HB 9-IN-STATE GASLINE DEVELOPMENT CORP  1:56:49 PM CO-CHAIR SEATON announced that the next order of business would be HOUSE BILL NO. 9, "An Act requiring the Joint In-State Gasline Development Team to report to the legislature recommended changes to state law that are required to enable or facilitate the design, financing, and construction of an in- state natural gas pipeline so that the in- state natural gas pipeline is operational before 2016; and providing for an effective date." [Before the committee was Version U, labeled 27-LS0075\U, Bullock, 1/19/12, adopted as the working document on 2/6/12.] The committee took an at-ease from 1:57 p.m. to 1:58 p.m. 1:58:44 PM RENA DELBRIDGE, Staff, Representative Mike Hawker, Alaska State Legislature, on behalf of Representative Hawker, sponsor, noted that committee members posed a number of questions about HB 9 at the committee hearing on 2/6/12. She directed attention to these questions and the answers provided in a [2/8/12] memorandum [from Representative Chenault, prime sponsor,] included in the committee packet. She addressed the first question, paraphrasing from the memorandum, written as follows [original punctuation provided]: 1. Provide a comparison of the authorities granted to the  Alaska Gasline Development Corporation (AGDC) in HB 9  with those granted under the Alaska Gasline Inducement  Act (AGIA), and note which, if any, are authorities  unique to the AGDC and AGIA projects.  MS. DELBRIDGE prefaced that the memorandum's answer is a very cursory comparison and should not be construed as a comprehensive legal analysis of AGIA and HB 9. She related that should the committee want such an analysis, the sponsor suggests a review from parties that are expert in AGIA and applicable laws. She paraphrased the memorandum's answer, written as follows [original punctuation provided]: In a broad sense, AGIA and AGDC are similar in that both projects may exercise eminent domain; AGDC acts as a coordinator of an instate project much as the State Pipeline Coordinator's Office serves as such for an AGIA project; both projects enjoy expedited permitting processes; both provide confidentiality protecting commercial negotiations or proprietary work products; and both limit judicial review claims in an attempt to prevent unwarranted delays in state- sanctioned projects. 2:00:18 PM REPRESENTATIVE KAWASAKI inquired whether Representative Hawker, as co-sponsor of the bill, has ever requested a specific legal analysis of whether HB 9 and AGIA are compatible and, if not, is that something the co-sponsor or the committee would do. MS. DELBRIDGE offered her belief that the question posed on 2/6/12 was not compatibility but what HB 9 offers in comparison to what AGIA offers. Compatibility, such as concerns about violating the half a billion cubic feet a day limit under AGIA with an in-state line, is already addressed in House Bill 369 that prohibits AGDC from pursuing any project that is in violation of AGIA. 2:01:11 PM MS. DELBRIDGE moved to the second question and answer, paraphrasing from the memorandum, written as follows [original punctuation provided]: 2. Does HB 9 contain a date or similar benchmark  requiring AGDC to return to the Legislature with its  findings on planning and developing an instate  gasline?    HB 9 does not specifically include a date certain by which AGDC must return to the Legislature. However, AGDC is subject to the Executive Budget Act; as a public corporation, AGDC is unable to spend funds without an appropriation. Without a significant appropriation, AGDC would lack the means to sanction a project and proceed with construction. MS. DELBRIDGE said there is every expectation that at the point of sanctioning AGDC would return to the legislature with that funding request because it would be hundreds of millions, if not over a billion, dollars. 2:02:08 PM CO-CHAIR SEATON understood that AGDC could not sign contracts that obligate the state without the appropriation from, and the approval of, the legislature. MS. DELBRIDGE deferred to Mr. Dubler. JOE DUBLER, Vice President, Alaska Gasline Development Corporation (AGDC), Director of Finance, Alaska Housing Finance Corporation, Department of Revenue (DOR), explained that all the contracts that AGDC enters into, similar to other state agencies, are subject to appropriation. To the extent there is no appropriation, the contract expires. MS. DELBRIDGE pointed out that House Bill 369, passed in 2010, had a date certain at which AGDC was to deliver a project plan to the legislature and that was done on schedule on July 1, 2011. Additionally, AGDC has been providing monthly status reports to the legislature so there is a continuing process of keeping tabs on that work and the status of that work. 2:03:07 PM MS. DELBRIDGE continued paraphrasing from the memorandum, turning to question and answer 3, written as follows [original punctuation provided]: 3. HB 9 grants AGDC the ability to use eminent domain.  