Legislature(2007 - 2008)BUTROVICH 205
04/12/2007 03:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 104 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
April 12, 2007
3:37 p.m.
MEMBERS PRESENT
Senator Hollis French, Chair
Senator Charlie Huggins, Vice Chair
Senator Bill Wielechowski
Senator Lesil McGuire
Senator Gene Therriault
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 104
"An Act relating to the Alaska Gasline Inducement Act;
establishing the Alaska Gasline Inducement Act matching
contribution fund; providing for an Alaska Gasline Inducement
Act coordinator; making conforming amendments; and providing for
an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 104
SHORT TITLE: NATURAL GAS PIPELINE PROJECT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/05/07 (S) READ THE FIRST TIME - REFERRALS
03/05/07 (S) RES, JUD, FIN
03/14/07 (S) RES AT 3:30 PM BUTROVICH 205
03/14/07 (S) Heard & Held
03/14/07 (S) MINUTE(RES)
03/16/07 (S) RES AT 3:30 PM BUTROVICH 205
03/16/07 (S) Heard & Held
03/16/07 (S) MINUTE(RES)
03/19/07 (S) RES AT 3:30 PM BUTROVICH 205
03/19/07 (S) Heard & Held
03/19/07 (S) MINUTE(RES)
03/21/07 (S) RES AT 3:30 PM SENATE FINANCE 532
03/21/07 (S) Heard & Held
03/21/07 (S) MINUTE(RES)
03/21/07 (S) RES AT 5:30 PM SENATE FINANCE 532
03/21/07 (S) Heard & Held
03/21/07 (S) MINUTE(RES)
03/22/07 (S) RES AT 4:15 PM FAHRENKAMP 203
03/22/07 (S) Heard & Held
03/22/07 (S) MINUTE(RES)
03/23/07 (S) RES AT 1:30 PM BUTROVICH 205
03/23/07 (S) Heard & Held
03/23/07 (S) MINUTE(RES)
03/24/07 (S) RES AT 1:00 PM SENATE FINANCE 532
03/24/07 (S) Heard & Held
03/24/07 (S) MINUTE(RES)
03/24/07 (S) RES AT 3:00 PM SENATE FINANCE 532
03/24/07 (S) Heard & Held
03/24/07 (S) MINUTE(RES)
03/26/07 (S) RES AT 3:30 PM BUTROVICH 205
03/26/07 (S) Heard & Held
03/26/07 (S) MINUTE(RES)
03/27/07 (S) RES AT 3:00 PM BUTROVICH 205
03/27/07 (S) Heard & Held
03/27/07 (S) MINUTE(RES)
03/28/07 (S) RES AT 3:30 PM BUTROVICH 205
03/28/07 (S) Heard & Held
03/28/07 (S) MINUTE(RES)
03/29/07 (S) RES AT 5:00 PM BUTROVICH 205
03/29/07 (S) Heard & Held
03/29/07 (S) MINUTE(RES)
03/30/07 (S) RES AT 1:30 PM BUTROVICH 205
03/30/07 (S) Heard & Held
03/30/07 (S) MINUTE(RES)
03/31/07 (S) RES AT 12:00 AM BUTROVICH 205
03/31/07 (S) Heard & Held
03/31/07 (S) MINUTE(RES)
04/01/07 (S) RES AT 11:00 AM BUTROVICH 205
04/01/07 (S) Moved CSSB 104(RES) Out of Committee
04/01/07 (S) MINUTE(RES)
04/02/07 (S) RES RPT CS 6AM SAME TITLE
04/02/07 (S) AM: HUGGINS, GREEN, STEVENS, STEDMAN,
WIELECHOWSKI, WAGONER
04/02/07 (S) RES AT 3:30 PM BUTROVICH 205
04/02/07 (S) Moved Out of Committee 4/1/07
04/02/07 (S) MINUTE(RES)
04/04/07 (S) JUD AT 2:45 PM BELTZ 211
04/04/07 (S) Heard & Held
04/04/07 (S) MINUTE(JUD)
04/11/07 (S) JUD AT 1:30 PM BUTROVICH 205
04/11/07 (S) Heard & Held
04/11/07 (S) MINUTE(JUD)
04/11/07 (S) JUD AT 5:30 PM BUTROVICH 205
04/11/07 (S) Heard & Held
04/11/07 (S) MINUTE(JUD)
04/12/07 (S) JUD AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
Larry Ostrovsky, Chief Assistant Attorney General
Oil, Gas & Mining Section
Department of Law (DOL)
Anchorage, AK
POSITION STATEMENT: Provided information related to SB 104
Marty Rutherford, Deputy Commissioner
Department of Natural Resources
Juneau, AK
POSITION STATEMENT: Provided information related to SB 104
Marcia Davis, Deputy Commissioner
Department of Revenue
Juneau, AK
POSITION STATEMENT: Provided information related to SB 104
Bonnie Harris, Senior Assistant Attorney General
Civil Division
Oil, Gas & Mining Section
Department of Law
Anchorage, AK
POSITION STATEMENT: Provided information related to SB 104
Paul Kendall
Anchorage, AK
POSITION STATEMENT: Supported SB 104
Paul Laird, General Manager
Alaska Support Industry Alliance
Anchorage, AK
POSITION STATEMENT: Supported SB 104
Jerry McCutchen
Anchorage, AK
POSITION STATEMENT: Offered suggestions on SB 104
Merrick Pierce
North Pole, AK
POSITION STATEMENT: Offered an amendment to SB 104
Joey Merrick, Business Manager
Alaska Laborers Local 341
Eagle River, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Pat Falon, Marketing Representative
Alaska Laborers Local 341
Anchorage, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Tammie Wilson
Fairbanks, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Michael Friborg, Business Agent
Local IUOE 302
Fairbanks, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Jon Brown
Local IUOE 302
Fairbanks, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Barbara Huff Tuckness, Lobbyist
Director of Legislative and Governmental Affairs
Teamsters Local 959
Anchorage, AK
POSITION STATEMENT: Supported SB 104
Jim Laiti, Manager
Plumbers and Steamfitters Local 375
Fairbanks, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement and apprenticeship programs
Tim Sharp, Business Manager
Alaska District Council of Laborers
Fairbanks, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Travis Tolman, Apprentice
Laborers Local 341
Anchorage, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Dennis Knebel, Business Development Coordinator
IBEW Local 1547
Anchorage, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
Vince Beltrami, President
Alaska AFL-CIO
Anchorage, AK
POSITION STATEMENT: Supported SB 104 with a project labor
agreement
David Gottstein, Co-Chair
Backbone
Anchorage, AK
POSITION STATEMENT: Supported AGIA - SB 104
ACTION NARRATIVE
CHAIR HOLLIS FRENCH called the Senate Judiciary Standing
Committee meeting to order at 3:37:29 PM. Present at the call to
order were Senator Huggins, Senator Wielechowski, and Chair
French. Senator Therriault and Senator McGuire arrived shortly
thereafter.
SB 104-NATURAL GAS PIPELINE PROJECT
CHAIR FRENCH announced the committee will continue the
consideration of SB 104. Recapping yesterday's discussion he
asked if the administration has a perspective on whether the gas
pipeline coordinator has a term of office or if the person
serves at the pleasure of the governor.
3:38:10 PM
MARTY RUTHERFORD, Deputy Commissioner, Department of Natural
Resources, stated the preference that the person serve at the
pleasure of the governor. Furthermore she prefers that the
office reside within the Department of Natural Resources to
accommodate coordination with the other joint pipeline office.
CHAIR FRENCH stated that where the office is placed is an
executive decision, but he did have several conceptual
amendments to suggest with regard to the coordinator position.
On page 20, line 3, insert "position" at end of sentence to
clarify that this is a position rather than a person. He also
suggested adding language to make it clear that the inducement
act coordinator serves at the pleasure of the governor.
