Legislature(2015 - 2016)BARNES 124
04/01/2015 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): Alaska Gasline Development Corporation Board of Directors | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 1, 2015
2:04 p.m.
MEMBERS PRESENT
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Bob Herron
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
Representative Andy Josephson
Representative Geran Tarr
MEMBERS ABSENT
Representative Benjamin Nageak, Co-Chair
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Alaska Gasline Development Corporation Board Of Directors
Joe Paskvan - Fairbanks
- CONFIRMATION(S) ADVANCED
Rick Halford - Eagle River
- CONFIRMATION(S) ADVANCED
Hugh Short - Bethel
- CONFIRMATION(S) ADVANCED
PREVIOUS COMMITTEE ACTION
No previous action to report
WITNESS REGISTER
JOE PASKVAN, Appointee
Board of Directors
Alaska Gasline Development Corporation (AGDC)
Fairbanks, Alaska
POSITION STATEMENT: As an appointee, answered questions.
RICK HALFORD, Appointee
Board of Directors
Alaska Gasline Development Corporation (AGDC)
Eagle River, Alaska
POSITION STATEMENT: As an appointee, answered questions.
HUGH SHORT, Appointee
Board of Directors
Alaska Gasline Development Corporation (AGDC)
Bethel, Alaska
POSITION STATEMENT: As an appointee, answered questions.
HAROLD HEINZE
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the three
appointees to the Board of Directors of the Alaska Gasline
Development Corporation.
ACTION NARRATIVE
2:04:04 PM
CO-CHAIR DAVID TALERICO called the House Resources Standing
Committee meeting to order at 2:04 p.m. Representatives Seaton,
Olson, Josephson, Tarr, Herron, Hawker, and Talerico were
present at the call to order. Representative Johnson arrived as
the meeting was in progress.
^CONFIRMATION HEARING(S): Alaska Gasline Development
Corporation Board of Directors
CONFIRMATION HEARING(S):
Alaska Gasline Development Corporation Board of Directors
2:05:10 PM
CO-CHAIR TALERICO announced that the only order of business is
the continuation of the committee's confirmation hearings begun
on March 23, 2015, for Mr. Joe Paskvan, Mr. Rick Halford, and
Mr. Hugh Short, appointees to the Alaska Gasline Development
Corporation (AGDC) Board of Directors.
CO-CHAIR TALERICO noted that committee members have received a
copy of the [March 12, 2015,] transcript of the Alaska Gasline
Development Corporation's Board of Directors meeting.
2:06:01 PM
REPRESENTATIVE HAWKER presumed all committee members agree that
the aforementioned transcript accurately reflects the process
[that occurred during the March 12 Board meeting]. He said he
left [March 23] confirmation hearing concerned about the
interpretation being heard of the March 12 AGDC Board meeting
and the decision making process that was undertaken at that
meeting. Today's conversation, he continued, is not anything
personal about any individual, rather it is the committee's duty
to have the best qualified people on the AGDC Board. With the
exception of one of the appointees, there is not a lot of
compliance with the statutory guidelines [for appointees to the
AGDC Board] that the governor was requested to consider. He is
therefore looking at the actions during the March 12 AGDC Board
meeting to see how the decision making process was approached.
A focus of his concern is the timeframe of who, what, when in
relation to the votes that were taken at that meeting. During
the March 23 confirmation hearing, Mr. Paskvan was asked why he
voted for [Resolution 2015-01] to now increase the pipe sizes
without any kind of analysis or technical explanation for why
those were the right sizes to go to. Mr. Paskvan's answer was
that he voted for the resolution because the contractor team
wouldn't be available to the board in the future [to look at
increased pipe sizes]. He asked Mr. Paskvan whether the
aforementioned is a fair recollection.