What does this authority do in practical terms?  Eminent domain is a power granted under 09.55.240 (see attached), allowing eminent domain to be exercised for most public uses, including uses authorized by governments and, per 09.55.240(a)(13), "for the location of pipelines for gathering, transmitting, transporting, storing, or delivering natural or artificial gas or oil or any liquid or gaseous hydrocarbons, including, but not limited to, pumping stations, terminals, storage tanks, or reservoirs, and related installations." HB 9, in Section 1, Lines 15-16, explicitly ensures AGDC will be able to exercise this power as provided in 09.55.240-460. This legislation does not expand eminent domain. REPRESENTATIVE GARDNER asked why it is necessary to explicitly ensure. MS. DELBRIDGE understood there are occasional legal questions brought as to what entity specifically in a given circumstance can exercise eminent domain. 2:04:50 PM MS. DELBRIDGE commenced paraphrasing from the memorandum, citing questions and answers 4 and 5, written as follows [original punctuation provided]: 4. Section 4, lines 24-25 of HB 9 address duplication of  state efforts. Has duplication of efforts, such as  ownership of studies, been an issue, or is it  anticipated to be an issue?  AGDC is working diligently to avoid duplicating work funded by other state money. The sponsors believe efficiency with state resources is important, and will offer an amendment to this paragraph retracting the deletion, but keeping the change replacing the "Joint In-State Gasline Development Team" with "Alaska Gasline development Corporation." 5. Would waiving costs or rental fees for a lease or  right-of-way provided by the Department of Natural  Resources require a fiscal note? If not, how would the  costs incurred by the agency be covered?  Generally, the sponsors suggest that a fiscal note should come from the department affected. However, AGDC is now paying the state Department of Natural Resources $189,000 per year for a right-of-way lease; Section 6 would eliminate or reduce that charge. Additionally, as discussed in committee on Feb. 6, the sponsors are developing an amendment to Section 6(g). 2:06:40 PM CO-CHAIR SEATON said the question on 2/6/12 was whether AGDC could obligate DNR and other departments to prioritize their budgets without going through a budgetary process and have to absorb the costs out of their existing programs. He requested further clarification. MR. DUBLER responded that the forthcoming amendment will modify this so it is not gratis and will be at usual and customary charges. Regarding expediency, he related that the sponsors are standing by the expediency issue whereby the individual departments will prioritize this project ahead of other projects to the extent it is necessary to complete it on a timely basis [see 2:27:09 timestamp for a correction by Mr. Dubler]. In further response to the co-chair, Mr. Dubler said the forthcoming amendment will modify the part about it being at the department's cost to being that AGDC will pay usual and customary charges for the services and/or products that it receives. 2:08:26 PM MS. DELBRIDGE returned to the memorandum, paraphrasing question and answer 6, written as follows [original punctuation provided]: 6. Section 6 (e) of HB 9 allows AGDC to enter into  confidentiality agreements as needed to acquire or  provide information. Information that falls under such  an agreement is not subject to disclosure under AS  40.25.110. Is this confidentiality provision also  contained in AGIA?  While AGIA has some confidentiality provisions, the primary function is to protect proprietary information of private interests, provided to the state for informational and not decision-making purposes. Under AGDC, the protection primarily becomes one of protecting AGDC and private parties it engages with in commercial negotiations and other matters. The role of the state is different under AGIA than under AGDC. 2:09:57 PM CO-CHAIR SEATON recalled that this became a huge issue during the Alaska Stranded Gas Development Act when the legislature was unable to find out any of the operating provisions with the operating company. He asked whether this same problem would occur under HB 9, whereby the legislature would be asked to sanction something that it is unable to find out about. MR. DUBLER replied that the confidentiality discussion talked about here is