Legislature(1995 - 1996)
04/29/1996 05:15 PM House WTR
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON WORLD
TRADE AND STATE/FEDERAL RELATIONS
April 29, 1996
5:15 p.m.
MEMBERS PRESENT
Representative Ramona Barnes, Chairman
Representative Gail Phillips, Vice Chairman
Representative Bill Williams
Representative Gary Davis
Representative Gene Kubina
Representative Eldon Mulder
Representative Jerry Mackie
OTHER HOUSE MEMBERS PRESENT
Representative Kay Brown
Representative John Davies
Representative Joe Green
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 548
"An Act authorizing, approving, and ratifying the amendment of
Northstar Unit oil and gas leases between the State of Alaska and
BP Exploration (Alaska) Inc.; and providing for an effective date."
- PASSED CSHB 548(WTR) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 548
SHORT TITLE: NORTH STAR OIL & GAS LEASE AMENDMENT
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
03/28/96 3434 (H) READ THE FIRST TIME - REFERRAL(S)
03/28/96 3434 (H) RESOURCES, FINANCE
03/28/96 3434 (H) FISCAL NOTE (DNR)
03/28/96 3435 (H) GOVERNOR'S TRANSMITTAL LETTER
03/28/96 3436 (H) ATTACHMENT/S&H SUPPLEMENT #21
04/03/96 (H) RES AT 8:00 AM CAPITOL 124
04/03/96 (H) MINUTE(RES)
04/10/96 (H) RES AT 8:00 AM CAPITOL 124
04/10/96 (H) MINUTE(RES)
04/12/96 (H) RES AT 8:00 AM CAPITOL 124
04/12/96 (H) MINUTE(RES)
04/15/96 (H) RES AT 5:00 PM CAPITOL 124
04/15/96 (H) MINUTE(RES)
04/23/96 (H) RES AT 3:00 PM CAPITOL 124
04/23/96 (H) MINUTE(RES)
04/24/96 (H) MINUTE(RES)
04/24/96 (H) MINUTE(RES)
04/24/96 4019 (H) WTR REFERRAL ADDED
04/26/96 (H) MINUTE(RES)
04/26/96 4040 (H) RES RPT CS(RES) NT 3NR 3AM
04/26/96 4041 (H) NR: BARNES, OGAN, GREEN
04/26/96 4041 (H) AM: KOTT, WILLIAMS, DAVIES
04/26/96 4041 (H) FISCAL NOTE (DNR) 3/28/96
04/29/96 (H) WTR AT 5:00 PM CAPITOL 124
WITNESS REGISTER
JIM BALDWIN, Assistant Attorney General
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0200
Telephone: (907) 465-3600
POSITION STATEMENT: Answered questions on HB 548.
JOHN SHIVELY, Commissioner
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801-1724
Telephone: (907) 465-2400
POSITION STATEMENT: Answered questions on HB 548.
ERIC LUTTRELL, Vice President
Exploration and New Developments
BP Exploration (Alaska), Incorporated
P.O. Box 196612
Anchorage, Alaska 99519-6612
Telephone: (907) 564-5460
POSITION STATEMENT: Answered questions on HB 548.
ACTION NARRATIVE
TAPE 96-2, SIDE A
Number 001
CHAIRMAN RAMONA BARNES called the House Special Committee on World
Trade and State/Federal Relations to order at 5:15 p.m. Members
present at the call to order were Representatives Williams, Davis,
Kubina and Barnes.
HB 548 - NORTH STAR OIL & GAS LEASE AMENDMENT
Number 060
The first order of business was HB 548, "An Act authorizing,
approving, and ratifying the amendment of Northstar Unit oil and
gas leases between the State of Alaska and BP Exploration (Alaska)
Inc.; and providing for an effective date."
CHAIRMAN BARNES asked Mr. Jim Baldwin to come before the committee
and state his name and position in state government.
JIM BALDWIN, Assistant Attorney General, Civil Division
Department of Law, stated his position in state government.
CHAIRMAN BARNES asked Mr. Baldwin if he is the person who wrote the
original legislation.
MR. BALDWIN informed the committee he is not the attorney that
wrote the original legislation, but he did review it and approved
it before it was sent to the Office of the Governor.
CHAIRMAN BARNES asked Mr. Baldwin if he is substantially familiar
with it.
MR. BALDWIN state he was.
Number 129
CHAIRMAN BARNES asked Mr. Baldwin if he is the person who wrote the
opinion under his signature.
MR. BALDWIN indicated he did. He noted he consulted with people in
the Department of Law and in the Department of Natural Resources
(DNR). He stated he signed the opinion.
CHAIRMAN BARNES asked Mr. Baldwin if he is substantially familiar
with what is in the opinion.
MR. BALDWIN said that he thinks he is.
CHAIRMAN BARNES asked Mr. Baldwin to go through the opinion he
wrote.
Number 205
MR. BALDWIN explained the primary issue they dealt with in the
opinion was what was the commissioner's authority to amend a net
profit share lease as provided by existing law. He said they
considered that issue and determined or advised the commissioner
that they felt that the law was not clear on this point and that it
needed clarification as far as the authority to amend the net
profit share lease and that it was not provided by any existing
provision in Section 38.05.180. He said that there had been some
suggestion that there was some authority in Section 180(p). So the
first part of the opinion deals with the fact that they believe
that there needs to be specific authority provided to the
Department of Natural Resources to make such a change in an
existing lease. Mr. Baldwin indicated if the Chair wishes for him
to go into detail about that analysis, he would.
CHAIRMAN BARNES said she believes there are only two members of the
committee that have participated in any prior hearings on the bill.
She said she would appreciate it if Mr. Baldwin would briefly set
out that discussion.
Number 313
MR. BALDWIN said it was suggested that there was authority provided
in subsection (p) of 180, which is basically the general leasing
authority in the Alaska Land Act for oil and gas leases.
Subsection (p) is specific authority to make certain changes, when
necessary, to implement a unit. He said because of the wording of
the statute, it talked about "may change royalty requirements," his
office determined that the language was not broad or specific
enough to cover a net profit share amendment because of the
reference to royalty requirements and the fact that there is some
authority out there that a net profit share provision is not the as
a royalty. Therefore, any authority or authorization found in
Section 180 (p) or (j), which is the provision that was enacted
last year for royalty reduction, that any authority in existing law
applicable to royalties was not necessarily applicable to net
profit share reductions. He said they felt that there needed to be
some specific change in the law enacted to authorize the
commissioner of DNR to do what he was proposing to do.
CHAIRMAN BARNES asked that the record reflect that all committee
members were present.
