INTRODUCTION OF SB 360 - "ALASKA NATURAL GAS PROJECT ACT" [This was not a scheduled hearing, but an explanation before the Joint Committee on Natural Gas Pipelines.] Number 1098 CHAIRMAN TORGERSON announced the next order of business, an explanation of SB 360, which was introduced that day by the Senate Resources Committee. As chairman of that committee as well, he explained the intention behind the legislation. CHAIRMAN TORGERSON expressed hope that SB 360 will become a vehicle for "passage of any of the work that we're currently doing." He said it accomplishes a lot of necessary things. First, it recognizes that there won't be a project built this year. There isn't a lot of work that the legislature needs to do this year, he explained. However, there has been a public expectation that something would happen, such as passage of legislation to provide incentives or help spur the project. "I've said, from day one, that I would not leave my negotiations with an incentive," he said. "I still believe that, that we shouldn't until all the details are laid on the table of what we're doing, what the project economics are." CHAIRMAN TORGERSON noted that the timeline for receiving the project economics has continued to slide backwards, with nothing received; he said he isn't sure that information will be received this session, but believes it is important to at least put the parameters together that would direct the administration to start negotiations, for example, with municipalities on some of their issues. In some cases, he noted, it will come back to the legislature for approval later. Number 1194 CHAIRMAN TORGERSON highlighted provisions of SB 360. It allows the project to be phased under the Alaska Right-of-Way Leasing Act. It gives all agencies the full cooperation of the Department of Natural Resources (DNR) commissioner, "more or less," for expedited permitting. It allows the governor, if he/she finds provisions of the law that impede the project, to propose a waiver. Furthermore, any decisions by the commissioner or other agencies shall be subject to limited judicial review. He remarked, "These are all part of ANGTA that we wanted to have part of our laws." It also says that any judicial action brought must be done within 60 days, he noted. CHAIRMAN TORGERSON continued, noting that SB 360 allows the commissioner of the Department of Revenue to start negotiations with local governments on property tax "after they are sure that the project is not economically feasible, and then the commissioner will put together a ... [socioeconomic] report on the impacts of local governments, and then ... he may recommend to us whether to waive it all, reduce it, defer it, or whatever; and that would require legislative approval after that work is done." The bill also directs the commissioner of DNR to waive, reduce, or defer all or part of the royalty payments on the project; again, this takes legislative approval, he told members, upon discovery that the project is not economically feasible without taking such action. Furthermore, it allows the Alaska Railroad Corporation (ARRC) to issue tax-exempt bonds for the project. CHAIRMAN TORGERSON mentioned the commissioners of the respective agencies and noted that under SB 360, companies must agree, before receiving any benefits, to train and hire Alaskans and use Alaskan businesses in the construction and operation of the project, consistent with constitutional provisions. They also must complete a study on in-state demand and submit a plan that must be approved by RCA; complete a study on natural gas resources in northern Alaska; and submit a plan that must be approved by RCA to maximize access to the project so that competition for Alaskan oil and gas can be promoted. Furthermore, they must update the studies after ten years, and they must agree to the provisions in the right-of-way lease [providing] for in-state use of gas and expansion of the project. Number 1329 CHAIRMAN TORGERSON characterized SB 360 as a carrot-and-stick approach intended to bring everybody to the table. He noted that it would be heard [by the Senate Resources Committee] on Monday [4/15/02], when the commissioners and so forth, along with the oil companies, if ready, would testify by invitation only; he expressed the hope of moving it from committee at the following hearing so it could go to the Senate Finance Committee for debate. Again suggesting that SB 360 is the vehicle to use, he acknowledged that it is major legislation to get through the process in the time remaining. He concluded the discussion of SB 360 by encouraging members of the Joint Committee on Natural Gas Pipelines to read it and provide any suggestions.