Ultimately the governor is the chief executive so if the
coordinator starts making poor decisions, the governor should
have the authority to remove that person.
CHAIR FRENCH noted the timeframe between the appointment and
confirmation by the legislature, and questioned whether there is
a legal distinction between the coordinator's powers and
authority before confirmation. In the event that the governor
has to remove one coordinator and appoint another, there
shouldn't be an inability to move forward simply because the
legislature hasn't been assembled for the confirmation, he
stated.
3:41:39 PM
MR. OSTROVSKY, Chief Assistant Attorney General, Oil, Gas &
Mining Section, Department of Law (DOL), acknowledged that this
is a unique position and he isn't sure whether it would be
treated the same as a state commissioner or not. However, the
legislature would remove any ambiguity by describing it that
way.
CHAIR FRENCH suggested that the same concept should apply to the
commissioners to clarify that they have the full authority
granted in the bill to keep the project moving forward on the
day they are appointed.
MR. OSTROVSKY said he believes commissioners have that
authority.
CHAIR FRENCH said there's no need to change it if it's existing
law, but the committee would make it explicit with regard to the
inducement act coordinator since that is a new position.
3:42:53 PM
Senator McGuire joined the committee.
CHAIR FRENCH, finding no further questions about the position or
powers of the inducement coordinator, asked Ms. Harris to
address expedited judicial review.
BONNIE HARRIS, Senior Assistant Attorney General, Civil
Division, Oil, Gas & Mining Section, Department of Law,
Anchorage, said she's organized her thoughts on expedited
judicial review into three broad areas. The first is what the
review is under the current Senate CS. For the most part that
would be appellate action, she said. Next is how an original
action might occur and which laws would apply. She opined that
an original action would most likely be raised as a declaratory
judgment action. Finally there's the question of which court
would review an appeal or declaratory judgment action on the
license or on the bill.
MS. HARRIS explained in that in the current committee substitute
[25-GS1060\K], Sections 43.90.190 and 43.90.200 refer
respectively to the appeal process for decisions to issue no
license and a decision by the commissioners to issue a license.
Under Section 43.90.190(b) and (c), the commissioners are
required to make a written finding if they decide that no
applicant should be issued a license.
CHAIR FRENCH asked her to review what it means to act jointly
and how the commissioners to come to a decision using the legal
terminology "jointly."
MS. HARRIS explained that the decisions would have to come
jointly from their authority.
CHAIR FRENCH asked what happens from a layman's perspective if
the commissioners have a difference of opinion with respect to
making a decision.
MS. HARRIS replied it would be much the same as with the
discussion yesterday where the pipeline coordinator might want
to take a different position than the commissioners. "I imagine
it would be resolved administratively with a decision by the
governor," she said.
CHAIR FRENCH asked if there's a legal definition for "acting
jointly" or if it's meant in the common English sense.
MR. OSTROVSKY said he believes it's meant in the common English
sense, which is that both commissioners would sign off on any
decisions that need to be made. If a decision requires joint
action and the commissioners aren't able to agree, then it's not
a decision.
MS. HARRIS agreed; her understanding is that one commissioner
could not take an action where joint action is required. Use of
the term commissioners in the plural is defined as the two
acting jointly. The provision that allows the commissioners to
make regulations to implement the act states authority for the
commissioners jointly to implement the act. It also expresses
authority for the commissioners independently to adopt
regulations. The authority for the commissioner of natural
resources is under Title 38 and the authority for the
commissioner of revenue is under Title 43.
3:46:42 PM
Senator Therriault joined the committee.
MS. HARRIS explained that after the commissioners have reviewed
the applications and made a best interest sort of finding, they
give public notice and send notice to the legislature of the
intent to issue a license. If the commissioners decide that no
application sufficiently meets the requirements to warrant a
license, then they will issue a written best interest finding
determination that no license will be issued. A decision to
issue no license is a final agency action that is subject to
appeal to superior court within 30 days of the date that the
final agency action is made public. The timeframe is provided
under the court rules and the Administrative Procedures Act. On
the other hand, a notice of intent to issue a license that goes
to the legislature does not become a final agency action until
the commissioners issue a license, which under Section 43.90.200
would not occur until the legislature approves the license by
resolution. So the notice of intent to issue a license is
subject to appeal and the finding behind it is subject to appeal
when the license is issued. Challenges on either would more than
likely be challenges to the administrative record. Definitely it
would be a challenge to the administrative record if it was a
decision to issue no license because that decision goes straight
from the agency to the court. Because a decision to issue a
license has a stop at the legislature, it would probably be an
appeal on the administrative record, but conceivably anyone who
appealed would also bring in the legislative history of the act
or the legislative approval of the resolution.
3:49:30 PM
SENATOR WIELECHOWSKI asked if her assumption is that an appeal
would be on the written record and that the court would uphold
the decision if there was substantial evidence supporting the
agency decision.
MS. HARRIS said she believes it's "substantial evidence where
the factual findings of the agency on a rational basis for the
determination on the application of the law."
SENATOR WIELECHOWSKI asked if there's any danger that the court
would allow a trial de novo type of situation.
MS. HARRIS said in her experience a trial de novo in that
circumstance would be unlikely. The courts are reluctant to step
into a whole new proceeding or an expanded review of the
administrative record. However the court does have statutory
discretion to do that, she stated.
SENATOR WIELECHOWSKI asked if there's any way to change this
such that it is not a final agency action, because that gives
such tremendous rights to appeal. If it's an act by the
legislature, on the other hand, the only way it can be
challenged is on constitutional issues.
MR. OSTROVSKY noted that the bill has evolved somewhat. As
originally introduced the license would become effective if the
legislature did not disapprove. At that point it becomes a final
agency action. A party could make an administrative appeal-
unless there were some external issues-that would be based on
the record and would include briefing. As currently written the
bill is based on legislative approval, which provides an
intermediate step between the commissioners' decision and
issuance of the license. DOL's view is that would take it out of
the realm of administrative appeal because the commissioners'
decision would have been superseded by the legislature's
determination. Once the legislature has acted, probably the only
avenue for challenge would be on constitutional issues.
SENATOR WIELECHOWSKI asked if Section 43.90.190(c) needs to be
cleared up then because it says that the commissioners'
determination under (b) is a final agency action for purposes of
appeal.
MS. HARRIS explained that what was formerly Section 43.90.190(a)
says that it's a final agency action after the legislature has
acted to approve the license. The decision to issue no license
is final when it's issued. "If you wanted to change that you
would change…190 and a…housekeeping change to 200 would also
probably have to be done."
SENATOR WIELECHOWSKI reminded members that Senator Ted Stevens
cautioned the legislature to make this as bullet-proof as
possible. He agrees because getting mired in appeals could
potentially cost years. This committee needs to focus on
avoiding letting parties make endless appeals. I'd like to work
with the administration to try to figure out ways to do that,"
he stated.
CHAIR FRENCH asked Ms. Harris to continue.
3:54:29 PM
MS. HARRIS recapped that she had gone through the appeal
procedures as she reads them in the SRES committee substitute.
She continued to explain that another way for a party to
challenge is to bring an original action to court asking it to
declare how the AGIA law affects their interest. For the most
part people think that the tax exemption provision under AGIA is
what will be challenged on constitutional grounds, she observed.
In that regard she said there's a body of law in Alaska-most
recently, Anchorage Chrysler v. Daimler Chrysler in 2006-on what
the parameters of a declaratory judgment action are. The
legislature by statute vested the superior court with the power
to render declaratory judgments, she stated. The standard in law
is that "in the case of actual controversy…, the superior court,
…may declare the rights and legal relations of an interested
party…, whether or not further relief is or could be sought."