imperative. For example, AGDC is currently attempting to work with some producer companies on alignment on issues of gas composition. However, the companies will not share any information with AGDC because they are concerned that that information will become public; so right now AGDC is shooting in the dark. Referencing question 4 about sharing of information and duplicating efforts, he said that for this summer's field work AGDC is focusing its efforts from Fairbanks down so that if there is an alignment with the AGIA and AGDC projects, AGDC will not be duplicating any efforts above Fairbanks where the AGIA efforts are focused. The proposed confidentiality would prevent people from being able to request information provided by companies to AGDC for the project that the companies would not otherwise be obligated to provide to the public. 2:12:01 PM CO-CHAIR SEATON said he appreciates and does not have a problem with that. However, he is asking whether this provision is structured so broadly that it would allow the confidentiality agreements of an operating entity to be withheld from the legislature, although AGDC would know. For example, the legislature would be unable to find out the operating conditions and veto rights of the operating entity. He cautioned that if HB 9 sets up the same controversial structure as was in the Alaska Stranded Gas Development Act it will be problematic for moving the bill through the system. MR. DUBLER answered that he is unfamiliar with the Alaska Stranded Gas Development Act and its confidentiality provisions, so he cannot compare what AGDC is asking for here with what was in that bill. What AGDC is asking for here is similar to what exists under AGIA. In AGIA the state is the licensor and TransCanada the licensee, and he offered his belief that the agreements between the two parties are subject to confidentiality agreements. CO-CHAIR SEATON stated that this question will need resolution from Legislative Legal and Research Services or the sponsor. MR. DUBLER agreed to get an answer to the committee. 2:14:17 PM MS. DELBRIDGE continued her review of the memorandum, paraphrasing question and answer 7, written as follows [original punctuation provided]: 7. Is there a provision, similar to one in AGIA, that  requires a body of work developed under AGDC be  remanded to the state in the event a project is not  sanctioned or is unable to attract sufficient  customers?  As a state corporation, all work product and assets developed by AGDC belong to the state. Depending on the circumstances, AGIA provides for the transfer of work by the private-sector licensee to the state either at no cost to the state, or at some level of cost, per AS 43.90.200: ... CO-CHAIR SEATON surmised that the state would have the product and if the project did not go forward the confidentiality agreements would not prevent the state or the legislature from having that information. MS. DELBRIDGE agreed to check on that in conjunction with the co-chair's previous question. 2:15:26 PM MS. DELBRIDGE paraphrased question and answer 8, written in the memorandum as follows [original punctuation provided]: 8. The Alaska Natural Gas Development Authority has  engaged in work related to a right-of-way between  Glennallen and Palmer. Is there an asset, such as a  right-of-way lease, and if so, will that lease be  transferred to AGDC upon passage of HB 9?  Alaska Natural Gas Development Authority assets remain with the Authority. However, under HB 9, the AHFC Board, as directors of ANGDA and AGDC, would have the ability to transfer assets from one subsidiary to another. MS. DELBRIDGE offered her belief that the conditional lease held by Alaska Natural Gas Development Authority (ANGDA) requires commissioner approval in order to transfer. She continued paraphrasing the rest of the memorandum's answer, written as follows [original punctuation provided]: The right-of-way lease ANGDA secured is conditional, and as such, may require significant additional time and investment to upgrade to an unconditional lease. Consultation with the State Pipeline Coordinator's Office (SPCO) clarified that a conditional lease does not grant an interest in state land, but is a 'reservation' allowing 10 years to convert to a non- conditional lease. A conditional lease cannot be renewed. In further clarification, ANGDA's conditional lease does not technically follow the Richardson Highway, but begins in Palmer and terminates in Glennallen. ANGDA began work on a further segment between Glennallen and Delta Junction, but to the SPCO's knowledge, never acquired the right to state land for that segment. 