MR. BALDWIN explained their conclusion was that there needed to be
some express authorization provided. He noted that is what one of
the section in the original version of the bill that the Governor
introduced would do. Mr. Baldwin explained since this lease was
initially competitively bid, there was a question as to whether a
change could be made to the lease at all which took place sometime
after the lease was competitively bid, particularly since the net
profit share provision was the main variable that was considered in
awarding the lease in the first place. He said they considered
that issue and relied heavily on the Kenai lumber case which set
out the rules for when you can make changes to competitively bid
procurements or solicitations. In their determination of the facts
of this case, it appeared to them that a court would most likely
not consider this change to be material. Principally, they relied
upon the passage of time since the award of these leases, and
basically the fact that the initial contracts, incorporated by
reference of state law, seems to contemplate that the lease
agreements are subject to change during the term as provided in
law. Therefore, a change of this nature would not be considered to
be material. He said they felt that the Kenai lumber case did not
present a bar towards changing a net profit share lease provision.
Mr. Baldwin said they also considered the issue of local or special
legislation because as it came to them, the department was very
concerned that there not be a broad ranging grant of authority
given here, that it be very specific. The department wants to be
able to consider these kinds of changes on a case-by-case basis
because they are of such significant fiscal effect for the state
treasury. They did not favor a law of general application, they
wanted something that was very special and limited in its
application. Mr. Baldwin said his office considered the issue of
whether to propose a statute in that narrow form would violate the
local or special prohibition in the Alaska Constitution and
concluded that because this was such a significant revenue source
and that under the terms of the lease amendments, there would be
some other indirect benefits. This was a matter of statewide
concern and it could, therefore, not be classified as local or
special legislation and they felt that any court that reviewed a
challenge on that basis would give a large degree of deference to
the legislature in its determination that it wished to make a
narrow statute.
MR. BALDWIN referred to the response from a letter he received from
the Speaker at the time that they were considering introducing this
bill and said the question was raised by the Speaker as to whether
or not this proposal would constitute an expenditure of funds that
would be in violation of the public purpose doctrine. He said they
considered that issue in the opinion and concluded that there was
basically a trade off, a quid pro quo between the state giving up
something, but also getting something in return and that in any
case the legislature will grant a broad degree of deference to the
legislature when it makes a determination concerning the resources
or assets of the state and felt that this would pass a muster under
the public purpose doctrine of the Alaska Constitution.
Number 764
CHAIRMAN BARNES asked Mr. Baldwin to turn his attention to the
original bill that was introduced and said based upon his testimony
to the committee at this time, she believes that he has stated that
the provisions of the bill would have to show a compelling state
interest to change the provisions of the lease and that it must
clearly show a general public purpose. Bearing that in mind, she
referred to page 2, line 9.
MR. BALDWIN asked if that is finding number (8).
CHAIRMAN BARNES said it is findings (8), (9) and (10). She
indicated those findings have words in them that she believes both
Mr. Baldwin and herself recognizes as being non-binding non-legal
terms under the laws in the state of Alaska. Chairman Barnes asked
Mr. Baldwin if he would say that is true. She read the wording.
"(8) BP Exploration (Alaska) Inc. has committed to hire Alaska
residents and contractors and to fabricate modules for the unit in
Alaska;" She asked Mr. Baldwin to keep in mind benefits that we
are to derive from this compelling public purpose of changing these
leases and asked him if he would say that "has committed to hire"
means anything in Alaska law.
Number 910
MR. BALDWIN said he is aware that the lease provisions that backup
this bill are not stated in a mandatory way. In other words, they
are very carefully worded so that there is no apparent state action
to force the leaseholder to implement local hire.
CHAIRMAN BARNES indicated that doesn't answer her question. She
asked to Mr. Baldwin to look at sections (8), (9) and (10)
together. She said, "Since we have to, under our constitution,
derive from this legislation a compelling public purpose of
commitment to the state that is concrete, would you believe either
one of those three lines, as an attorney for the state, has any way
nailed down anything concrete as it relates to hiring Alaskans or
to building modules in Alaska?"
MR. BALDWIN said he doesn't think those findings do that. He said,
"But I think that there is, and as I testified in the Senate
committee and I'll just state that here again that I think as a
state, and we're acting with the powers of the sovereign state, we
have to be extremely careful that we not do something that would be
perceived as state action to implement a discriminatory provision
that -- in other words, discriminates against nonresident workers."
Number 1041
CHAIRMAN BARNES said with that in mind, she asked Mr. Baldwin to go
back to what he just told the committee in that we have to show a
public purpose clearly defined for changing these leases. She
asked him if he can show her, since those lines don't do it, where
in the bill there is a clearly defined public purposes for changing
the leases.
MR. BALDWIN said he believes that there has been testimony in other
committees that there is a high degree of expectation that there
will be a more expedited development of the field and that there
may be a more certain expectation of revenue to the state treasury
than we would have otherwise. He said he thinks there has been
testimony and a record created to that effect.
CHAIRMAN BARNES said there is nothing in the bill that says that.
MR. BALDWIN explained there is nothing in the bill that says that,
but they have been attempting to make that record as they have
appeared before the various committees.
Number 1113
CHAIRMAN BARNES said, "As long as BP, as the company negotiating
with the state, voluntarily without coercion from us, concludes
that it is in their interest to hire Alaskans and to build these
modules in Alaska in exchange for us giving up the net profit
sharing leases -- that would be constitutional wouldn't it?
Voluntary.
MR. BALDWIN answered in the affirmative and said he thinks that's
right. He said, "I know that the Administration has approached
this committee -- has approached the legislature with this problem
as one of saying to you that we've negotiated this agreement in
good faith and that it should be an up or down decision by the
legislature. I know that has wrangled some because they want it to
do more and the problem is what you can do is very limited as a
state - what you can do is very limited, and if I were to sit here
and tick off what you could do you probably wouldn't think that
that's enough."
CHAIRMAN BARNES said you'll agree that any piece of legislation
that is put before a legislative body is subject to amendments.
MR. BALDWIN said he would agree to that.
CHAIRMAN BARNES said, "As long as we don't violate the terms of the
lease, then you would say that we have the right to amend it.
Would you not?"
MR. BALDWIN responded, "I would say that you can amend the bill.
I've been concerned with the fact that some of the committee
substitutes that I've seen coming out of the preceding committee
and out of the Senate where actual lease provisions were put in the
bill, I think that presents a legal issue. That's kind of between
the executive and the legislature. To a certain extent we've
almost invited that by bringing it here but it's still...."
CHAIRMAN BARNES said he didn't have a choice.
MR. BALDWIN said they didn't have a choice. He explained what they
are looking for is for the legislature to change the Enabling Act
so that we can do this. He said that is something that clearly the
legislature can do or not do. Mr. Baldwin noted it gets into a
very difficult area when the legislature attempts to renegotiate
the contract.
CHAIRMAN BARNES indicated that is the question. As long as the
legislature doesn't renegotiate the contract, there shouldn't be a
problem.
MR. BALDWIN said, "No." The legislature can condition enabling
statute and that is purely within the legislature's lawmaking
power. He noted he has been concerned when he sees rewrites of the
amendments in the law. If the legislature wants to do that, there
are other ways to do it. He said he isn't encouraging the
legislature to do that.
Number 1280
CHAIRMAN BARNES indicated she hasn't seen any of those. She noted
she has a proposed committee substitute (CS) she will give to the
committee.