Thus a court has the discretion, on the filing of an action for
declaratory judgment, to take that up. She added that one of the
cases included a statement that "a court may grant declaratory
relief, in its discretion, when to do so serves a useful purpose
in clarifying and settling the rights of parties or when it will
terminate and relieve uncertainty giving rise to the preceding."
Also, under Alaska law there's a series of tests for the court
to determine whether or not to grant declaratory judgment. She
explained that the declaratory part simply means to declare what
that particular party's rights are in the context of this law.
3:56:55 PM
CHAIR FRENCH asked for a more concrete example so that the
committee and the public could follow what sort of instances
might bring these declaratory judgment actions.
MS. HARRIS said Anchorage Chrysler v. Daimler Chrysler was a
breach of contract action. In that case Daimler Chrysler claimed
that the contract required Anchorage Chrysler to remodel their
building and Anchorage Chrysler disagreed. "The court…found that
there was a controversy in the way the contract read-that the
court would decide before the breach happened." [Declaratory
judgments are appropriate to resolve pre-breach disputes over
contractual language, giving useful guidance for the parties or
others contemplating a contingent course of action.13 Anchorage
Chrysler Center, Inc. v. DaimlerChrysler Corporation
(02/24/2006) sp-5993, 129 P3d 905]
CHAIR FRENCH said what he's trying to get at is who might go to
court seeking declaratory judgment of their rights under AGIA.
MS. HARRIS said when the legislature passes the bill and AGIA is
enacted, anybody could bring a claim that it's unconstitutional.
CHAIR FRENCH agreed that's the clearest and most obvious
example.
MS. HARRIS said another example would be when a license is
issued. A disgruntled applicant or perhaps anyone with
citizen/taxpayer standing could bring the action saying it
violates the constitution. Another clear example would be
potential shippers before the first open season. A potential
shipper could ask for a declaratory judgment before they had to
bid in the open season to determine what affect the tax
exemption would have. The question would be would it be
sustained or would it be something that the legislature could
change after the shipper has committed to firm transportation.
CHAIR FRENCH asked if it's almost always an interested party. In
this case someone that's involved in the process who wants
clarification about their rights and duties under the AGIA bill.
MS. HARRIS said it would almost always be an interested person,
but it could be a taxpayer who is interested in the broader
sense of the public fisc. "But a person whose rights are
affected more directly would be more likely to succeed in asking
a court to take a declaratory judgment action." A potential
shipper would fit that description, she stated.
CHAIR FRENCH said part of the reason for addressing expedited
judicial review is to ask if anything in the bill says the court
has to get going and hear an AGIA claim. Senator Wielechowski
has highlighted the concern that many Alaskans have, which is
that this not get tied up in court endlessly.
MS. HARRIS advised that nothing specifically directs the court
to get going, but there's the 90-day period for raising
constitutional challenges and then there are the 30-day appeal
periods that are inherent in the administrative action.
CHAIR FRENCH said those are directed at the interested parties
and the citizens, but once the claim is filed in superior court
we would have to trust the court system to move swiftly. With
that in mind he suggested that now is the time to talk about the
pros and cons of trying to direct the court system to treat
these claims in an expedited manner. He asked if she has
something prepared to address that.
MS. HARRIS advised that the constitution does give the
legislature the authority to decide the jurisdiction of the
supreme court and the superior court. Article IV, Section 1 says
there is a supreme court and it is a court of final appellate
jurisdiction. It doesn't say that the supreme court can't hear
other kinds of cases such as an original action that doesn't
come up as an appeal from a lower court or from an
administrative action. Right now the Declaratory Judgment Act
and the Administrative Procedures Act have all appeals going to
superior court. According to her research it appears that the
legislature would have authority to direct the supreme court to
take a matter as an original action. She noted that the supreme
court already has that authority with its discretion. However,
she would caution that there is a specter of separation of
powers issue between the legislature and the judiciary so the
legislature should take care in exercising the authority as it
exists.
CHAIR FRENCH remarked that original jurisdiction in the supreme
court has come up before and he's been leery of that idea. You
can put original jurisdiction in the supreme court, but the
first thing the court will do is appoint a master to hear the
facts. More than likely the master will be a superior court
judge and the fact-finding mission the master engages in will
look very much like a trial. "It seems to me that you're simply
recreating…the current system as it stands," he stated. That
doesn't necessarily address the real concern, which is trying to
get a quick judgment out of the supreme court. He said he's
thinking about an amendment along the lines that the court shall
hear claims relating to the particular title and chapter in a
most expeditious manner that comports with the boundaries of
justice. He isn't sure that the legislature can tell the court
to do this on a six-month timetable, but that is the most
concrete way to deal with the concern that Senator Stevens and
Senator Wielechowski have expressed. "I…need to articulate that
here because that's the easiest thing to do. Just write a rule
that says they have to do it in six-months, but I think most of
us are aware that that would…be a flagrant separation of powers
violation." The court can't be commanded to do its work in a
certain length of time, but it is possible to ask the court to
act as fast as possible consistent with the principles of equal
protection and efficient use of its time, he stated.
MS. HARRIS opined that it would be possible to ask the court to
take the action within a certain amount of time. She added that
the comments about the master are correct. The DOL appellate
division has said that appointing a master might be faster, but
others have expressed the view that it would not be faster.
SENATOR WIELECHOWSKI pointed out that if the supreme court was
given original jurisdiction in this case you'd bypass the
superior court and the appellate division, which would probably
result in a significant time savings. He asked if she had an
idea about how much time it would save.
MS. HARRIS said an administrative appeal would probably take a
couple of years to get through court.
SENATOR WIELECHOWSKI said that's opposed to a supreme court
original jurisdiction, which would take a few months.
MS. HARRIS agree it could be that short, but it could be longer.
She outlined the process in which a master would be appointed
and given a reference of what matters to decide. The master
would potentially examine the evidence and then report to the
supreme court on findings of fact and conclusions of law. Then
the parties would have the opportunity to take exception to
provisions in the master's report. She noted that the DOL
appellate division has said that parties are generally very
cautious about what they take exception to because that is
argued to the supreme court. The supreme court may or may not
concur with master, but that report is the supreme court's sort
of trial court.
CHAIR FRENCH suggested it's time to think about the practical
applications of this scenario.
MR. OSTROVSKY added that if there's an appeal of the
administrative decision, the superior court orders the record
prepared in 40 days then the court schedules briefing, which is
30-days for each side. Then the court hears oral argument and
renders a decision within 180-days. When there's no intermediate
appeal, it goes right to the supreme court. DOL doesn't believe
that original jurisdiction speeds the process up substantially,
he said. What happens is it'd go to supreme court and a factual
record would be developed or there would be a factual hearing on
the record. The court would probably appoint a master who would
order the record to be assembled and hear oral arguments and
issue a decision. He isn't sure if it would be subject to the
same 180-days, but he would note that the supreme court is
subject to the 180-days only with respect to circulating an
opinion. His experience is that administrative appeals tend to
get through superior court within two years, but it can be
faster than that if the parties request expedited review. Once
it gets to the supreme court there's already a record developed
and there's a decision so the court just gives it a fresh look.
He reiterated, "When we've looked at this issue in the past with
respect to litigation, we haven't seen a significant advantage
that wouldn't be gained by asking the court for expedited
review."
SENATOR WIELECHOWSKI noted that in redistricting cases and
campaign related cases the supreme court issues decisions within
days. "I realize this is more complex, but I kind of like the
idea of the supreme court as original action." The supreme court
could probably handle an appeal in a few months in the same way
that the complex redistricting cases are done.
MR. OSTROVSKY said in election matters there's a 10-day statute
for bringing an appeal after a decision. Court Rule 90.8 says
that the matter will be given priority over other court matters
and the legislature might consider that. he noted that it takes
a two-thirds vote of the legislature to amend court rules.
