
negative action by the legislature kills the contract.
Disapproval of the contract by the legislature would be required
to be by the passage of a bill because of the effect to parties
outside of the legislature. Passage of a bill would also
protect the state against litigation regarding the separation of
powers.
10:17:10 AM
CHAIR KOHRING removed his objection to the amendment to the
amendment, and to Conceptual Amendment 15. There being no
further objection, Conceptual Amendment 15, as amended, was
adopted.
10:17:40 AM
REPRESENTATIVE SAMUELS moved [Conceptual] Amendment 16 which
read [original punctuation provided]:
Page 10, line 17, following "shall"
Insert "use an undiscounted value and, at a
minimum, discount rates of two, six, and eight
percent, and"
CHAIR KOHRING objected.
REPRESENTATIVE SAMUELS remarked:
...I didn't want an applicant to come forward and say
the discount rate of seven was used and that it used a
discount rate of five, that it could possibly change.
... So, we're trying to have some continuity and said
that you must use an undiscounted cash ...
undiscounted value which is just total cash and then a
suite of two, six, and eight percent on all
applicants.
REPRESENTATIVE RAMRAS asked whether the amendment conformed to
Version E.
10:18:44 AM
REPRESENTATIVE SAMUELS said, "Yes, on page 10, line 17."
COMMISSIONER GALVIN asked for copies of the amendments under
discussion.
The committee took an at-ease from 10:19 to 10:25.
10:26:18 AM
CHAIR KOHRING removed his objection to [Conceptual] Amendment
16.
10:26:42 AM
MR. SCOTT opined that the high end of the bracket of eight
percent is well reasoned and comports with the long-term rate of
return earned by the Alaska Permanent Fund Corporation. He
continued to explain that two percent is a reasonable rate for a
low inflation rate and will use the value of today's dollars.
Mr. Scott said that "undiscounted cash" is not a relevant
measure of economic value; therefore, a zero discount rate does
not provide information for an economic analysis. He suggested
replacing six percent with five percent as was recommended by
the state's economic advisor.
10:28:58 AM
REPRESENTATIVE SAMUELS offered an amendment to [Conceptual]
Amendment 16 that changes six percent to five percent.
10:29:21 AM
REPRESENTATIVE DAHLSTROM asked whether eight percent remained in
[Conceptual] Amendment 16.
REPRESENTATIVE SAMUELS said, "Yes, two, five, and eight."
CHAIR KOHRING removed his objection and [Conceptual] Amendment
16, as amended, was adopted.
10:30:01 AM
REPRESENTATIVE SAMUELS moved [Conceptual] Amendment 17, which
read [original punctuation provided]:
Page 7, line 22, following "Commission"
Insert "if the proposed project is engaged in
interstate commerce,"
Page 7, line 22, following "Alaska"
Delete, ",as applicable"
Insert, "if the project is not engaged in
interstate commerce"
Page 7, line 22, following "for"
Delete, "any"
Insert, "a"
Page 7, line 24, following "value"
Delete, "existing"
Insert, "previously owned"
Page 7, line 25, following "value;"
Insert, "describe the gas treatment plant,
including its design, engineering, construction,
ownership, and plan of operation; the identify [sic]
of any third party that will participate in the
ownership or operation of the gas treatment plant; and
the means by which the applicant will work to minimize
the
effect of the costs of the facility on the tariff;"
CHAIR KOHRING objected.
REPRESENTATIVE SAMUELS noted that [Conceptual] Amendment 17 will
require a more complete design of the gas treatment plant to be
included in a bid from a mid-stream entity. He opined that the
gas treatment plant is a large part of the process and the bid
should include a more complete description than originally
required in the bill.
CHAIR KOHRING removed his objection and hearing no further
objection, [Conceptual] Amendment 17 was adopted.
10:30:49 AM
REPRESENTATIVE SAMUELS moved [Conceptual] Amendment 18, which
read [original punctuation provided]:
Page 11, line 4, following "cost overruns"
Insert ", and encourage shippers to participate
in the first binding open season"
CHAIR KOHRING objected.
The committee took an at-ease from 10:31 to 10:32.