Number 1288
REPRESENTATIVE JERRY MACKIE referred to the committee substitute
which came out of the Senate Resources Committee and asked Mr.
Baldwin if his opinion is that it is unconstitutional because of
local hire provisions.
MR. BALDWIN said he believes it is a very questionable validity
because the drafter attempted to make the bill appear that the
leaseholder was expected to operate within the extent permitted by
law, but there is also mandatory language as to local hire which
confuses the issue a great deal. He said he thinks it gives cause
for those who want to attack whatever hiring scheme is voluntarily
implemented by the leaseholder to attack it and perhaps
successfully so. It is great cause for concern.
Number 1340
REPRESENTATIVE MACKIE asked Mr. Baldwin if it is his legal opinion
that there is a high likelihood that would be found
unconstitutional the way it is currently drafted.
MR. BALDWIN indicated he doesn't have an unpublished Supreme Court
opinion with him.
REPRESENTATIVE MACKIE said his opinion would be fine.
MR. BALDWIN said he thinks it raises a serious legal issue.
REPRESENTATIVE MACKIE referred to the House Resources Committee
version of the bill and asked Mr. Baldwin what his opinion is in
terms of it's constitutionality in terms of the local hire
provision.
MR. BALDWIN said he thinks it has similar problems. He indicated
he was very concerned when he reviewed the minutes that it felt
that that bill was sufficient with out a severability clause. Mr.
Baldwin said he thinks it should have a severability clause, at the
very least, if anything is going to be done about local hire. It
should be very clear. That way, we might have some success in
avoiding an injunction that would stop the project.
Number 1405
REPRESENTATIVE MACKIE referred to the original version of HB 548
and asked Mr. Baldwin if, in his opinion, that bill is workable and
if it would meet the tests of whether or not it would be
constitutional.
MR. BALDWIN said, "Yes." He also said he thinks the provisions of
the lease were very carefully drafted and reviewed by his office.
He said it was very carefully worded to not create the situation
where the leaseholder was forced to do anything. He said it has
been their perception that the leaseholder is very inclined towards
Alaska hire and that we, as a state, needn't do anything to force
them to do anything beyond that.
REPRESENTATIVE MACKIE referred to looking at the local hire
decisions that have been thrown out in the past in terms of what
previous legislatures have tried to do and asked if there is any
way to deal with local hire that would meet those court tests, and
had there been a way wouldn't it be in the bill. He said there are
a lot of people that would like to include local hire language in
the bill and he would also like to see that, but if it can't be
done, it can't be done. He asked, "If there was a way, would you
not have had it in this particular language?"
MR. BALDWIN said he knows the Administration feels just as strongly
about local hire as anybody else does. He said he presumes those
who negotiated the lease pursued all the avenues they could pursue
to try and achieve that. There have been cases such as Hickland v.
Orbeck, which is pretty much on point with trying to make
leaseholders of oil and gas leases to employ local hire in their
activities and weren't successful in that case.
Number 1510
REPRESENTATIVE MACKIE said he would infer from Mr. Baldwin's
comments that the only thing that works to accomplish this project
is the original version of HB 548 which was submitted and agreed to
by the Administration.
MR. BALDWIN responded, "I'm not saying that we have all the answers
or that somebody - that there isn't somebody out there more
creative, but we think that's a safe approach to implementing the
project."
Number 1536
CHAIRMAN BARNES said, "Mr. Baldwin, before I go to the next person
I want you again to state for the record whether or not the whole
key is whether BP voluntarily commits to our Alaskans and whether
BP voluntarily commits to build modules in Alaska."
MR. BALDWIN said there are certain things that we can do as far as
local hire goes, but they are subtle. In other words, we cannot
directly mandate percentages and that sort of thing. There are
certain things we can do that are subtle. He said it appears to
him that BP intends to do those things. Those things are requiring
instate construction, they appear to agree to do that. They also
appear to support Alaska as being the point of hire. Mr. Baldwin
said those are the two things that we feel, as a state, we can
mandate or do. The Administration believed they had those points
covered in the lease agreement. Beyond that, you embark upon a
course of conduct to require more than that which exposes you to
protracted litigation over the validity of what you've done.
Number 1623
REPRESENTATIVE GAIL PHILLIPS referred to the House Resources
Committee version of the bill and said the committee put on
sidebars in the last portion of the bill that all of the processes
wouldn't go forward until the requirement for the local hire -
local contractors, local vendors, local module building had been
met. He asked Mr. Baldwin if when he was negotiating the contract,
did the Administration - the department consider putting any kind
of sidebars on this that would say the agreement is not going to go
into effect until we see the positive results of this.
MR. BALDWIN said he would like to defer that question to DNR. He
noted he didn't sit in on those negotiations.
CHAIRMAN BARNES asked Commissioner Shively to join the committee at
the table.
Number 1755
JOHN SHIVELY, Commissioner, Department of Natural Resources, came
forward to answer Representative Phillips' question. He said, "In
answer to Speaker Phillips' question we didn't, to my knowledge,
not consider the kind of sidebars that you've put on it for the
same kind of reasons I think that Mr. Baldwin talked about. We
felt that we could not force the issue of local hire, that if we
required it that it would be a problem for us constitutionally
because it would be a state act. We tried to push the language in
the agreement to the brink of what we felt would be acceptable
constitutionally, recognizing as I've testified before that such
language, as we could get, would not guarantee the state what the
Governor wants, what I wanted, what we know the legislative
leadership wants because of the discussions that - that you have
had with BP."
REPRESENTATIVE PHILLIPS said, "Mr. Commissioner, if you didn't
consider sidebars, did you give any creditability or any discussion
to the issue of creating incentives then if the company put these
requirements into place. In other words, if we saw positive
results on local hire, local vendors, modules built in Alaska, why
didn't we put a process into place giving incentives for doing that
and tie the incentives into that rather than a blanket release
right at the very beginning?"
COMMISSIONER SHIVELY responded, "Madam Chairman, Speaker Phillips,
I think that you need to recognize sort of what we negotiated over
and then what I think is of major sort of public concern. For the
department, my major concern was that the economics of the deal
made sense to the department and those economics have to do with
the risk that we have under the net profits royalty, the need for
certainty, the need to be able to get the leases back and rebid
them. That was to me really the negotiated part of the agreement
and that was important for the state. Local hire was important as
a piece of what I think people wanted, but if the deal could not
stand on the economics, then the department shouldn't be doing it
just for local hire. And so we spent the bulk of our time
negotiating on the economic issues (indisc.)."
REPRESENTATIVE PHILLIPS said it wasn't the matter that they turned
down the issue of incentives, it was a matter that they looked at
a different aspect of the project instead.
COMMISSIONER SHIVELY said that is correct.
Number 1820
REPRESENTATIVE BILL WILLIAMS said, "Along those same lines
(indisc.) incentives goes, is it too late to (indisc.) to the
agreement?"
COMMISSIONER SHIVELY said he thinks the answer is probably yes.