JOE PASKVAN, Appointee, Board of Directors, Alaska Gasline
Development Corporation (AGDC), replied yes, the "A Team" was in
the process of being disbanded and it was important to use that
team to get a rough order of magnitude cost for the increased
volume through the 36-inch pipe. He said he also thought it was
prudent for Alaska to be positioned to move forward if the
Alaska Liquefied Natural Gas (LNG) Project would falter. He
recalled his testimony as being that the first objective is to
move the Alaska LNG Project (AK LNG) forward and that the Alaska
Stand Alone Pipeline (ASAP) Project only moves forward if AK LNG
doesn't, and to make certain that due diligence is done to
ensure that Alaska's backup plan is economically viable.
2:10:05 PM
REPRESENTATIVE HAWKER said the point is that the basis for
taking the vote was the losing of the engineering team. Drawing
attention to page 110 of the March 12 transcript where the
actual vote occurred, he noted that up until that time the only
dialogue was about looking at the pipe size and not until after
the vote is it entered into the record on page 111 that there
might be a problem with the loss of the engineering team. So,
he posited, it was a hindsight reason, not a foresight reason.
Continuing, he said this is troubling because a board of
directors is needed that listens to the staff and in this case
the AGDC Board made a big decision on pipe size and starting off
on a new project without having anything entered into the record
that indicated the merits of that decision. The reason given to
the committee for this was the loss of the engineering team, but
that was an afterthought that didn't occur before the vote. The
aforementioned is concerning because it is important to have a
board that makes the most rational decisions that can be made on
this project.
2:12:12 PM
REPRESENTATIVE HAWKER continued, saying he is also concerned in
regard to the question about whether the AGDC Board took a vote
with the knowledge it would likely be violating contractual
agreements that exist with the Alaska LNG Project. Very clear
statements were made before this committee that the AGDC Board
had no knowledge it would likely be violating contractual
agreements at the time the vote was made and that the Board
learned about that after the vote. But, he pointed out, after
that first vote there was a second vote. Drawing attention to
the transcript, he noted that on page 148 Mr. Parady [Fred
Parady, Deputy Commissioner, Department of Commerce, Community &
Economic Development] makes a motion that, subject to the
modification of Administrative Order 271, the Board directs the
staff of AGDC to further assess the components associated with
the resolution and develop a rough order of magnitude cost
estimate and impact to the schedule of the ASAP Project. Mr.
Short then asks [page 149] whether there is any legal reason
that the Board cannot move forward with the resolution that
passed and a reconfigured ASAP. After some debate, Mr. Dubler
[Vice President, Commercial Operations, AGDC] states on page 154
that there are contractual issues with going above 500 million
cubic feet per day and that if AGDC goes over 500 the data it
has received from AK LNG won't be able to be used on the ASAP
Project. So, Representative Hawker explained, Mr. Dubler is
basically saying that AGDC itself would have to do it over again
because AGDC cannot use data that was developed with the other
project. Representative Hawker returned to the transcript,
noting that on page 155 a roll is called and everyone votes in
favor of the motion despite being told there are some
contractual, legal, technical problems with it. He said this
and the other aforementioned issue cause him a great deal of
concern regarding the appointees to the Board, adding that his
concern is with the judgement in making the decisions that need
to be made in an incredibly technical and professional arena.
2:15:33 PM
REPRESENTATIVE JOSEPHSON offered his respect for Representative
Hawker, but stated he would like to extend another perspective
for the record. He said he disagrees with the statement that
only one of the three nominees meets the requirements of Title
31. It is a "shall consider" test, it is not a cumulative test,
and it doesn't say that one thing should be weighed more or less
than other considerations. He said he also disagrees with
Representative Hawker's comment that this was an effort to
increase the size of the ASAP pipeline. Rather, he views this
as a consideration, a request for information, but far from any
decision to do that. Relative to violating contractual
agreements, he said it is very important to note that on page
154 of the transcript Mr. Dubler doesn't say this would
constitute a violation of a contract with AK LNG; Mr. Dubler
does say that there could a legal issue. However,
Representative Josephson continued, the side of the coin in the
AGDC office that is AK LNG can march forward just as it always
has; what Mr. Dubler was advising was that there could be some
information sharing problems with the other side of the coin,
the ASAP line; that is what could be legally implicated. There
are three agreements, Representative Josephson added, each with
a different data sharing agreement: ASAP can still use data
from the Alaska Pipeline Project (APP), the Alaska Gasline
Inducement Act (AGIA) as included in the termination agreement,
and ASAP can use data from the cooperation agreement from the
Denali Project and from the Trans-Alaska Pipeline System (TAPS)
historical data. Thus, there are other ways for ASAP to get the
data that it might need to consider issues about expansion or
compression and that is all that's contemplated here.