2:17:30 PM CO-CHAIR SEATON noted that ANGDA is online and will respond to the question of whether there is or is not a right-of-way. REPRESENTATIVE HERRON inquired how many of the conditions of the conditional lease have been met and satisfied. In response to Co-Chair Seaton, he agreed to pose this question to ANGDA. 2:18:18 PM CO-CHAIR FEIGE, in regard to ANGDA's work on the conditional right-of-way lease between Palmer and Glennallen, asked what would be the value of letting that work be abandoned. He said that if a bullet line to Anchorage went in, it seems that a right-of-way to connect the electrical grid to a source of cheaper electrical generating energy would be a reasonable benefit to the people of that region. Glennallen, Copper Center, Kenny Lake, Chitina, and Valdez are all on the same electrical grid, he continued, and they pay a significant premium to what is paid by the folks in the Anchorage Bowl. MS. DELBRIDGE replied that she does not believe there is any intent to abandon the right-of-way that ANGDA has acquired. She said she believes that it is seen as an asset that AGDC and ANGDA together under the AHFC board can further build on and make use of. MR. DUBLER added that there are at least 25 conditions that have to be met and those are project plans that have to be submitted for review and approval to the Department of Natural Resources (DNR). A significant amount of work needs to be done to get this to a lease that would actually be useful in terms of putting in a pipeline, but some work has been done and that would not be abandoned. He offered his belief that this conditional lease is in effect until July 2016, so four years are left to complete all of the requirements that DNR has put on ANGDA to complete this lease. 2:20:08 PM CO-CHAIR FEIGE noted that AGDC could be fully engaged in developing and building a pipeline to the Anchorage Bowl in 2016 when this conditional right-of-way expires. Assuming HB 9 becomes law, he asked whether it would be prudent and whether AGDC would pursue extension of that conditional right-of-way to preserve it for future use, given a significant amount of work has been done. MR. DUBLER said he is not sure he would describe the work as a significant amount. While he does not know how much work has been done, he can see how much has not been done by what is in the conditions in the lease. He said his recollection of reading the lease is that it is not subject to extension, but to the extent that there is a lease in place now he would hope that the commissioner of DNR would be able to issue a new one that replicates what is existing. In further response to Co-Chair Feige, Mr. Dubler agreed that AGDC would consult the legislature if it is found that the conditional lease needs to be extended. 2:21:23 PM MS. DELBRIDGE moved to question and answer 9, written in the memorandum as follows [original punctuation provided]: 9. What are the potential impacts to the state and local  governments if state resources, such as land, water  and gravel as specified in Section 6, of HB 9, are  provided to an AGDC project at no cost and the gasline  includes commercial gas exports?  The sponsors expect an amendment under development to Section 6, (g), of HB 9 to address this concern. MS. DELBRIDGE recalled the committee's concern that the state could end up subsidizing commercial gas exports, and assured members that it is not the intent of the sponsors to create that sort of subsidy. 2:22:07 PM MS. DELBRIDGE addressed question and answer 10, written in the memorandum as follows [original punctuation provided]: 10. Regarding HB9 Section 12, what are the existing  timelines for judicial review?  Judicial review of decisions by commissioners on right-of-way leases is already limited in statute: ... MS. DELBRIDGE noted that this limited judicial review is in AS 38.35.200, included in the memorandum. She paraphrased the rest of the answer in the memorandum, written as follows [original punctuation provided]: Sections 12 and 13 in HB 9 work together to add a new subsection (c) incorporating the judicial review process created for the Trans-Alaska Pipeline System. Judicial review is already statutorily limited to 60 days per the Right-of-Way Leasing Act (AS 38.35.200); the new Section 13 (c) defines the jurisdiction for a claim and prohibits a court from issuing injunctive relief that would delay project progress while a claim is heard. Section 13 (c) also specifies a 60-day window for claims to be filed alleging denial of rights under the state Constitution. MR. DUBLER added that this provision is not intended to take away the rights of citizens to object to this project. It is meant to push the objection to the beginning of the project rather than when a billion dollars' worth of pipe is ready to go into the ground and a claim is suddenly filed that stops all work for a year and a half while the issue is resolved. The intent is to resolve those issues up front and not wait until it is time to dig the ditch. CO-CHAIR SEATON said the committee appreciates that. 2:23:56 PM MS. DELBRIDGE paraphrased questions and answers 11-12, written in the memorandum as follows [original punctuation provided]: 11. What is the anticipated impact to municipalities  associated with Section 6, HB 9, exempting an AGDC  project from state and municipal property taxes during  construction? What are the anticipated impacts to  municipalities during a pipeline construction phase?  