From his understanding of BP developing incentives for hire
requires a variety of measures that he thinks are difficult to
agree on, not the first of which is "What is an Alaskan?"
Commissioner Shively referred to the Senate Resources Committee and
said they gave some very specific guidance as to what they consider
Alaskan in terms of how you count them, and what's an Alaskan,
constitutionally, are probably two different things. He said he
would be willing to listen to the ideas people have about how you
do those incentives. He said the Native community has probably
been the most active in terms of negotiating local hire commitments
of an incentive system in that regard. He referred to Speaker
Phillips question and said it is just something that he has really
not seen dealt with in that way and if they didn't do it, that was
at least one of the reasons.
Number 1900
REPRESENTATIVE GENE KUBINA referred to the discussion that has been
going on about how to do this and asked if before this ever came to
the legislature couldn't the Administration have said to BP, "You
know if you signed a project labor agreement for labor and Native
hire, before we ever got to the legislature, we wouldn't have to
fight this local hire issue." Representative Kubina said he says
that because it seems like when there is project labor agreements
with the unions the percentage of Alaskans rises significantly, and
yet that wouldn't have been part of any lease agreement. It could
be simply said, "And then when that's done, we'll forward this to
the legislature." He asked if there is anything legally that would
have stopped them from doing that.
MR. BALDWIN said in the last couple of years we have seen
development along the area of project labor agreements and it has
been mostly favorable towards their implementation. He said there
was a time when we were reluctant to get involved in that because
of the uncertainty, but that uncertainty is starting to be resolved
at least on the lower court level in Alaska. He noted he is aware
of a recent case where federal court found a project labor
agreement to be nondiscriminatory. One of the side benefits, not
a direct benefit of a project labor agreement, is the fact that
whatever the union does as far as maintaining resident membership
you can benefit from that in an indirect way. So it has had an
indirect effect of encouraging local hire just as it is required
under state construction contracts that the point of hire be
through local union halls. That way if the unions are somewhat
discriminatory, that wouldn't be state action, it would be private
action. He said that is how you get there. Mr. Baldwin noted he
doesn't know what BP's labor picture is and how much of the work
they do is unionized. It would take an analysis of that before we
could say that it would definitely solve this problem.
Number 2014
REPRESENTATIVE KUBINA asked Commissioner Shively if this is
something that ever entered into the discussion at all.
COMMISSIONER SHIVELY indicated it wasn't discussed. He stated, for
the record, "At least the information that I have -- that the
Department of Labor did when they did their statewide local hire
analysis, not only of the oil industry but all industries that it
is not necessarily true that union contractors, at least by the way
they measure it, do significantly better than nonunion. And that
may be somewhat because of the measure that the Department of Labor
uses which is running the employment list against the permanent
fund dividend list, which is how they come to that analysis. But
at least under that analysis, I was surprised to see that there was
not. In fact, in one company I know of the nonunion arm had a
better local hire - Alaska hire record that the union arm. I don't
think the state, in the past, has been really in the business of
mandating or suggesting project labor agreements. That's generally
been left to negotiations between industry and unions."
Number 2073
CHAIRMAN BARNES asked Commissioner Shively if he has seen the
document entitled, "First Amendment to the Northstar Unit Leases
Between the State of Alaska and BP Exploration (Alaska) Inc."
COMMISSIONER SHIVELY indicated he has.
CHAIRMAN BARNES referred Commissioner Shively to page 12 of the
document asked him to acknowledge, for the committee, that it was
executed by him.
COMMISSIONER SHIVELY acknowledged it was executed by him.
CHAIRMAN BARNES noted it was also signed by E.M. Luttrell, Vice
President, BP (Alaska). She asked if the document was also
executed for him voluntarily.
COMMISSIONER SHIVELY answered in the affirmative.
Number 2140
CHAIRMAN BARNES referred to page 5, (10) and read, "Paragraph 41 is
replaced in its entirety as follows: 41. EMPLOYMENT OF ALASKAN
RESIDENTS." She asked Commissioner Shively if this was language
that was voluntarily agreed to by him and by BP.
COMMISSIONER SHIVELY said it was.
CHAIRMAN BARNES asked Commissioner Shively to look at page 7, (5),
and read, "Paragraph 31 is replaced in its entirety as follows:
31. EMPLOYMENT OF ALASKAN RESIDENTS." She asked Commissioner
Shively if this was language that was voluntarily agreed to by him
and by BP.
COMMISSIONER SHIVELY responded in the affirmative.
Number 2195
CHAIRMAN BARNES referred to page 11 and read "These amendments take
effect when and if an Act(s) substantially similar to the act,
attached as Exhibit D and incorporated by reference, takes effect.
This amendment is dated for reference purposes of March 22, 1996."
She noted it is signed by Commissioner Shively and Mr. Luttrell
also.
COMMISSIONER SHIVELY confirmed the signatures were his and Mr.
Luttrell's.
CHAIRMAN BARNES said Commissioner Shively and BP (Alaska) actually
voluntarily agreed to all that is in the document.
COMMISSIONER SHIVELY said, "Yes, Madam Chairman, we did."
CHAIRMAN BARNES asked the committee members to read the pages of
the document she so noted. She gave the committee members a
proposed committee substitute and asked them to review it,
recognizing that Commissioner Shively has testified that the
language before the committee in the contract was put there
voluntarily by BP. There was not any coercion by the state of
Alaska or Commissioner Shively. Chairman Barnes said she would
give the committee members a separate document that relates to
legislative intent. She noted that a lot of the House Resources
Committee's version of HB 548 is not included in the proposed
substitute. The reason it is not included is because she has an
opinion from Jack Chenoweth that it was unconstitutional. She
noted that as long has she has been in the legislature she has
never knowingly participated in doing something that was
unconstitutional. Having said that, we have to look for a way for
the legislature to accomplish its end in a constitutional manner.
She stated a constitutional manner is that which BP and the state
of Alaska entered into voluntarily that is now part of the public
record of this committee and is so stated under the signature of
both BP and the commissioner of the Department of Natural
Resources.
CHAIRMAN BARNES referred the committee members to page 3, line 22,
and said the committee will find that directly from the agreement
and the lease amendments entered into by BP and the state of Alaska
it is reprinted in the legislation verbatim. In that regard, she
said she also has a letter from John Morgan, President, BP
(Alaska), Incorporated. She asked Commissioner Shively if he had
the opportunity to review the draft committee substitute.
Number 2470
COMMISSIONER SHIVELY said he has had an opportunity to review it.
CHAIRMAN BARNES asked him if he would say that it contains the
language of the leases that were signed by him.
COMMISSIONER SHIVELY indicated it looks like it contains the
language, but noted he hasn't done a word-for-word analysis.
TAPE 96-2, SIDE B
Number 007
CHAIRMAN BARNES said she tried to provide some additional
legislative intent. She noted that we all know that legislative
intent does not have the force of law. Chairman Barnes said they
have tried to make some clarifying language in the legislative
intent which we understand is nothing more than that clarifying
language. That is whole the problem with the original bill. The
whole bill is legislative intent that means nothing except for
ratifying a deal with (indisc.) in a piece of legislation, other
than the reference of the contracts. She asked if there were any
questions.