CHAIR FRENCH said we'll see if we can get the two-thirds support
for identifying AGIA related claims as priority. He then asked
if the only instance under which the administrative record gets
a full review is when no license has been issued. "It's the
190(c) route."
MS. HARRIS said yes; when no license has been issued the matter
goes from the administration to court without legislative
involvement.
CHAIR FRENCH commented that that is where there can be a two-
year review of the administrative record.
MR. OSTROVSKY agreed.
CHAIR FRENCH said in that instance the reality is that we're not
standing in the way of a project; we're checking to see that we
didn't miss a good opportunity.
MS. OSTROVSKY agreed.
CHAIR FRENCH observed that that leads into the next topic, which
is the point at which a legal challenge can be brought. Noting
that the bill repeatedly references determinations made by the
commissioners, he asked if there's any legal significance to
"determination."
MR. OSTROVSKY explained that the significant language is that
the commissioners' determination becomes a final agency action
for appeal purposes.
CHAIR FRENCH asked if a determination is challengeable.
MR. OSTROVSKY said yes.
MS. HARRIS elaborated that under DNR and DOR regulations a party
that doesn't like a decision or determination generally has an
administrative avenue of appeal until there's a final
determination on the issue. She cautioned that she'd need to
review the bill to check the context in which it's currently
used.
CHAIR FRENCH referenced Section 43.90.150 on page 9, lines 26
and 27 and said that seems to be the first place where the
commissioners make a determination. You're saying a person can
only appeal that determination administratively and ask for
reconsideration. O they could do the smart thing and fix their
application. In either event they can't get to court on that
decision.
MR. OSTROVSKY agreed because there isn't a final agency
determination. Generally the courts won't consider things when
they're going through the administrative process.
CHAIR FRENCH said that holds true for all the determinations
down to the final agency determination in Section
43.90.190(a)(1).
MR. OSTROVSKY added that at that point someone would
appropriately come in and say that the process was flawed along
the way.
SENATOR WIELECHOWSKI questioned whether it isn't a final
determination for a party that submits an application which is
deemed inadequate. But it isn't a final determination for the
state or the other parties.
MS. HARRIS said it's an issue that could come up and there is an
argument that it's a final determination in Section 43.90.150.
The person could appeal to the agency for review and after going
through the agency level reviews, they could take the final
agency action on the question of whether or not their
application was complete to court. She added that it is possible
for the commissioners jointly to have authority and to have
regulations to determine what will and will not be a final
agency action. The idea isn't to limit anyone's right to
administrative or judicial recourse; rather the idea is to
funnel it into a more administratively efficient channel saying
that at a certain point it will be a final agency action and
then you may take it on to court. She's familiar with some tax
regulations in DOR that are like that.
CHAIR FRENCH said for the record, are we back to where we're
equivocating a bit? He thought it was clear that a rejected
applicant wasn't going to get a court review of the
commissioners' decision. Is that not correct?
MS. HARRIS responded there are two lawyers and you got two
answers, but they aren't completely inconsistent because it
isn't absolutely clear-although to Mr. Ostrovsky it is clearer.
There are arguments that you have to wait until there's a final
agency action as provided under Sections 43.90.190 and
43.90.200, she stated.
CHAIR FRENCH imagined a rejected applicant saying that their due
process rights have been trampled and that they want their day
in court. Their argument would be that they didn't get a full
and complete hearing on whether or not their application was
incomplete or that it didn't meet the terms. He asked what
happens in that event.
MR. OSTROVSKY said he believes that DOL would argue that the
statute looks at two possibilities. One is that the
commissioners reject all applications and that is a final agency
decision. Or the commissioners accept an application and it goes
through legislative approval. At that time someone who believes
that they have been denied due process can challenge either
decision saying there were procedural irregularities. The court
would remand it back to the agency at the time that the
application was filed on the issue of completeness. Generally
courts want agencies to complete their decision making process,
he said.
4:19:47 PM
MS. DAVIS advised that the current House committee substitute
incorporated a provision in the application requirements which
says the applicant shall, "waive the right to appeal the award
to another applicant or the determination under AS 43.90.180(b)
that no application merits the issuance of a license." She noted
that 43.90.180(b) is the determination to issue a license to no
one. The idea is to cut off the avenue for appeals for someone
who is aggrieved by not having their application selected. She
said she would defer to the attorney general's group, but it
would remove some of the administrative hassle.
SENATOR THERRIAULT advised that Senator Wagoner has developed
language to that effect.
SENATOR WIELECHOWSKI said he likes the idea and believes it's
worth discussion. He asked Ms. Harris for her thoughts on
legally prohibiting a person from bringing a lawsuit if they
feel they've been discriminated against.
MS. HARRIS said she believes it's possible to structure a
provision that wouldn't be discriminatory to designate when the
actions are final. It would say something such as "no action
taken under this chapter is a final agency action until…" Then
move it into Section 43.90.190 or Section 43.90.200 whenever you
think it's appropriate for the claims to be brought on any
action that goes on during the application process, she said.
4:22:08 PM
SENATOR HUGGINS advised that Senator Wagoner didn't offer the
amendment because he didn't know whether it would meet the legal
test.
MR. OSTROVSKY explained that the state as a sovereign decides
when where and how it can be sued so this would be the exercise
of that power. The state would be restricting a participant's
ability to sue and the issue this raises is due process.
CHAIR FRENCH stated that the focus is on Section 43.90.190 and
he believes that legislative approval and the issuance of the
license is the meat and potatoes of the decision making process.
He noted that on page 13, lines 2 and 3, there is reference to a
final agency action and on lines 13 and 14 there is reference to
a final administrative action. It strikes him that the two words
should be same, and he asked which one he would pick.
MR. OSTROVSKY said he believes final agency action is the way
it's usually described in statute.
CHAIR FRENCH said he'd put it in the amendment file to change
the word "administrative" on page 13, line 13, to "agency."
MR. OSTROVSKY said he'd double check after the meeting
CHAIR FRENCH asked what would be included in the determination
of who gets the license.
MR. OSTROVSKY said he expects it would be analogous to a best
interest finding where the commissioners would describe their
review of the applications. They'd go through the criteria and
give a lengthy discussion of their rationale for the decisions.
He added that agency decisions have to be reviewable by courts
meaning that courts have to understand the reasoning behind the
decisions.
CHAIR FRENCH asked if the standard of review for the decision
would be the reasonable basis test.
MR. OSTROVSKY said he believes so because this is a question
that involves agency expertise as a mixed question of policy and
reason.
CHAIR FRENCH said the superior court would ask itself if the
commissioners had a reasonable basis for awarding the license to
the particular successful applicant.
MR. OSTROVSKY said he believes that would be the standard.
CHAIR FRENCH said once the decision is made to award the license
the process comes to the legislature in the form of a resolution
or a bill asking it to ratify the commissioners' decision. Then
the question is what an aggrieved party can really attack once
the legislature has passed a bill ratifying the license.
MR. OSTROVSKY opined that if the bill remains with legislative
approval the likely challenge would be on a constitutional
basis. There wouldn't be much point in challenging the agency
determination because the findings of the commissioners would be
less relevant due to the subsequent legislative process.
CHAIR FRENCH summarized that the unsuccessful applicant loses
the ability to challenge the decision of the commissioners as
having no rational basis because the legislature has superseded
its judgment in place of the judgment of the commissioners.
MR. OSTROVSKY said that is his opinion.
4:28:11 PM
SENATOR THERRIAULT said he'd like some discussion on the
legislature interjecting itself into what is generally an
executive function. He questioned the advisability of stepping
back into that unknown. The administration must have considered
that in the original bill and the Chair just brought up the
question of whether the commissioners' decision is superseded by
the legislature by passing a bill. He noted that the AGIA bill
calls for a resolution and not a bill. He asked if there's a
difference between a bill and a resolution.