At this point, without final project engineering and costs, it is difficult to determine the potential impacts. Additionally, municipal taxes could change between now and a taxable period. The sponsors have requested a legal opinion on what pipeline project assets and activities are taxable, and will provide additional information to the committee as it becomes available. 12. Provide an AGDC analysis of international fiscal  systems consultant Pedro [van Meurs'] assessment of an  Alaska gas export project, as presented in a seminar  to legislators in December 2011.  This request will take additional time, as AGDC was not present at [van Meurs'] presentation and has no access to the assumptions that went into the original analysis. 2:25:28 PM MS. DELBRIDGE paraphrased question and answer 13, written in the memorandum as follows [original punctuation provided]: 13. Be prepared to discuss Section 25 of HB 9, exempting  from Regulatory Commission of Alaska review any  agreement or amendment to an agreement entered into by  AGDC with a public utility, for as long as debt is  outstanding on an AGDC pipeline.  AGDC has indicated it is prepared to discuss this at the committee's pleasure. CO-CHAIR SEATON said the committee will leave that at this time because there are no commissioners available and no one from the Regulatory Commission of Alaska (RCA) available. He offered his appreciation for the answers provided. 2:27:09 PM MR. DUBLER corrected his earlier statement that under HB 9 AGDC would have the highest priority in obtaining permits from the state's agencies; rather, AGDC would be second to AGIA. CO-CHAIR SEATON inquired whether Mr. Dubler is representing the administration's or AGDC's position on HB 9. MR. DUBLER replied he is just answering questions on the bill and said the governor is not sponsoring HB 9. He offered his belief that the governor's position is to let the legislative process work and if HB 9 passes the governor will consider the bill at that time. CO-CHAIR SEATON opened public testimony on HB 9. 2:29:27 PM KIRSTEN SIKORA, Acting CEO, Alaska Natural Gas Development Authority (ANGDA), Office of the Commissioner, Department of Revenue (DOR), testified as follows: For the past eight and a half years ANGDA has focused on its mission to bring the most affordable energy to Alaskan consumers. ANGDA has been flexible and transparent in all of our undertakings. Over the years ANGDA has participated in several projects that are noteworthy. ANGDA has secured a conditional right-of-way between Palmer and Glennallen. ANGDA completed the required wetlands study, conceptual design, and the route delineation to the draft EIS [environmental impact statement] stage on a bi-directional pipeline between the Beluga Field and Fairbanks. ANGDA secured status as a shipper in TransCanada's Alaska Pipeline Project [APP], which will provide the lowest gas pipeline tariff rates possible to the Alaskan consumers. ANGDA's participation in the APP open season has effectively secured a 30 percent discount over other entrants that may come into the project at a future date. ANGDA worked with private sector companies, Native corporations, and rural communities on the Alaska propane project. This project is an excellent example of how government and the private sector can work together to provide energy solutions and local economic impacts. As part of our statewide view, ANGDA has provided delivery options and other logistical considerations to deliver the clean-burning alternative fuels to those residents in Alaska that will not benefit from an in-state gasline. In closing, ANGDA's body of work is good and valuable and can benefit the State of Alaska and its consumers. Governor Parnell has stated that projects will align. ANGDA's spur line right-of-way and our status in the open season will greatly complement AGIA. Again, I thank you for the opportunity to share just a snippet of what ANGDA has accomplished over the years. And, as a mother of three, I truly appreciate the opportunity to be a part of this monumental decision for our future generations. 