Number 051
REPRESENTATIVE MACKIE said he would like to ask Mr. Baldwin a
question. He referred to the terms of the committee substitute and
said by including the language of the agreement, which was
voluntarily agreed to, does it pose any problems by putting it in
the legislation the way that it was drafted in either the Senate or
House Resource versions or does it take away that particular
problem.
MR. BALDWIN said as he understands it, they are the exact
provisions that were negotiated. So we can say that creates any
problem other than the one we created for ourselves.
REPRESENTATIVE MACKIE said it is one thing to put it into an
agreement, but it's another thing to put it into a bill or into
statute. He asked if that is a different issue.
MR. BALDWIN said the issue would be if we wanted to go back and
amend it. They would then have to go back to the legislature to
change the law. He said, "Say something happened, a Supreme Court
opinion came down that changed the law somewhat. Then we would be
constrained to come back to you to change it and that's up..."
Number 115
CHAIRMAN BARNES noted that is done all the time.
REPRESENTATIVE MACKIE asked if the language in the bill, the fact
that it's in a bill, it's statute with provisions of local hire,
does it achieve what the Chair is trying to achieve by not having
the same constitutional problems with local hire provisions that
are currently in the Resources version.
Number 125
MR. BALDWIN said if there is a problem with the language, which he
doesn't think there is, whether it's done by the legislature or
done by the Department of Natural Resources it is all state action.
He said he doesn't think it would make it any worse that it was
done by the legislature as opposed to the department.
CHAIRMAN BARNES said she would not think of putting anything in the
bill that the department and BP hadn't agreed to voluntarily.
MR. BALDWIN indicated he knows that and said he is glad we have
made that record today.
CHAIRMAN BARNES said she worked really hard at.
MR. BALDWIN said she has done a very good job in doing that.
CHAIRMAN BARNES noted the letter from Mr. Morgan was also
voluntarily and says essentially the same thing.
Number 176
REPRESENTATIVE KAY BROWN distributed an opinion to the committee
members. She said she appreciates the committee's attention to the
constitutional issues in the legislation and she believes the local
hire is one of those. She noted there are others that she hopes
they will also consider. Representative Brown said she asked Mr.
Chenoweth to identify what legal issues he sees that are
significant with respect to the legislation before the committee.
She said it detailed in a memorandum and urged the committee
members to take a careful look at it. The point raised in number
1 has been brought up before, but she thinks it is worth repeating
that the proposal before the committee is not authorized under
current law. She said she doesn't believe that the department or
the commissioner had the authority to enter into the agreement that
they have entered into. It is pointed out in Mr. Chenoweth's
memorandum that competitively bid contracts may not be materially
amended. It appears that the modification in this manner is
material by virtually any measure. That then brings us to the
issue of whether the legislature can cure this illegality with
another act. She said she believes there are two constitutional
provisions that would invalidate the legislation as it is presently
drafted. One is pointed out on page 2 of Mr. Chenoweth's
memorandum deals with Article 8, Section 17, identified as the
uniform application clause. She referred to "Shepherd v.
Department of Fish and Game, a 1995 case and said that provision
basically states, "Laws and regulations governing the use or
disposal of natural resources shall apply equally to all persons
similarly situated with reference to the subject matter and the
purpose to be served." She explained he goes on to point out that
this bill references only the Northstar leases and no mention is
made of any other leases that might similar problems or might
warrant reformation. That should be carefully considered.
REPRESENTATIVE BROWN said she further questioned Mr. Chenoweth
about his finding on the local or special acts limitation. He told
her he had not considered the point of view that she raised and
that he would reconsider it and would put something in writing when
he has had a chance to review. Representative Brown referred to
her opinion and said it is that Abrams v. State which is, as far as
she knows, only case interpreting this local or special acts
limitation in the constitution is a completely different situation.
It involved whether there could be a municipality formed at Eagle
River and that the reason the court had to come up with this
balancing test was because a general law could not be made
applicable. It was in fact a localized situation which then led
them into nonetheless having to go through this balancing test.
Representative Brown explained she thinks the clear language of the
constitution says if a general law can be made applicable, the
legislature shall not pass a special act. If it means anything,
surely it must apply in a situation like this one where we are
passing special benefits for one company. She stated she believes
this legislation has serious flaws constitutionally and doesn't
believe that the legislature can go back and cure this agreement in
this manner. She urged the committee members to take those things
into account as they further deliberate on this bill.
Number 335
CHAIRMAN BARNES said she does believe the legislature is empowered
to make this legislation constitutional because we are the sole
controller of the resources in this state. She indicated that if
the legislature chooses to make an amendment and can show the
public purpose than the legislature can pass this bill. It must be
shown how it will serve the public purpose of the people of the
state.
REPRESENTATIVE BROWN said, "Madam Chair, I would agree that we can
do anything we can get 21 votes to do. Whether it is
constitutional or not I think is a debatable point. The
constitution does impose requirements on us as we serve as the
trustee of the people's resources. And it does say very clearly
that if you can make a general law applicable no local or special
act shall be valid. And I believe, in this case, there is many
ways that we could make a general law applicable and in fact that
is one of my concerns about this whole situation is the precedence
that were setting and how we are going to deal with our outstanding
net profit share leases and all the other companies and lessees
that have competitive contracts. Are we now to throw out our
competitive bidding system and have only a negotiated system where
the commissioner can go and in secrete completely renegotiate every
competitive lease that we have? I think that would be most
unfortunate. And I do believe that we, the legislature, are also
subject to the constitution."
Number 410
CHAIRMAN BARNES stated she absolutely agrees with Representative
Brown and she doesn't believe that the commissioner, under present
law, could go renegotiate these leases without ratification by the
legislature.
Number 420
REPRESENTATIVE MACKIE asked if you can't have special legislation
when a local act can be applicable.
REPRESENTATIVE BROWN clarified if a general act can be applicable,
you can't have special legislation.
REPRESENTATIVE MACKIE said he thinks that if they could have done
it under a general law, they would have just done it without it
coming before the legislature and that is why it is before the
legislature to adopt.
REPRESENTATIVE BROWN said that isn't her understanding. She said
she thinks that was a choice they made to go as a special act as
opposed to a general act. She said she believes it is clearly
possible to make a general act and that would be the constitutional
way to proceed if the legislature chooses to do so.
Number 454
REPRESENTATIVE KUBINA referred to Mr. Baldwin's letter dated March
26, page 3, under 2, he actually makes a statement, "The department
intends to seek the narrowest possible provision to specifically
authorize amendments to only the Northstar leases." He said the
way it is stated it is like Mr. Baldwin was given direction before
he wrote the letter that would be the course of action.
Number 480
MR. BALDWIN responded, "Yes, if it was legally permissible to do
that."