CHAIR FRENCH replied the short answer is yes and the committee
would discuss that in the future.
SENATOR THERRIAULT reminded the committee of the solid week of
discussion from last year about whether the legislature can
demand ratification.
MR. OSTROVSKY commented that he agrees with the statement Mr.
Bullock made yesterday that there are separation of powers
issues related to the legislature essentially doing executive
branch functions such as entering into or approving contracts.
This situation is somewhat analogous to the 1998 consideration
of the Stranded Gas Act because it too called for legislative
approval. And so the attorney general did an opinion, he said.
In both bills the separation of powers issue is a little unclear
because to some degree they both involve the taxing power of the
state, which is a legislative function. The separation of powers
issue has come up a number of times before and the way it's
generally been resolved in Alaska is though the doctrine of
comity. That is the governor has agreed, as a matter of comity,
to the legislative action. The AGIA bill is a similar case
because the governor introduced a bill that initially called for
legislative disapproval. "So I think as a matter of comity the
governor has acceded to a legislative role in here."
MR. OSTROVSKY summarized that he believes there is an underlying
separation of powers issue related to the AGIA bill, but that
issue will always be there if the legislature wants to take a
role in what is arguably an executive branch function. In the
past it's been resolved with the executive branch recognizing a
colorable claim of separation of powers but agreeing to a
legislative role as a matter of comity. "I think that's
reflected in the bill," he stated.
SENATOR THERRIAULT noted that the Stranded Gas Act was
problematic in that it spanned many governors and asked if this
"agreement" would survive the next administration.
MR. OSTROVSKY said no, it's particular to an individual governor
to say that or not. If this isn't a license in four or five
years another governor could say that the legislature has no
role. This governor has not expressed intent to do that in this
bill, he said.
4:32:35 PM
CHAIR FRENCH said his perspective is that it's a bit of a
tradeoff or political bargain between the two branches of
government. The governor is giving the legislature a grant of
authority because that was the pattern of the Stranded Gas Act
and the legislature is happy to have the ability to not
disapprove or to approve the applicant before granting this
enormous contract that deals with a huge piece of the state's
resources.
MR. OSTROVSKY said he wants to clarify that the separation of
powers issue is always out there but it is not clear that this
bill is a violation of that. The attorney general looked at the
Stranded Gas Act because it involved the state's fiscal system
and that's a legislative branch function. One way to look at it
is that the legislature gave away part of its authority to the
executive subject to legislative approval. Clearly the
separation of powers issue is always out there but it isn't
clear that this violates it.
SENATOR THERRIAULT reminded members that last fall when the
legislature sued the governor to prevent him from potentially
signing a contract it argued that to the court. Because the
legislature sort of loaned out its power it would most likely
prevail. The superior court judge agreed and ruled that the
governor was barred from signing a contract. He isn't sure that
AGIA is the same because the legislature is passing judgment on
what it is willing to do with the taxing authority right now.
We're not loaning our authority out saying negotiate and then
we'll ratify it after the fact.
MR. OSTROVSKY agreed that the facts are different here.
CHAIR FRENCH said it's worth pointing out that three or four
days was spent on the issue last year in part because many
citizens were concerned about their ability to study the record
upon which the commissioners would make a decision. He noted
that the Stranded Gas Act called for a high degree of secrecy
and AGIA takes a different approach. AGIA says that an
applicant's record is open for public inspection the day the
application is put forward unless it's a trade secret. That
would be addressed subsequently under a different subject, he
said.
CHAIR FRENCH stressed that the committee must acknowledge that
the applicants surrender a significant of their due process
rights through the legislature inserting itself to approve the
license. He continued to say that:
The fact is if an unsuccessful applicant who's unhappy
with the decision of the commissioners can only attack
that decision…during that 60-day legislative process
when we're about to grant the license to somebody
else, that's their opportunity…to have their day in
court. They…come here and make the case that the
commissioners made a bad decision…that they're going
in the wrong direction…that something has to be done
before we go down the wrong track. That's in essence
their trial. Just as much as it's an affirmation of
the decision made by the commissioners to grant the
license in this direction, it's the unsuccessful
applicants opportunity to have their hearing…on the
nature of their grievance. That's the way I read it.
SENATOR THERRIAULT requested some discussion about the
difference between a resolution and a bill.
MR. OSTROVSKY said his understanding of the difference is that a
resolution has to do with the sense of the body and conduct
within the body and a bill has external affects. A bill sets
obligations and rights of parties outside. Under the current
committee substitute there is approval by resolution. In a way
it turns a resolution into a bill because it has an affect. He
didn't know if that's a problem. He believes they effectively
become the same but he would suggest the committee ask the
legislative drafters.
4:38:02 PM
SENATOR McGUIRE said in this instance the governor clearly has
approved a project through the commissioners so the meaningful
affect would only be there if a governor had a different
viewpoint. In this case a resolution and a statute would have
similar affects, she stated.
MR. OSTROVSKY added particularly if there's the issue of comity.
CHAIR FRENCH stated his belief that Mr. Bullock will say it
makes a big difference and that it should be a bill rather than
a resolution. "I guess I'm not hearing any fierce opposition
from the Department of Law with respect to that point," he said.
SENATOR WIELECHOWSKI expressed the view that it makes a huge
difference for two reasons. First, Article IX, Section 4, talks
about exemptions of a different kind granted by general law so
it is helpful in terms of the surrender clause and taxation.
Second, it helps in terms of appeal rights. As previously
mentioned the rights of appeal are lower when it's a legislative
decision as opposed to an agency decision.
MR. OSTROVSKY said that might be correct, but he would point out
that the legislature is considering the bill right now.
SENATOR McGUIRE said she wants to hear the legal arguments in
this committee but she also thinks it's important to be
practical. In that regard she noted that sometimes it's
difficult to get 61 people to make a decision on something.
Senator Wielechowski's argument is good but she'd like to hear
some practical parts interjected. The idea is to end up with a
gas line contract but at the same time ensure: that the process
tracks the constitution; that it's done appropriately; and that
the rights of appeal are reserved. There's a balance there
somewhere, she said.
CHAIR FRENCH said he's had the same thought. "There's a tipping
point in there between what's constitutional and what gets a gas
line and…it's worthy of keeping in mind."
CHAIR FRENCH asked if there are more questions about the point
at which a legal challenge can be brought.
SENATOR WIELECHOWSKI stated that this is a very worthwhile
discussion to have because the issue is to protect the state
from being stuck in litigation for years to come.
CHAIR FRENCH suggested the committee spend a bit of time on the
legislative role in approving the license versus disapproving
the decision to issue a license. He asked Mr. Ostrovsky to give
his view of whether there is a difference and if so, what it is.
MR. OSTROVSKY said the original bill called for legislative
disapproval in part to give people the right to challenge in
court the administrative record. Any challenge would be on the
commissioners' decision and if the legislature had disapproved
the decision there wouldn't be anything to challenge, he said.
By changing it to approval the legislature inserted itself and
that probably takes out the opportunity for an administrative
challenge. Essentially the legislature becomes the citizens'
input in lieu of the court.
CHAIR FRENCH questioned what the administration had in mind to
present to the legislature in terms of a resolution or bill when
it initially proposed the AGIA bill.
MR. OSTROVSKY explained that under Section 43.90.200 of the
original bill the commissioners were to forward a notice of
intent to issue a license.
MS. HARRIS added that the commissioners were to forward letter
of intent to issue the license and the finding that had been
made public. She didn't know what the document itself would have
looked like, but it would probably have been an advice to the
legislature. The legislature could take action if it
disapproved.