REPRESENTATIVE SAMUELS said that [Conceptual] Amendment 18
pertains to the application evaluation. He then remarked:
...part of the criteria is that, and you can read
there, the reasonableness, specificity, and
feasibility of the applicant's work plan, timeline,
and budget required to be submitted under the cite,
including the applicant's plan to manage cost overruns
and the degree to which to applicant intends to
insulate shippers from the effects of cost overruns,
and encourage shippers to participate in the first
binding open season. So, how are you going to talk
people into giving you the gas? ... You should be able
to, on the application process, articulate that.
CHAIR KOHRING removed his objection and hearing no further
objection, [Conceptual] Amendment 18 was adopted.
10:32:48 AM
REPRESENTATIVE SAMUELS moved [Conceptual] Amendment 19, 25-
GH1060\B.21, Bullock, 3/29/07, which read:
Page 15, line 14, following "43.90.140(7)":
Insert "if the Federal Energy Regulatory
Commission does not have a policy in effect that
presumes that rolled-in rates apply to the recovery of
expansion costs for the project"
Page 16, line 17, following "43.90.140(7)":
Insert "if the Federal Energy Regulatory
Commission does not have a policy in effect that
presumes that rolled-in rates apply to the recovery of
expansion costs for the project"
CHAIR KOHRING objected.
REPRESENTATIVE SAMUELS informed the committee that HB 177
requires that the mid-stream entity must testify before the
Federal Energy Regulatory Commission (FERC) to get the
inducement of the 15 percent on the rolled-in rates and the
shippers must testify before FERC for the tax lock-in. He then
said:
Everybody is going to testify, if you want something
from the bill, you have to go before FERC and testify
the same way. The FERC can override all that if they
so choose to, but you have to testify the same. ...
One of the pieces of testimony from the administration
was that the regulation could change. The FERC right
now has a rebuttable presumption of rolled-in tariffs
and that regulation could change. ... As long as the
rebuttable presumption is at FERC, ... you've got the
rebuttable presumption, you will have the mid-stream
entity, which must defend the rolled-in tariff and
then the shippers can argue their own interests. ...
I'm reticent to, to not adopt this, and lock the state
into a policy which we don't know if we're going to
like at the end of the day. ... It's probably better
to allow the FERC to hear, as long as they have got
the rebuttable presumption in there ... we should
allow FERC to at least hear there might be competing
views....
10:35:33 AM
REPRESENTATIVE RAMRAS asked if [the language] was on page 15,
line 14.
10:36:02 AM
MR. BULLOCK said:
The changes would actually be on page 20, and I think
it would go in to line 5, where it talks about the
agreement not to protest in that part of the bill,
that's relating to the royalty, and the tax condition
is in the next page, on page 21.
10:36:46 AM
REPRESENTATIVE DAHLSTROM clarified that [Conceptual] Amendment
19 amends page 20, line 15, and page 21, line 6.
10:37:22 AM
MR. BULLOCK remarked:
It's offered conceptually, to modify the conditions
under which the person that receives the royalty and
the tax inducement can or can not protest or
participate in the FERC proceedings.
10:37:28 AM
REPRESENTATIVE SAMUELS pointed out that this does not apply to
the mid-stream entity. The mid-stream entity still must defend
to the position that the state requires in the legislation. The
intent of the amendment is that it will apply to the shipper as
long as FERC has the rebuttable presumption.
10:37:42 AM
COMMISSIONER GALVIN expressed the state's objection to
[Conceptual] Amendment 19. The administration is committed to
having rolled-in rates apply to the expansion provisions. He
noted that the state can object to rolled-in rates if it desires
and can waive that provision. The true issue is whether the
state will preclude a party from committing gas because of the
obligation to not oppose rolled-in rates in the future.
Commissioner Galvin stressed that the administration wants an
attractive package that does not set up obstacles for mid-stream
and up-stream applicants. In order for the explorers to have
confidence that expansion will take place within a reasonable
time, the state should not raise the prospect of a long drawn-
out process at FERC, he said.
10:41:24 AM
MR. SCOTT recalled the importance of certainty for rolled-in
rates on the incentives that explorers face. The state has
indicated that having certainty of rolled-in rates makes a
material difference in the value of a hydrocarbon prospect.
[Conceptual] Amendment 19 will create significant uncertainty as
to the future rates and would diminish the attractiveness of the
exploration prospect. Mr. Scott pointed out that there are
elements of fiscal certainty for different parties in HB 177.