2:19:04 PM
REPRESENTATIVE TARR said she would like to associate herself
with Representative Josephson's comments. She said she thinks
the appointees under consideration meet the requirement of the
statute. She noted that there are also information sharing
pieces to the AK LNG joint venture agreement. In that situation
the parties have the right to own, use, sell, and adapt for
their own personal or joint operations outside of AK LNG. She
observed on page 154 of the transcript that Mr. Dubler states,
"... when you said legal, that technically that isn't a legal
issue, but that is a consequence of the action that the Board's
contemplating." She interpreted that as the Board being told
that there is not a legal issue with the action being taken but
there are some limitations to that and to take that under
advisement; the members present that day took that under
advisement and voted unanimously to move forward. Had this
conversation taken place after the meeting or after there was an
opportunity to change action, she said, that might be more
concerning. But this conversation happened during the same
meeting where the Board had the opportunity to hear from legal
counsel and could have rescinded its actions or could have made
a different proposal.
2:21:19 PM
REPRESENTATIVE OLSON said he has read the March 12 transcript
several times and has the feeling that there may have been
previous discussions on the sizing issue. He requested each of
the appointees to answer whether there were other prior meetings
where this issue was addressed.
RICK HALFORD, Appointee, Board of Directors, Alaska Gasline
Development Corporation (AGDC), replied he first saw the motion
at the meeting and he had no discussion about it prior to that.
HUGH SHORT, Appointee, Board of Directors, Alaska Gasline
Development Corporation (AGDC), regarding the resolution and the
motion passed by the Board, responded that about 10 minutes
prior to the meeting start time he participated in some
conversations with mostly staff and a couple Board members about
600 [American National Standards Institute (ANSI)] versus 900
[ANSI]. But, he continued, that was the limit to his knowledge
of the resolution or the sizing.
MR. PASKVAN answered he did not have any discussion about this
issue and was unaware of the resolution's existence until the
time of the meeting on March 12. He said his understanding was
that this request for reconfiguration of the ASAP Project arose
out of [AGDC] subcommittee chairman Dave Cruz's discussions with
Mr. Frank Richards [P.E., Vice President, Engineering and
Program Management, AGDC] about wanting to ensure that Alaska
has a viable backup plan should AK LNG falter.
REPRESENTATIVE OLSON noted the committee did not ask for a
verbatim transcript and he feels the transcript is incomplete
because several people who listened to the meeting have
recollections of things that are not seen in this transcript.
He explained he is trying to ascertain that to the best of the
knowledge of the appointees there was nothing that would be in
violation of the Open Meetings Act. He asked whether adequate
procedures were followed for the Open Meetings Act.
MR. SHORT replied yes.
MR. HALFORD responded yes.
2:25:11 PM
REPRESENTATIVE SEATON said he is more disturbed about the issue
[of the contract] because he sat on the House Resources Standing
Committee when it considered [Senate] Bill 138 [Twenty-eighth
Alaska State Legislature]. While doing that bill, he had an
amendment on the table that said if AK LNG did not progress the
state would own 100 percent and use of the data. Mr. Joe
Balash, the [Parnell Administration's] representative, requested
the amendment be delayed because he wanted to work on something.