CHAIR FRENCH referenced page 10 of the original bill, which says
that unless the notice of intent is disapproved by joint
resolution the license would go into effect. Suppose the
legislature considered the commissioners' decision for 30-days
and then went home without disapproving it and without passing a
joint resolution. He questioned what the state would have argued
in court if an unsuccessful applicant asked for a full rehash of
the agency decision in superior court, looking at every finding
to see if it had a reasonable basis. Would the state argue that
by not disapproving it, the legislature was in essence approving
it or would the state waive that argument and let that long
process take place?
MR. OSTROVSKY said he doesn't believe the state would waive that
right, but he does think that under this statute it was a final
agency action that is subject to appeal. You can't read much
into the legislature's approval or disapproval; you'd have to
review the agency record and see if the decision was made
correctly.
CHAIR FRENCH summarized saying you believe that there's a
greater likelihood of a full reasonable basis examination of the
commissioners' decision under the disapproval scenario than
under the approval scenario. Under approval it's clear that the
challenge is wiped out, but it may survive under the disapproval
scenario.
MR. OSTROVSKY clarified that he believes it does survive under
the disapproval scenario.
SENATOR WIELECHOWSKI said that goes back to the issue of it
being a resolution or a bill. As a resolution it's a final
agency determination and the losing party has the right to go to
court. If it's a bill that right does not exist. The only right
at that point is to attack the constitutionality. "That's why I
think it's critical that we figure out a way to make this into a
bill instead of a resolution," he stated.
CHAIR FRENCH asked if there is more discussion on this point.
4:47:46 PM
SENATOR THERRIAULT mentioned the House language that cuts out a
disgruntled applicant and questioned whether they would be the
only potential challengers of an agency determination.
CHAIR FRENCH said not necessarily, but it's hard to imagine
other entities that would have the financial interest and
wherewithal to bring a challenge. But there could be citizens
that are aggrieved by the decision and want a review, he said.
SENATOR THERRIAULT wondered if the House language really cuts
that out because they've waived that right.
CHAIR FRENCH said in this case it wouldn't be an applicant. A
more efficient way to address it might be to box out all the
commercial players from attacking one another subsequent to a
commissioners' decision. But it's not possible to ever really
get away from the disgruntled citizen who doesn't like a
particular company, he said.
MR. OSTROVSKY advised that Mr. Bullock made the House version a
bill rather than a resolution.
CHAIR FRENCH announced that the committee would look carefully
at the work from the other body and take it up as a possible
amendment at the appropriate time in the proceedings.
SENATOR McGUIRE asked for additional discussion on approval
versus disapproval because she believes it might have been
better as originally drafted. She reiterated that getting 60
people to move in one direction is very difficult and she's a
bit worried about the legislature supplanting the court process.
MR. OSTROVSKY stated that disapproval was in the original bill
in part for a clean administrative decision. It's really a
policy call for a fulsome avenue for judicial appeal or a
political avenue with legislative approval.
4:51:51 PM
SENATOR WIELECHOWSKI opined that it's a balancing test: the
original bill had legislative disapproval; if the legislature
takes no action then the decision to issue a license is
automatically approved; if the legislature takes no action it
gives up the right to potentially head off numerous lengthy
appeals; if the legislature is to approve there will be
tremendous pressure on all sides for some sort of action; the
risk of delay translates to billions of dollars every year. "So
it is a balancing test in my opinion," he stated.
MR. OSTROVSKY explained that the original bill had disapproval
in part because of the administrative record, but also because
the administration believes that it makes for a quicker process.
The commissioners make a determination and the legislature has
the ability to act on it. That moves the process forward quickly
and gives citizens the right to challenge the decision. The
administration has full confidence that the commissioners will
make a good decision and with a very defensible record.
SENATOR McGUIRE said she still isn't pleased with the change.
Stating that she trusts this administration, she described the
AGIA process as more transparent than the previous process. Also
it provides an opportunity to evaluate and it has a track record
for appeals and process that's clear. Thus she's concerned about
adding 30 days and interjecting a political body into such an
important process. My goal is similar to Senator Wielechowski's,
she said, but my approach is the opposite.
MR. OSTROVSKY pointed out that picking an applicant is really
more an executive function while a piece of legislation gives
the executive branch direction on how to do something. Doing
that thing is what the executive branch does, so the legislature
will have a different kind of debate under the approval scenario
because it will have to do with picking a particular applicant.
"That's another reason that we felt that this…feels like more an
executive branch function and ought to be subject to the type of
review executive branch functions are subject to," he stated.
SENATOR THERRIAULT said he agrees, which gets back to the issue
of the legislative interjecting itself. Under the Stranded Gas
Act the legislature was loaning its power, but that's not the
case here. "Personally, I wouldn't require any legislative
involvement," he stated. The legislature could dictate what it
wants in the law and the executive could carry out its executive
function.
4:56:15 PM
CHAIR FRENCH suggested the committee reserve judgment until the
public and interested parties have had the opportunity to
express their view on the matter.
CHAIR FRENCH recessed the meeting at 4:56:41 PM.
CHAIR FRENCH reconvened the meeting at 5:40:36 PM and opened
public testimony on SB 104. He advised that each person would be
given about five minutes to state their general concerns.
Supplementary information could be sent to his office in written
form and it would become part of the record.
PAUL KENDALL, Anchorage resident, said the legislature is
defining the way Alaska determines value and manages its assets
in an open and public manner. He sees a gathering of elected men
and women with respect for differences to discover a way to make
a better life for our children. He said he's still concerned
about not seeing the faces of the testifiers. This large bet-on-
the-come gas pipeline undertaking is insignificant to him but it
is not inconsequential. The consequences will be huge for the
Alaskan people. If indeed the time has come he believes that
Alaska will have the Alaska sovereign line, the Canadian Highway
line, and a hydrogen fuel-based economy. If he's right, Alaska
may be the place where mankind breaches a new society. Some may
find that statement suspect, but all things have a time to come
and Alaska has paid heavily. He thanks the governor, her team,
and the elected officials who mean to do the right thing. To
this point the accomplishments have been admirable. The Alaska
gas pipeline day of reckoning is close at hand and on that day
everyone will see the true intentions of all parties that have
come to share the spoils. He said he'd like to see two things:
1) a review of the volumetric space in the pipe sphere and 2) a
review of the projected $3 mcf at the wellhead for the consumer.
In conclusion he asked the committee to please not underestimate
the applications of hydrogen gas fuel because its time has come.
5:46:44 PM
PAUL LAIRD, General Manager, Alaska Support Industry Alliance,
said this 400 member company generates more than 30,000 jobs for
Alaskans. The alliance believes that if Alaska wants the North
Slope producers to make firm commitments, then upstream fiscal
issues need to be resolved first. AGIA puts too much emphasis on
mitigating the short-term financial risks of pipeline builders
and not enough to address the longer term risks of the shippers.
He can't tell what fixes are needed to provide prospective
shippers with fiscal confidence to make commitments exceeding
$100 billion over the next 30 years, while still complying with
Alaska's constitution. He urged the committee to determine what
terms aren't constitutional and find a mutually beneficial
solution that is. The alliance urges the legislature to craft a
bill that acknowledges the interests of Alaskans, the developer,
the transporter, and North Slope producers and shippers.
5:48:39 PM
JERRY McCUTCHEN, Anchorage resident, articulated the view that
Econ One's work is garbage and the legislature should get its
money back. Also he was not impressed with MidAmerican's
statement that the 35 tcf would last for 22 years. The state's
estimate that the decline would begin in about 13 years is about
right. You're really suffering from lack of gas, he said. You
need 60 tcf and you've only got 29 tcf according to Alaska Oil
and Gas Conservation Commission.(AOGCC). Now Pt. Thomson is
missing so now you have a third of the necessary gas. You're
banking on the governor giving Pt. Thomson back, but its value
isn't what it was 30 years ago as unexplored land. Now the
market value is $70 billion. Can the state afford to give that
asset back and how long is the litigation going to last? He
believes it will last the entire Palin administration. He
questioned how it's possible to design a gas line without Pt.