REPRESENTATIVE KUBINA said, "Well maybe my question really then is
why that way? Why wasn't it brought as more like 207 or something
where something more general was on the small general act that
would allow not only what was done in 207, but again what could be
done to include this in a 207 type situation?"
Number 506
COMMISSIONER SHIVELY said he would like to answer the question. He
said this really is a unique situation. First of all, there aren't
that many leases on the North Slope that were bid with net profits
as a variable. This is the only oil field which is basically set
with four of the five leases based on a very high net profits.
Commissioner Shively said they think it is different and is a
situation that can be dealt with and they believed that it was a
situation that needed to be dealt with. He said they could have
had a general piece of legislation that, had it passed, would have
allowed them to go and negotiate an agreement with BP if they met
those standards. He referred to terms of the timing development
and said timing is critical here because of the problem on the
development account and how fast it is earning interest, it really
gives BP an incentive to delay development, so the state has an
incentive here. This was the way to get it done as quickly as
possible and perhaps have construction early this fall. That is
why they did it. Although there was discussion about a more
general piece of legislation, this was the route they took.
Number 573
MR. BALDWIN referred to the terms of the legal rhetoric and said
they're not similarly situated. In addition, the Abrams case that
was cited by Representative Brown is not the only case on local and
special legislation. Another case he cited in the opinion was
State v. Lewis which involved a land trade, specific acreage
located in the railbelt area. There was a bill authorizing that
specific land trade. One can always argue that you can do a
general law authorizing land exchanges between private corporations
and state lands, but the court reasoned in that case that it did
not violate the local and special legislation prohibition because
it was a matter of statewide interest. That case came along after
the Abrams case. That is part of the reason for their opinion.
REPRESENTATIVE KUBINA asked what would happen to BP's time line to
meet the sanction, which understands is their corporate
headquarters commitment of the funds to the project. He asked what
would happen if the legislature left and somebody immediately filed
a lawsuit.
MR. BALDWIN said it depends on the kind of lawsuit filed and what
was asked for. If what was asked for a preliminary injunction and
it was granted, then work would stop. Otherwise, he would guess
that BP would have to assess the litigation risks they have and
decide whether or not they wanted to proceed with that litigation
in front of the court.
Number 670
REPRESENTATIVE MACKIE referred to an amendment that will soon be
offered to the committee substitute and stated it says the
amendment is drafted to Version M and the committee is working with
Version O.
CHAIRMAN BARNES said the committee will adopt 2, as a working draft
so she can distribute them. She said she will then put them in the
correct order.
Number 707
REPRESENTATIVE PHILLIPS moved to adopt CSHB 548, Version O, dated
4/29/96 as the committee's working document along with Amendment M-
1, dated 4/29/96.
CHAIRMAN BARNES asked if there was an objection. Hearing none, it
was so ordered.
REPRESENTATIVE PHILLIPS referred to the issue of special
legislation and the court's decision on the Abrams case, where the
court recognizes the statute may effect only one of the very few
areas and yet relate to a matter of statewide concern or common
interest. She said the courts then could rule. If there were a
lawsuit on this then the courts could rule that this is an issue of
common interest that could be applied in any of these similar tax
cases.
Number 771
COMMISSIONER SHIVELY said he thinks all the court could do is say
what the legislature had done was constitutional or
unconstitutional. They couldn't extend this kind of agreement to
other net profit leases.
REPRESENTATIVE PHILLIPS asked Mr. Baldwin if he thinks they would
give credibility if another entity came up and wanted this kind of
a benefit.
COMMISSIONER SHIVELY explained it would be somebody in a similar
situation. There really isn't another oil field that looks like
this with these kind of net profits on such a large portion of
leases. He said he thinks they would first have to come to the
commissioner and be turned down in terms of looking at it to say
they hadn't been treated the same. Two of the existing leases that
were bid this way with net profits as a variable are in the Duck
Island Unit and are presently under production. Commissioner
Shively referred to most of the net profit leases the state had and
said the net profits were not the bid variable and that's the real
difference we see in this situation. There are a lot of net profit
leases, but with most of them the net profits were preset at like
30 or 40 percent. The bid variable was a bonus bid which is what
they're accustomed to and there was also some kind of base royalty
involved. This is somewhat of a unique situation and that's why he
thinks it can be dealt specifically by the legislature.
REPRESENTATIVE MACKIE asked Commissioner Shively if he has reviewed
the working draft the committee has before it.
COMMISSIONER SHIVELY said he has.
REPRESENTATIVE MACKIE asked if he is comfortable that the work
draft will accomplish what the original version did.
COMMISSIONER SHIVELY indicated Chairman Barnes has said that it is
the same words that are in the agreement. He said he thinks it
accomplishes what the committee wants it to accomplish. It
certainly got them as far as they thought they could go using the
same words. "If it works for the committee, it works for us."
Number 885
REPRESENTATIVE MACKIE said Commissioner Shively's concern was the
constitutionality question of the local hire provisions, etc., that
were added in other committees and not necessarily the particularly
language to get us to the same result.
COMMISSIONER SHIVELY said, "I think that the key in what the Chair
has said repeatedly is that she is using language, including
language that we had in the agreement, that talked about them
voluntarily agreeing to do this as opposed to the legislature
mandating it. I think that's the key difference is that they can
voluntarily say as a business they've made this business decision.
We as a state cannot say, `You have to make that business decision
or political decision' or whatever you want to call it."
Number 929
REPRESENTATIVE KUBINA asked Commissioner Shively if he supports the
version of the bill before the committee.
COMMISSIONER SHIVELY said he sees no reason why he couldn't support
it.
Number 945
REPRESENTATIVE JOHN DAVIES said he appreciates the amendment that
the Chair has put before the committee in an attempt to get farther
down the road to a commitment to Alaska hire, but he believes we
can go a small step further. He said, "I think that that has do
with putting in and, unfortunately, I appreciate the difficulty of
actually amending the agreements. So what I'm proposing would
amend the agreement, it would be language that would amend the
agreement. I'm not sure there may be a way to finesse that, but
anyway the proposal that I would suggest - that I would like you to
look at is an amendment that I've prepared that would modify the
base royalty based on the percentage of Alaska hire. And so that
there would be a relationship between the percentage of Alaska hire
and the base royalty that was in the contract. And what -- in my
view, the advantage of this is of cause that, again, I think this
is - it would be voluntary situation. It's an incentive. I think
these have been found constitutional in other states and other
jurisdictions that companies can choose to hire as many Alaskans as
they want or not hire them, but once they've made that choice that
has an effect on what the base royalty would be. I think that this
also satisfies some of the, in my view, it satisfies some of the
constitutionality challenges to the contract from the point of view
of whether we are getting a fair value for the - from the state's
resources for all the people of the state of Alaska that would
establish a relationship between the benefit that we're scribing to
Alaska hire and the extraction of our resources. So I just wanted,
Madam Chair, the opportunity to put that consideration on the
record and to indicate that I have prepared an amendment and I hope
that it could be copies and distributed to the members of the
committee for their consideration and hope to have an opportunity
to discuss it with you all at a future date."