At the next committee meeting Mr. Balash said it had been worked
out and every party would own 100 percent of the data. So, with
that assurance the amendment was withdrawn. Now, however, his
understanding is that the [Parnell Administration] went forward
and agreed to reinsert the old AGIA term of 500 million cubic
feet a day into a contract that [the state] does not have the
data, only the use of the data up to, or less than, 500 million
cubic feet a day. He said he is very disturbed at that and
related that he had a meeting with ExxonMobil to try to figure
this out. ExxonMobil had talking points and said that since Mr.
Dubler had broken confidentiality and released the existence of
this contract, which was supposed to be confidential, and the
confidential term that [the state] only had the use of the data
up to 500 million cubic feet a day that that was where this
contractual issue came around. He said he is very disturbed
about that because there were a number of issues that were
brought up during conference on [Senate] Bill 138 and amendments
were put forward. There were objections from Mr. Balash that
those things weren't ripe at the time and that they would come
back to [the legislature] during special session for
consideration of the contracts.
REPRESENTATIVE SEATON continued, pointing out that seven members
of the House Resources Standing Committee [Twenty-eighth Alaska
State Legislature] signed a letter [dated April 15, 2014, to
Governor Parnell and the Alaska State Legislature] regarding
many of the things that were withdrawn from incorporation into
[Senate] Bill 138. Because the committee was told that the term
was successfully negotiated that [the state] had all of the
data, he is concerned as to whether those other terms could have
been negotiated in some secret contract. He said he is calling
it secret because if the existence of the contract is
confidential then it is a secret contract, and it is very
disturbing if there is a committing of the state to provisions
that the legislature is to be totally unaware of.
2:29:21 PM
REPRESENTATIVE SEATON further said he is disturbed that anyone
affiliated with the state would ever re-insert the AGIA
limitation of 500 million cubic feet a day on the state in any
way, and reiterated he is more concerned with the possible
existence of a contract. When reading page 154 of the
transcript he cannot tell whether this is someone's opinion that
there might be something in there that is a little squirrelly or
whether there is a contract. He asked whether the three
appointees knew of the existence of a contract and whether they
knew the existence of terms in the contract that it would be a
contract violation to study having more than 500 million cubic
feet a day. He explained he is asking because if a person
doesn't know of the existence of a contract and doesn't know THE
existence of a term in the contract, the person cannot be bound
to that.
MR. HALFORD replied he has never seen a contract, but has heard
on several occasions "the intimation that there are provisions
that we don't know." He said he shares Representative Seaton's
concern.
MR. SHORT responded he has not seen the contract. Drawing
attention to page 154 of the transcript, he noted it is his
questioning that spurs the existence of this contract and this
provision. He further noted that towards the end of the
transcript there is a lot of discussion around confidentiality
agreements. But, he reiterated, at that point in time he did
not know that this contract or this potential provision existed,
nor does he know at this point.
MR. PASKVAN answered he has not seen any contract, but he
generally understands that any data that is paid for by a party
can be used by the party that paid for it. But, in the process
that the Board went through on March 12, the Board was not
asking for data, the Board was asking for Mr. Richards to obtain
these rough cost estimates. Data was not being obtained in the
sense of geotechnical data or that type of thing.
2:32:45 PM
REPRESENTATIVE OLSON asked whether the appointees are aware of
the existence of any contracts, secret or otherwise, that have
not been put before the legislature.
MR. SHORT replied no.
MR. HALFORD responded no.
MR. PASKVAN answered no.
2:33:18 PM
REPRESENTATIVE HAWKER said there are two sides to the story
regarding Senate Bill 138. He specified that his name is not on
the April 15, 2014, letter and that he does not see anything in
the letter that has anything to do with information sharing. He
said he does not know who on the committee has signed
confidentiality agreements for AK LNG's work, but he has.
REPRESENTATIVE OLSON stated he has [signed a confidentiality
agreement].
REPRESENTATIVE HAWKER inquired whether the appointees have
signed a confidentiality agreement as members of the AGDC Board.
MR. SHORT answered no.
MR. HALFORD replied no.