2:32:05 PM CO-CHAIR FEIGE inquired about the approximate value on the work for the conditional right-of-way between Palmer and Glennallen. MS. SIKORA replied that she does not have an exact value on the segment from Glennallen to Palmer, but said she will provide that information by tomorrow. In further response, she said it would be roughly $6 million. 2:32:41 PM REPRESENTATIVE KAWASAKI said he is not yet sure what he thinks of HB 9. He related that a 1/30/12 letter from Representatives Chenault and Hawker to the ANGDA Board of Directors states the sponsors' belief that ANGDA's statutory language is overly prescriptive and limits the scope of mission that is critical to adapt to changing markets. He requested Ms. Sikora to address this. MS. SIKORA deferred to ANGDA's chairman [Mr. Scott Heyworth], saying that it is a policy issue the board can speak to. CO-CHAIR SEATON requested Mr. Heyworth to present his testimony first and then answer Representative Kawasaki's question. 2:33:50 PM SCOTT HEYWORTH, Chairman, Board of Directors, Alaska Natural Gas Development Authority (ANGDA), Office of the Commissioner, Department of Revenue (DOR), cautioned that the committee is being asked to take a very risky political action that could close the door on more economically viable gas projects in the state. He said HB 9 would abolish a citizens' initiative that passed with over 63 percent approval 10 years ago. He assured the committee that ANGDA has always kept the interest of Alaskan consumers at the forefront. MR. HEYWORTH said several aspects of the bill cause him specific concern. Regarding the provision that would eliminate RCA oversight, he asked who would protect the consumers' interest in a tariff that may prove highly inefficient to consumers. Regarding Section 18 that would repeal and re-enact AS 41.41.020 dealing with the authority's governing body, he said the Alaska Housing Finance Corporation (AHFC) is not the appropriate agency to oversee ANGDA because it is an inherent conflict of interest between shipper and pipeline builder. Both the Alaska Pipeline Project and Denali-The Alaska Gas Pipeline project went to great extents to keep a distance between the commercial team, the pipeline builders, and the potential shippers. While the AHFC board has experience in financial transactions and housing expertise, it has none in energy or gaslines. He stressed that ANGDA has participated in the Alaska Pipeline Project as a shipper, and therefore cannot turn over its confidential agreements to AGDC unless the parties it is working with agree. 2:36:14 PM MR. HEYWORTH, continuing with his specific concerns, stated that Section 27, which proposes to add a new subsection to the exemptions in AS 42.05.711, would leave no check and balance in the mega-project development to protect the public interest. It would give carte blanche to the AGDC, with AGDC becoming the self-regulator, developer, and shipper of a pipeline in Alaska and an unregulated State of Alaska monopoly. He said ANGDA would never have looked for these types of changes in its mission, statutes, or exemptions from regulatory oversight. Regarding Section 31, [which would repeal Section 1 of Ballot Measure No. 3], he strongly suggested that HB 9 receive a great deal of scrutiny during the legislative session, given that ANGDA was created by the will of the people. The people of Alaska are counting on legislators to question whether HB 9 is in the best interests of all Alaskans. MR. HEYWORTH urged committee members to consider whether the needs of the consumers are being placed first, whether it is a viable project without complete state subsidies, and whether the project is the right size and going to the right location, all of which has yet to be determined. He asked where the industrial anchor tenants have weighed in; where do the producers and industrial users want to go - Valdez or Cook Inlet; and whether this project is the right size. 2:38:06 PM REPRESENTATIVE KAWASAKI reiterated his question regarding the 1/30/12 letter from Representatives Chenault and Hawker. MR. HEYWORTH deferred to Ms. Sikora. MS. SIKORA replied that in the past ANGDA has demonstrated it is always flexible and open to changes. She said she does not believe that at the time this authority was given to ANGDA under AS 41.41 it was overly prescriptive. She added that ANGDA looks forward to working with the legislature and the administration on the best way forward to provide Alaska's consumers with the lowest cost energy. REPRESENTATIVE HERRON reiterated his earlier question about whether all of the conditions in the conditional lease have been met and satisfied. MS. SIKORA referenced Co-Chair Feige's statement that the conditional right-of-way could be of value and would be of value to the people of Southcentral. Saying she did not have a line- item description of the work that has been completed, she deferred to ANGDA's permitting coordinator, Ms. Kaye Laughlin, to provide further information. 