Number 1095
CHAIRMAN BARNES said she would have the amendment copied and
distributed to all members of the committee. She noted there is
floor session at 7:00 p.m. It would give the committee a chance to
review the amendment and then the committee would reconvene after
session.
REPRESENTATIVE PHILLIPS referred to page 5, Section 3, of the work
draft which relates to reporting provisions. She said she believes
this is a very important part of the bill that has been quietly
ignored and read from the bill, "The lessee, BP Exploration
(Alaska) shall file with the commissioner of Labor at least every
six months the reports that the commissioner of Labor determines
are necessary to evaluate the lessees efforts described under the
local hire provisions in the act." She said she thinks that is a
very important to have in the bill. Representative Phillips asked
that the committee consider a technical amendment that the
commissioner of Labor should also send the report to the
legislature.
REPRESENTATIVE MACKIE asked if the committee would reconvene after
session. He also asked if the amendment would be drafted into the
bill at that time.
CHAIRMAN BARNES indicated the committee would reconvene after
session and the amendment would be included in the bill at that
time. Chairman Barnes recessed the meeting at 6:30 p.m.
CHAIRMAN BARNES called the meeting back to order and noted all
members of the committee were present except Representative Kubina.
Number 1277
ERIC LUTTRELL, Vice President, Exploration and New Developments,
BP Exploration (Alaska), Incorporated, came before the committee.
CHAIRMAN BARNES asked Mr. Luttrell if he has had an opportunity to
read the draft CS adopted by the committee.
MR. LUTTRELL indicated he has read the CS. He said in their
reading of the bill he thinks the bill will do what everyone is
trying to achieve. He requested that he have a chance to review it
one more time.
Number 1341
REPRESENTATIVE ELDON MULDER asked Chairman Barnes if she would be
prepared to explain to the House Finance Committee the changes made
in the bill the following day.
CHAIRMAN BARNES indicated she would have no problem doing that.
She asked if there were any questions of Mr. Luttrell. There were
no further questions of Mr. Luttrell. Chairman Barnes asked if
there was anyone else wishing to give testimony. There being none,
she indicated Representative Phillips has a proposed amendment.
Number 1390
REPRESENTATIVE PHILLIPS said she would propose a technical
amendment on page 7, line 26, Section 4, where it says, "BP shall
file with the commissioner of Labor at least every six months the
reports that the commissioner of Labor determines are necessary."
She said she would like to add a phrase after the word
"commissioner" add a new sentence, "The commissioner shall submit
these reports to the legislature." Representative Phillips moved
the amendment be adopted.
CHAIRMAN BARNES asked if there was an objection. Hearing none, the
amendment was adopted. She asked if there were additional proposed
amendments.
Number 1480
REPRESENTATIVE WILLIAMS asked for an explanation of page 6, line
17, "The lessee shall furnish the Department of Labor a quarterly
report regarding employment of Alaska residents in the leased area
in compliance with regulations." He referred to page 7, Section 4,
"The lessee, BP (Alaska) Exploration, Inc., shall file with the
commissioner of labor at every six months." He asked if quarterly
is different than every six months.
CHAIRMAN BARNES said, "Well I think that the first part you're
addressing is in the intent language and these don't have to be as
concise or conclusive as the ones that will be filed under the law
itself."
Number 1552
REPRESENTATIVE PHILLIPS said she thinks this provides us a very
good alternative and method of getting on the record everything
that the legislature wanted to make sure was on the record, that
being the fullest ability or the fullest requirement for making
sure that we had existing residential hire on this project. She
indicated she wants to stress the phrase "existing residential
hire" for the record. She said she doesn't mean that we are going
to be bringing people up from the Lower 48, giving them an Alaska
drivers license and calling them a resident. It also gives us the
strongest language that we can ensure to make sure that those
vendors and suppliers in Alaska are going to get the first crack at
getting the contracts on this job and to the best of anybody's
ability that those modules will be built in Alaska. She said she
thinks it is very important that the record, throughout these
proceedings and hearings, is very clearly stated in all the
committees that is the intent of the legislature. We're not
interested in doing incentives, tax breaks, giving royalty breaks
or anything unless we are guaranteed that the people of Alaska will
be put to work. Representative Phillips stated she thinks we have
gone as far as we can in this amendment without violating the
constitution. That message is very very clearly on the record.
She indicated she will be reading those six month reports on a
regular basis.
Number 1670
REPRESENTATIVE GARY DAVIS referred to the severability clause and
asked how would severability would be enforced as far as do you
take out a phrase, do you take out a section, do you take out a
paragraph. He said his concern is the authorization to amend the
lease and the employment discussions are in the same subparagraph.
CHAIRMAN BARNES said if this should go to court, and perhaps with
the new bill it won't, of the court found that one section of the
bill or a portion of a section is unconstitutional, it would be
severed from the bill and the rest of the bill would remain in
tact.
REPRESENTATIVE DAVIS asked if it would be a section of the bill or
a portion of a section.
CHAIRMAN BARNES said she thinks if the court can find anything.
She asked Mr. Baldwin to come forward and clarify that.
Number 1750
MR. BALDWIN explained the way he sees severability working here is
that it reflects the intent of the committee that if the local hire
provisions in the bill were found to be unconstitutional you would
still intend that there be a net profit share reduction and that
the state would still receive all the benefits from the net profit
share reduction. That is the intention that we want on the record.
He said, "And I'm not quite sure what words or phrases would be
dropped from the bill or would be dropped - be stricken by the
court, but that's the important thing to get on the record is it's
the committee's intent and hopefully the legislature's intent that
if one - that if local hire is found to be or provisions relating
to local hire are found unconstitutional, or anything else. The
main thing is that the net profit share lease thing - a provisions
would stand."
REPRESENTATIVE DAVIS explained that was his concern and that is his
intent because the provision to amend is in the same subparagraph
as the employment provisions.
Number 1849
REPRESENTATIVE MULDER referred to the relation to the revision of
the contract and asked if the legislature approves legislation and
if the revised contract is signed by the state and BP, what is the
ability of the state to, in the future, readdress that contract
again. He said he thinks that it has been very clearly stated on
the record that to the extent constitutionally and legally allowed,
we have put a moral obligation on BP to hire Alaskans, to create
employment in Alaska. We have gone as far as we can go.
CHAIRMAN BARNES explained the legislature hasn't put the moral
obligation on BP, they voluntarily put it on themselves.
Number 1910
REPRESENTATIVE MULDER clarified to the extent allowable, they have
put the moral obligation upon themselves. He referred to the
future and said if they do not live up to the moral obligation,
what is the ability of the legislature to revisit the issue.
MR. BALDWIN responded that there is a provision in Title 1 which
states that the legislature does not have the power to impair
contracts. In other words, once a contract has been made with the
state or anybody else, the legislature cannot go in and change it
as they lack the power to do that. Mr. Baldwin noted the
legislature is a very powerful body and there are many issues and
areas that touch upon the leaseholder. The institution has a long
memory. He said he guesses there is plenty of opportunity, but not
in connection with this particular contract. He said a breach
could be enforced if there is a breach, but this language is
permissive and is voluntarily done by BP.