Thomson.
5:51:42 PM technical difficulties.
MERRICK PIERCE, North Pole resident, said he is pleased there is
not exclusionary language in AGIA that would limit competition
among licensed applicants. He advised that he would focus on
"Section 43.90.180-Application evaluation and ranking." There is
a lot of good criteria including subsection (b)(1) regarding how
quickly the applicant proposes to commence. He suggested adding
language to paragraph (5). After "state." Replace the period
with a comma and insert: "and factors found by the commissioners
to improve the health, safety, and welfare of Alaskans." There
are some entities that will build the project sooner rather than
later and a project built sooner would have very positive
impacts on the Fairbanks area. When Tom Irwin worked for Golden
Valley Electric Association, he worked with an energy taskforce
on energy matters for the Interior. The taskforce found that
this area of only 82,000 people pays about $50 million every
year for petroleum for electric generation and another $130
million for petroleum to heat homes and businesses. This
staggering outlay of money will be reduced when there is a gas
pipeline, he said. Also, his community has four coal-fired power
plants for electric generation and steam heat that emit
contaminants like lead, mercury and radio active material. Those
emissions are obviously toxic. The Environmental Protection
Association (EPA) has established that there is no safe lead
exposure level for children. Also, high doses of mercury cause
mental retardation and neurological disorders in infants. He
encouraged members to look at the EPA publication, America's
Children and the Environment. He said another concern is cancer.
The typical coal-fired power plant emits more radiation than a
nuclear power plant. That's because strontium, thorium, uranium,
and plutonium and trace amounts of all their radioactive
isotopes are found in coal. He noted that uranium level in Healy
coal is about 1 ppm and those radioactive isotopes contribute to
lung cancer. In Fairbanks the lung cancer rate is about 25 per
100,000 people so years of delay means more people in Fairbanks
will die of lung cancer and leukemia, more children will have
lower IQs due to lead exposure, and more infants will be born
mentally retarded as a result of mercury exposure. In conclusion
he said there's more riding on this gas pipeline than just the
tremendous economic benefits; there's a lot riding on getting
the air cleaned up in the Fairbanks area. He urged the committee
to include language that allows the commissioners to consider
the health, safety, and welfare of Alaskans when they evaluate
the different applications.
5:57:58 PM
SENATOR THERRIAULT asked him to restate the suggested language.
MR. PIERCE restated the following: On page 11, line 25 following
"state." replace the period with a comma and insert "and factors
found by the commissioners to improve the health, safety, and
welfare of Alaskans."
CHAIR FRENCH said he too made note of the language.
JOEY MERRICK, Business Manager, Alaska Laborers Local 341, Eagle
River, said this union, representing over 2,100 members in
Southcentral, supports the gasline project because it's vital to
Alaska's future. There are many aspects to AGIA, but the
laborers union and its members believe that the most important
issue is a project labor agreement to ensure that Alaskan
workers are dispatched through Alaskan hiring halls. Also,
Alaskan apprentices will be able to learn their craft and keep
their money in the state to help maintain the economy. A project
labor agreement will make sure that Alaska Native hire will take
place, which will help with the unemployment rate in rural
villages. Make sure the project labor agreement stays in the
AGIA so that Alaskan workers can help develop the gas, he
emphasized.
6:00:32 PM
PAT FALON, Marketing Representative, Alaska Laborers Local 341,
said the gas pipeline is desperately needed, but Alaskans should
not have to surrender to anything that does not include a
project labor agreement. This agreement will retain young
apprentices in the state by offering them good healthcare and a
retirement plan. The project is all about Alaska so it makes
complete sense to include a project labor agreement to ensure
preferred Alaska hire It is Alaska's gas and Alaskans should be
the primary labor force. Consider how important this is to
Alaska's economy and make sure the AGIA includes a project labor
agreement, he stated.
6:01:48 PM
TAMMIE WILSON, wife of a millwright and mother of a Local 302
apprentice, Fairbanks, said those outside the state do not trust
Alaskans so let them know that Alaskans believe in giving
Alaskans priority through project labor agreements. Our well-
trained and intelligent workers are invested in our communities
and deserve to be at the front of the line. Please put a project
labor agreement in the AGIA, she said.
6:02:49 PM
MICHAEL FRIBORG, Business Agent, Local IUOE 302, said he agrees
with Mr. Merrick. The union work has been good to him and his
family and he'd like it to go on for local people and people in
the rural villages. The project labor agreement is the only way
to ensure local hire, he said. He has worked with Bechtel under
a project labor agreement for five years and the training has
been very powerful. We can make this project many times as
powerful as that, he stated.
6:04:30 PM
JON BROWN, Local IUOE 302, Fairbanks, said Alaska's natural gas
has the potential to secure Alaska's future. We have one chance
to get it right, he said. The state wasn't ready for TAPS, but
there's lead-time now so a better job can be done in training
the workforce. He listened to Don Bullock who said that whatever
Alaska wants in the pipeline should be put into the bill and he
agrees. We need a low tariff to ensure the state gets fair
compensation for its resource and so that independent companies
can afford to ship their gas in the pipeline, he said. One way
to get a low tariff is to include a project labor agreement to
ensure a predictable cost and supply of labor. Also we can
ensure labor stability with no strike or lockout provisions. The
workforce will be competent and trained in standardized programs
that have class-time and on-the-job training. The cost of labor
will be known because wages and benefits will be agreed to
before work starts. The use of instate hiring halls will give
Alaskans the best opportunity to get jobs that are associated
with the gas pipeline. He urged the committee to include a
project labor agreement in the bill.
6:06:58 PM
BARBARA HUFF TUCKNESS, Director of Legislative and Governmental
Affairs, Teamsters Local 959, said this union represents about
5,000 active and retired members throughout the state. Many
members worked during construction of the oil pipeline and a
number still work on the North Slope or in indirect jobs.
However, that's nowhere close to the 25,000 members who worked
on TAPS at the peak of construction. For over 30 years there's
been talk about construction of a gas pipeline here and some who
worked on the oil pipeline thought they would move directly on
to the gas related jobs. Today all have given up on that idea,
she said. The Murkowski Administration negotiated a deal with
the oil producers and that effort failed miserably. Now the
Palin Administration has introduced SB 104 or AGIA, and Local
959 believes that this may be the needed framework for
constructing a gas pipeline in Alaska. Some say AGIA is a huge
risk, some say it favors the pipeline builders rather than the
gas owners, and some say the state should not tell bidders what
to bid. But those who represent workers believe AGIA may well be
the vehicle needed to move the gas pipeline project toward
reality. Our members view AGIA as a tool for the governor to use
just as our members need their tools to perform their jobs every
day, she stated. The governor has presented an aggressive
schedule that contains quantifiable results. The previous
committee and the governor should be applauded for including a
commitment to negotiate a project labor agreement, she stated.
No company would say this agreement isn't justified on a project
of this magnitude. With a project labor agreement in place it
will be possible to define training needs, legally require local
hire through local halls, and to define wages, benefits, and
working hours. The committee should remember that the gas
pipeline is vital to the future economic wellbeing of the state.
There's a window of opportunity to move forward this legislative
session; give the governor the tools to perform her job and
support passage of SB 104, she stated.