The initial shippers receive fiscal certainty with regard to tax
and royalty and there is an element of fiscal certainty for the
pipeline licensee. He expressed his belief that the creation of
certainty around the economics of exploration is very important.
10:43:51 AM
MR. BULLOCK added that the general economic policy of AGIA is to
maximize benefits to the state. The policy of rolled-rates
keeps the rate low, but raises the risk that the original
shipper will be subject to an increase in rate. The policy
decision to make, he advised, will be rolled-in rates versus
incremental rates.
10:44:47 AM
REPRESENTATIVE DOOGAN remarked:
If our concern is that the current producers might not
come to the open season, then we'd want to vote with
Representative Samuels, I think, because this gives
them more flexibility in terms of their exposure to
higher rates for shipping their gas after they've made
the commitment. If our concern is that people won't
go out and explore, then we want to vote against the
amendment because this gives them, at least in theory,
... the certainty that ... they'd be able to ship new
gas at a rolled-in rate. ... So, if it's a balancing
act, I'd like to know a little bit more about how come
you came down on the side of the explorers....
10:46:37 AM
COMMISSIONER GALVIN agreed that AGIA is a balance between
different interests and is also an exercise in judgment. The
state is attempting to balance the relative interest of
explorers and their risk of an initial shippers' challenge to
rolled-in rates, with the amount of disadvantage this represents
to the interests of the initial shippers. He expressed his
belief that the economics of the project are such that there
will be a successful open season. The DNR is responding to
structural concerns about royalty and concerns about changes in
the production tax, and feels that these responses will be
sufficient for the parties. Certainty for the explorers,
Commissioner Galvin said, will overcome the potential detriment
to open season.
REPRESENTATIVE SAMUELS said that he would not characterize the
amendment as an explorer versus current producer question. Over
time the mid-stream entity must back up what is regulated by the
bill. The FERC has the presumption of rolled-in tariffs and the
state generally agrees. However, as economics change for the
entities, the state can not deny them the ability to request a
change in rates. Representative Samuels opined that, in fact,
the state may change its stance and all parties will have an
opportunity to appeal to FERC for its decisions.
10:52:08 AM
COMMISSIONER GALVIN responded that the state can not predict
what an entity's motivation will be at the time of an expansion.
What is known, he said, is that almost without exception, it is
in the state's interest to have rolled-in rates. The state,
therefore, wishes to bind an entity that receives inducements to
make sure that it is consistent; thereby recognizing that the
entity may have different motivations at the time the proposal
is submitted. The bill provides the state with the ability to
change its stance on rolled-in rate treatment, and the state can
release the applicant from its obligation if necessary. At the
outset, however, it is in the state's interest to tie the
requirement of rolled-in rates to the value the state puts into
the up-stream.
10:53:59 AM
REPRESENTATIVE RAMRAS expressed his empathy with the state's
point of view. However, he said, there are too many unknown
variables and elasticity is needed. He remarked:
... I find myself appreciating the elasticity that
Representative Samuels is advocating for, even though
it slows the process, it brings FERC back in
incrementally. It affects negatively the ensuing
expansions, but I like what it does to the overall
architecture. ... When I weigh the two points on
number 19, see the administration's point of view, see
Representative Samuels's point of view and I think
that the amendment offers elasticity through the
licensee phase, so I'm going to be voting yes, for the
amendment.
10:56:10 AM
MR. BULLOCK reminded the committee that FERC would be making the
decisions, and the people making the arguments before FERC will
include the initial shippers, the state, the pipeline owner, and
the explorers.
10:56:53 AM
REPRESENTATIVE DOOGAN said:
... if there's actually an incentive that ... resides
in this language and our primary concern is to get gas
at the open season and our secondary concern is to
encourage exploration, then it seems to me that I'm
going to vote in favor of the amendment because if
there is an incentive that resides there, it resides
in the right place.
10:57:29 AM
CHAIR KOHRING withdrew his objection to [Conceptual] Amendment
19.
REPRESENTATIVE DAHLSTROM objected.
10:58:44 AM
A roll call vote was taken. Representatives Samuels, Ramras,
Doogan, Olson, and Kohring voted in favor of [Conceptual]
Amendment 19. Representatives Kawasaki and Dahlstrom voted
against it. Therefore, [Conceptual] Amendment 19 was adopted by
a vote of 5-2.
[HB 177 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at 10:59
a.m.
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