Number 2010
REPRESENTATIVE MACKIE referred to page 7, Section 5, relating to
severability and asked Mr. Baldwin if he feels that the language is
adequate to state the legislature's intent. He said there is
really nothing in the bill that mandates by the legislature in
statue anything that hasn't already been agreed to. He said he
doesn't see how something could be found unconstitutional with the
bill the way it is currently written because there is not a
statutory requirement by the legislature to mandate.
Representative Mackie asked if that was accurate and if there is,
where is it and does the severability clause still allow for it to
go forward if one portion were to be struck down.
MR. BALDWIN said he thinks it is always better to have an express
severability clause then merely to rely on the one in Title 1, but
by referring it in the bill he thinks it gets the point across to
the courts that you do intend for it to severable. Title 1 says
that it applies no matter what, even if the legislature doesn't
refer to it, but our courts have said that it is just not good
enough to rely on that. You have expressly relied on it and that
is what he recommends be done. He said in answer to the broader
question, he would be happy if nothing were said in the bill about
local hire.
Number 2129
CHAIRMAN BARNES again pointed out it's voluntarily. She said BP
has put this in the leasings and, thus, in the legislation.
REPRESENTATIVE MACKIE referred to the severability sentence in the
bill and asked if it is adequate to achieve what we want it to.
MR. BALDWIN indicated it is. He noted the sentence in AS 36.10.900
is a little bit different, but he thinks the sentence in the bill
conveys the legislature's intent that it be severable.
Number 2199
CHAIRMAN BARNES said language was also provided to her by someone
else to look at. She read, "Section 4, Severability. If any of
the provisions of this act are ultimately held unconstitutional,
said provision shall be severable from the rest of this act."
Chairman Barnes asked Mr. Baldwin if he would prefer that language
or does the current language do what she thinks it does.
MR. BALDWIN said he thinks it does. He said, "You want to make
sure that you're not relying on just the one in title -- the
provision in Title 1 automatically applying. By it's terms it
does, but our court has said severability is a question of
legislative intent and if we don't have any expression of
legislative intent then we're not going to imply it. And so the
fact that you have cited the severability clause and said that you
intended it to be severable, I think you've been expressing your
intent and it should be fine. The other one is fine to."
REPRESENTATIVE PHILLIPS said, "If this does what we want it - it's
in the language, lets go with it."
Number 2310
REPRESENTATIVE JOE GREEN said he had spoke to Mr. Chenoweth earlier
and he admitted there has been a change over the past few days
about his attitude on the constitutionality of what the was done
earlier. Representative Green said he thinks Mr. Chenoweth is of
the same opinion everyone else is that there was a constitutional
problem that has been cleared up the new language in the CS.
Number 2360
REPRESENTATIVE WILLIAMS said he would ask the department to see if
they can include some incentive language in for hiring. He noted
there is some proposed language offered by Representative Davies,
but he isn't prepared to offer it. He noted Kevin Becks put
together a spread sheet. Representative Williams referred to the
committee coming up with some incentives for hiring and indicated
he believes the amendment would work a lot better.
REPRESENTATIVE BARNES referred to the amendment that was provided
by Representative Davies and said if she thought that she could get
away with it constitutionally by adopting it she would, but she has
been told she cannot.
TAPE 96-3, SIDE A
Number 036
CHAIRMAN BARNES referred to the fiscal note in the committee
member's file and said it is her desire to nail down as clearly as
possible, in every way possible the, language in the bill is
voluntarily done on behalf of BP. So after the word "Northstar
unit," she would like a statement made that would say "Incorporated
by reference in this fiscal note is the attached letter dated April
29, 1996, BP Exploration, written to this committee by John C.
Morgan, President of BP (Alaska)." She said they would incorporate
the contents of the letter as an addendum to the fiscal note.
Number 121
REPRESENTATIVE PHILLIPS so move that the BP letter, dated April 29,
from John Morgan to Representative Barnes be included as an
addendum to the fiscal note. She noted the committee members all
have that letter.
CHAIRMAN BARNES asked if there was an objection. Hearing none, the
motion carried. Chairman Barnes noted the committee has adopted
the work draft and said she would entertain a motion to adopt the
CS.
REPRESENTATIVE PHILLIPS moved to adopt the CS.
CHAIRMAN BARNES asked if there was an objection. Hearing none,
CSHB 548(WTR) was adopted. Chairman Barnes said she would
entertain a motion to move the bill from committee with individual
recommendations.
Number 184
REPRESENTATIVE MACKIE said in regards to Representative Davies'
amendment, Representative Davies was told the committee would
address his amendment.
CHAIRMAN BARNES indicated the committee just did deal with the
amendment.
REPRESENTATIVE MACKIE said he heard a few opinions, but the
committee never dealt with the amendment. He said he does not
support the amendment, but out of courtesy to Representative Davies
he was told the committee would address the amendment.
CHAIRMAN BARNES asked Representative Phillips to withdraw her
motion.
REPRESENTATIVE PHILLIPS withdrew her motion.
CHAIRMAN BARNES said the CS has been adopted. She noted the
committee was given the amendment by Representative Davies.
Number 224
REPRESENTATIVE PHILLIPS moved Representative Davies amendment for
the purpose of discussion.
REPRESENTATIVE MACKIE objected to the motion.
Number 260
CHAIRMAN BARNES said she is led to believe under the separation of
power doctrine that the committee cannot deal in a constitutional
manner with the amendment that was given to the committee by
Representative Davies although she would be very happy to do so if
she thought it was constitutional, but she doesn't.
REPRESENTATIVE PHILLIPS agreed with Representative Barnes that she
would also like to consider the amendment, but also the fact that
it would change the contract is a (indisc.) that must be taken into
consideration.
REPRESENTATIVE BARNES said the question is the adoption of an
amendment prepared by Representative Davies. She asked for a roll
call vote. Representatives Mulder, Williams, Davis, Kubina, Mackie
Phillips and Barnes were against the adoption of the amendment. So
the amendment by Representative Davies was not adopted.
Number 360
REPRESENTATIVE MULDER indicated he appreciates the work
Representative Barnes has done. The second compelling reason for
the legislature and state to address this issue is obviously the
economics and the House Finance Committee will be looking at that
the following day. He commended Representative Barnes for putting
it clear on the record the cooperation between BP and their
commitment toward local hire and local investment voluntarily.
Representative Mulder made a motion to move CSHB 548 from committee
with individual recommendations and the accompanying fiscal note,
as amended.
CHAIRMAN BARNES asked if there was an objection. Hearing none,
CSHB 548(WTR) was moved out of the House Special Committee on World
Trade and State/Federal Relations.
ADJOURNMENT
CHAIRMAN BARNES adjourned the House Special Committee on World
Trade and State/Federal Relations meeting.
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