6:11:11 PM
JIM LAITI, Manager, Plumbers and Steamfitters Local 375,
Fairbanks, thanked the legislature and the Palin Administration
for their efforts in promoting a project. Right now the signs
are encouraging he said. In late 1969 he was an apprentice and
was fortunate to be in the middle of the construction boom in
the 1970s. The best way to prepare Alaskans for this project is
to utilize the programs, facilities, and instructors that are
currently in place. His apprenticeship program, which is
representative of many others, requires nearly 2,000 hours of
shop and classroom training and 8,000 hours of on-the-job
mentoring under the supervision of qualified craftsmen. He
emphasized that training will not create an effective workforce
without on-the-job experience as well. The proven track record
of joint apprenticeship training committees (JATC) in training
and placing Alaskans into construction jobs is without
comparison, he said. According to 2004 statistics, labor
management JATCs in Alaska accounted for 84 percent of the
active registered apprentices. The apprentices benefit from the
culture developed in Alaska's oil industry in recent years in
terms of having a safe work place, a productive workforce, and
producing a quality product that considers the environment.
We've come a long way since TAPS so let's make the most of our
experience. Maintain language for a project labor agreement and
ensure use of the proven apprentice programs, he stated.
6:14:27 PM
TIM SHARP, Business Manager, Alaska District Council of
Laborers, said the 5,000 members strongly support project labor
agreements. Since his last testimony project labor agreement
language has been added to AGIA and doing so takes care of a
good part of the remaining concerns the union had. All they ask
now is to tighten it up to take out any ambiguity. He wants to
hammer home the tenets that will make or break a successful
project and make sure the results of developing Alaska's
resources will maximize benefits to Alaskans. With the certainty
of training and a project labor agreement there will be a
definable goal to train towards. We look forward to turning on
the training schools full bore, he said. We can do that because
we know we have a deal coming online. If we'd had definable
goals and needed verbage to maximize Alaskan hire and training
back in the 1970s, we would still be talking about what a
successful project that was. Union and nonunion Alaskan
contractors could bid and multinational corporations and
contractors-union and nonunion-participated. Everybody got a
chance to bid and Alaskans got a chance to work, but we weren't
ready. This time we can be ready and we can make sure that the
overall project assures benefits and dollars for Alaskans.
6:17:37 PM
TRAVIS TOLMAN, Apprentice for Laborers Local 341, said he
supports the pipeline, which will help him provide for his
family. The more he has learned the more he has became convinced
that AGIA must include a project labor agreement because it will
ensure Alaskan hire on the single most important project the
state has ever seen. It will keep the economy strong and young
apprentices in the state with the security of decent wages and
benefits during a time when benefits are hard to come by.
6:19:03 PM
DENNIS KNEBEL, Business Development Coordinator, with IBEW Local
1547, said he is also a journeyman electrician. He listed
projects he worked on that had project labor agreements and said
all were good projects that maximized local hire with good wages
and good benefits.
6:20:02 PM
VINCE BELTRAMI, President, Alaska AFL-CIO, thanked Governor
Palin for sticking to her guns and seeing AGIA through because
this approach serves all Alaskans. If it fails it won't be due
to a lack of effort by those seeking to ensure that Alaskans get
the best possible deal for their resource. Including project
labor agreement language is the only legal means that
preferential Alaska hire can be achieved and it assures a
relationship with union apprenticeship programs. Unions
represent a large majority of workers who do the heavy and
highway construction, which are the skills needed for this
project. He cautioned legislators to be leery of those who have
made claims to the contrary because he has not seen any nonunion
apprenticeship programs that are doing training in the heavy
construction arena. Not having a collective bargaining agreement
with unions through a bona fide project labor agreement invites
risk that AGIA seeks to avoid. Project labor agreements that
have been negotiated with Alaska building trades councils have
successfully built the largest and most complex projects in the
history of the state. Large multinational and sometimes nonunion
construction contractors have successfully bid on and worked
under the terms of project labor agreements throughout the
state. The critics of project labor agreements don't represent
employees or pipeline building contractors, he stated.
6:22:30 PM
SENATOR WIELECHOWSKI asked what percentage of the federally
registered apprentices in Alaska belong to union programs.
MR. BELTRAMI said about 2,000 apprentices are federally
registered under the Bureau of Apprenticeship and Training and
85 percent are enrolled in union apprenticeship programs that
include 1,000 hours of classroom instruction as well as
supervised on-the-job training.
SENATOR WIELECHOWSKI asked what percentage of the heavy and
highway construction workers are union members in Alaska.
MR. BELTRAMI said it's about the same. Roughly 85 percent have
the experience to do the type work that will be needed to
construct a gas pipeline.
SENATOR WIELECHOWSKI asked what percentage of the employees
hired through the project labor agreement for the missile
defense site were Alaska hire.
MR. BELTRAMI said he understands that there was approximately 90
percent Alaska hire. That included 12 percent Native Alaskan
hire, 5 percent veteran hire and 5 percent female hire.
SENATOR WIELECHOWSKI asked if Bechtel and Fluor are typically
union shops.
MR. BELTRAMI said not usually, but they don't mind working under
project labor agreements.
SENATOR WIELECHOWSKI asked if he'd gotten any feedback from
Fluor and Bechtel regarding the experience they had using the
project labor agreement.
MR. BELTRAMI advised that he was a prime negotiator on the
missile defense project labor agreement when he was the
president of the building trades for Anchorage. Both companies
sent letters expressing pleasure with the professionalism of the
craftsmen they were associated with on the job. Things were
ahead of schedule and under budget and safety was top notch.
They attributed it to the relationship with the unions. There
really weren't any substantive issues at all and over 1,000
people worked on the project.
6:25:29 PM
SENATOR WIELECHOWSKI asked if his experience is that project
labor agreements have been successful in Alaska.
MR. BELTRAMI said he isn't aware of even one that hasn't been
successful. Seven or eight such projects have been done in
Juneau and CBJ has made using project labor agreements a policy.
Right now the new high school and the hospital expansion are
being done under project labor agreements.
6:26:41 PM
DAVID GOTTSTEIN, Co-Chair of Backbone, Anchorage, said AGIA may
not be in perfect shape but it is a good platform to work from.
It provides for a competitive and fair process for bidders and
the more vibrant the bidding pool the more the winning bidder
will be able to offer. Some say that the producers are arguing
that it is exclusive and that a competitive process results in
one winner. In the first case, most competitive processes
pressure participants to submit their best offer thereby
achieving better results. Second, the inducement will reduce the
risk of the project and attract more bidders that will offer
more in economic terms. Third, contrary to what the producers
say, they are not the only companies that are qualified to build
the pipeline. In other places gas lines are built and owned by
independent pipeline companies and not producers. For example,
Warren Buffet and MidAmerican are one of several investors that
are ready to offer billions of dollars in equity to start the
project. Fourth, once the project is chosen, the producers are
required under their leases to commit their gas or risk
forfeiture. Exxon wants everyone to believe that only they can
decide when to market our gas, but they are legally required to
sell our gas when the market is ready to purchase it. It's a
game of chicken and the producers hope we take the bait and veer
from the path of maximum opportunity for the state. Don't be
afraid to offer Pt Thomson gas because there's a high chance
that the supreme court will affirm the administrative decision
canceling the leases. Holding back offering the gas to a market
allows the producers to win, but sound business judgment
dictates taking the probable course and mitigating the small
chance of failure. In the worst case, sufficient gas will be
made available for a smaller project that is economic, which
we're told might be only 1 bcf/day. More than likely the
producers will fall in line so as to not be left behind. Holding
back would further risk their leases and generate the wrath of
Congress and the American people. If the court strikes down the
lease cancellations then the break-up fee could be paid to the
winning bidder as a consolation. But the benefits of proceeding
and the likelihood of success far out weigh the likelihood of
failure and the associated costs. "Let's not be chicken."
Getting our gas to market to benefit all Alaskans is what AGIA
is all about.
CHAIR FRENCH thanked the public for taking time to testify and
announced he would hold SB 104 in committee.
There being no further business to come before the committee,
Chair French adjourned the meeting at 6:31:05 PM.
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