MR. PASKVAN responded no, but said he understands work is being
done on putting together a confidentiality agreement and he has
indicated he will sign it once put together.
2:34:42 PM
REPRESENTATIVE HAWKER asked whether the appointees feel that it
really ought to have been their duty to not be making
substantial decisions on behalf of AGDC without having been
confirmed or having signed a confidentiality agreement in order
to be fully briefed on all of the ramifications that their
decisions might have. He said everyone knows that there are
elements of this that are under the seal of confidentiality
until it comes back to the legislature two years from now.
MR. SHORT responded that his personal opinion is that the
resolution, as well as the motion, directed staff to come back
to the Board with information and begin a process. It was not
to go out and spend a significant amount of money, but to come
back to the Board next week with some general information, rough
order of magnitude, and begin that process. He said he
anticipates that the next week's Board meeting will be very
detailed and that the Board will go into 600 versus 900 ANSI and
ask a lot more questions. A governance committee meeting was
held last week, and the attorney general has put together the
framework that the Board will have on the agenda next week for
confidentiality agreements to be signed by members. It is a
process and there is a ways to go in the process, he reiterated.
REPRESENTATIVE HAWKER inquired whether these are new
confidentiality agreements that will replace existing
confidentiality agreements.
MR. SHORT answered he doesn't know if they replace existing
confidentiality agreements.
MR. HALFORD agreed with Mr. Short's statements, and said that is
exactly the way he remembers it and the way he considered it.
MR. PASKVAN agreed with the statements of both Mr. Short and Mr.
Halford. The Board is just beginning this process, he added, it
is general information only, the Board is not soliciting data.
2:38:01 PM
REPRESENTATIVE SEATON pointed out that the vote by the AGDC
Board of Directors was unanimous. Members like Chairman Burns
and Mr. Cruz have these confidentiality agreements and obviously
the chairman and the other member did not think there was any
violation of a contract. Therefore, he does not understand why
the appointees are being held to a higher standard than the
chairman and the other member who voted in the same manner and
who would have had knowledge of confidential contracts and
confidential provisions of those contracts. If the people who
had knowledge of those did not think it was a problem he does
not know why the committee is making a big deal of it as being a
problem for people who didn't have knowledge of the contract.
He said he doesn't know what aspect the committee is
investigating here or trying to get to.
REPRESENTATIVE HAWKER responded he has absolute confidence that
the continuing members of the AGDC Board had adequate knowledge
upon which to base their decision. The question being asked
here has nothing to do with that, it is what these gentlemen's
basis is for making this decision. What is being heard is that
they are just getting started, they are just going to start
learning and get data. He said he is asking these gentlemen
what the basis was for their taking significant votes at a
meeting with what he believes was less than a full command of
the information that might have been available if they wanted to
stop and ask more thorough questions of the folks who were
trying to counsel them to slow down. He offered his
appreciation to Mr. Short for doing exactly that.
2:40:55 PM
REPRESENTATIVE JOSEPHSON said his sense is that the sponsor of
Senate Bill 138, the Parnell Administration, wanted to create a
very powerful board and the administration got what it wanted.
The maker of the motion was Mr. Burns, who, along with his board
at the permanent fund, is in charge of $55 billion of assets.
This is a policy call and some fact finding. A reference is
made, probably legally sound, that there could be some
consequences of preclusion to information sharing if the 500
million cubic feet per day is pushed too far. But technically
there is nothing illegal about that; it can be seen that it's
anticipated because there is a description of what will happen
if that threshold is crossed too far for upsizing the pipeline
and there could be the precluding of some information sharing
from AK LNG to ASAP. But beyond that, he said, he sees a new
governor and new members of the AGDC Board and he doesn't know
anywhere in the law that it says there must be a confidentiality
agreement and further training in the operations of AGDC before
a motion can be called and a vote held.
2:42:52 PM
REPRESENTATIVE HAWKER recalled that [in the committee's March 23
confirmation hearing], Mr. Halford answered questions about his
involvement with the Alaska Gasline Port Authority (AGPA) and
one of Mr. Halford's responses was that he was an overpaid
consultant. He further recalled that additional questioning at
that hearing established that Mr. Halford was a paid lobbyist
for AGPA. He said he felt that Mr. Halford was diminishing the
nature of his role with AGPA and was saying that his role was
very small. He asked whether this is a fair characterization.
MR. HALFORD responded he was not a full-time employee, he was a
consultant, and he was required to register as a lobbyist, which
he did. He said more of his activity was internal than external
in terms of lobbying, it was offering advice on human nature and
discouraging the doing of things that create problems for the
people whose support is being asked for.
2:44:17 PM
REPRESENTATIVE HAWKER distributed a copy of an advertisement put
out by AGPA for the All-Alaska gas pipeline that AGPA was
proposing. The advertisement, he observed, includes a picture
of Mayor Sarah Palin, Governor Jay Hammond, Governor Walter
Hickel, and Senator Rick Halford. He remarked that this seems
to be a rather public role.
MR. HALFORD replied that he didn't say it wasn't a public role
and that he thinks it was in the state's interest. It didn't
pan out, like many other things. He noted that in the 1990s he
was on a gasline financing committee with a previous governor
and said he believes that many people have tried to get gas to
market for many years.
2:45:33 PM
CO-CHAIR TALERICO opened public testimony.
HAROLD HEINZE testified as follows:
I personally knew the three members of the AGDC Board
that were released. I know them as experienced
contributors. Certainly the two members with strong
industry background are among the top dozen most
experienced pipeline project management people
available in Alaska. That talent is available for
many different contractors for hire. I also know and
commend the three AGDC Board nominees recently put
forward as good decision makers. AGDC's role as a
public corporation of the state is not to decide if
Alaska should risk tens of billions of dollars of
public money on the LNG project, but to assure that
the best technical, project management, business, and
market information is available to the legislature for
consideration in their decision. I believe the AGDC
Board as reconstituted is capable of directing the
AGDC executive staff and consultants to do that.
These three are well qualified to provide fiduciary
review.
MR. HEINZE further commented that the data confidentiality
issues are so convoluted right now that there is no way anybody
knows what all the restrictions are. As an example he cited the
ENSTAR Natural Gas Company data source restrictions and whether
they are still in effect. Regarding Representative Hawker's
statement that any legislative consideration of Alaska LNG would
be deferred until after the next mid-term election, he said that
that is not his understanding of the intent of Senate Bill 138.
2:48:29 PM
CO-CHAIR TALERICO closed public testimony after ascertaining
that no one else from the public wished to testify.
2:48:47 PM
REPRESENTATIVE TARR pointed out that three members of the AGDC
Board are attorneys and would therefore have some experience in
contract law. She said this builds some level of confidence in
their ability to sort through these matters.
REPRESENTATIVE SEATON believed that Mr. Heinz said two years
would be after the next election. He said he thinks
Representative Hawker misspoke when he said that the contract
would come back to the legislature in two years for approval.
REPRESENTATIVE HAWKER responded that he did not imply to say
that it would be two years from now.
REPRESENTATIVE SEATON said he wanted to clarify on record that
that wasn't the intent of Representative Hawker's statement.
2:50:02 PM
REPRESENTATIVE HAWKER noted that the forwarding of these names
to a joint legislative session for confirmation is not in any
way a commitment of any individual on the committee to vote
either for or against an appointee's confirmation. He moved
that the committee forward the names of Mr. Rick Halford, Mr.
Hugh Short, and Mr. Joe Paskvan to a joint legislative session
for the purpose of their potential confirmation as members of
the Board of Directors of the Alaska Gasline Development
Corporation. There being no objection, the names of Mr.
Halford, Mr. Short, and Mr. Paskvan were forwarded to a joint
legislative session.
The committee took an at-ease from 2:50 p.m. to 2:52 p.m.
2:52:55 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:53 p.m.