2:40:15 PM KAYE LAUGHLIN, Permitting Coordinator, Alaska Natural Gas Development Authority (ANGDA), Office of the Commissioner, Department of Revenue (DOR), explained that she has been involved in the spur line, which is the conditional right-of-way pipeline lease referenced earlier. She clarified that the conditional spur line lease is actually part of the overall Beluga to Fairbanks pipeline right-of-way lease application. She noted that the state pipeline coordinator was not involved in the federal EIS review that got to the draft EIS stage for the Beluga to Fairbanks pipeline project. She said there are no conditions yet because ANGDA does not have any permits that would carry conditions. MS. LAUGHLIN stated that a great deal of work has been done by ANGDA and outlined the work that has already been done by ANGDA: completion of conceptual pipeline system design; completion of land ownership surveys; completion of wetlands delineation; cultural resources clearances; 360 degree immersive video; earthquake studies; the project plans required for the EIS and future permits; access roads; materials sites; cultural review by the State Historic Preservation Officer (SHPO); government- to-government involvement meetings; the numbers of culverts and power lines along the route; assessments of wildlife, flora, fauna, threatened and endangered species, invasive weeds, migratory waterfowl, and air quality; and seismic activity analysis. MS. LAUGHLIN specified that this work was done for ANGDA's preferred pipeline route, as well as for the five alternative routes, and this work is in ANGDA's custody. Over 90 percent of the existing route is within existing rights-of-way, she said. Additionally, ANGDA has done traffic counts, anadromous streams, and distance and compatibility with the Trans-Alaska Pipeline System (TAPS). 2:42:53 PM REPRESENTATIVE HERRON requested that an explanation of the value of the conditional right-of way be compiled and given to the committee co-chairs. He further requested that someone from the administration explain conditional and non-conditional leases. CO-CHAIR SEATON directed attention to the 2/7/12, 4:19 p.m., e- mail from Ms. Sikora in the committee packet, which states that the right-of-way valuation for the full pipeline length from Palmer to Delta Junction is valued at $12,522,943 in 2011 dollars. He said that Co-Chair Feige's question was about the value of a segment of that right-of-way and when that breakdown is received from ANGDA the co-chairs will forward it to committee members. CO-CHAIR SEATON posed the question as to whether there is a conflict if ANGDA is a shipper and requested that a detailed answer be provided to the committee. 2:46:04 PM CORRIE YOUNG, reminded committee members that ANGDA was established by an overwhelming vote of confidence by the people of Alaska. [The initiative] passed in every district in the state, she said. Therefore, HB 9 would be abolishing something that was created by the will of the people who spoke overwhelmingly that an entity is needed solely for Alaskans to produce North Slope natural gas and propane for the citizens of today and of the future. CO-CHAIR SEATON clarified that HB 9 would not abolish ANGDA, but would roll together the structures to create a pipeline and to move that forward. He said he is not commenting on the bill one way or another, just explaining that the bill changes the format somewhat while keeping the goal of an in-state gas project and trying to move that project forward. 2:48:38 PM JAMES FIELDS stated that he is the school board president for the Copper River School District as well as a business owner and parent. He stressed that gas is needed in his area now; the area's residents cannot wait for something to get from Palmer to Glennallen and then on over to the Copper River Basin. Despite the government, highway, and other infrastructure in his area, he continued, school enrollment has declined 36 percent over the last nine years, which is huge and shows what the population is doing in the region. People moved to the region when fuel oil was 50 cents a gallon, not when it was $4 per gallon. He postulated that Anchorage has not seen as big a price increase due to its larger population, but said the residents of his community are citizens like the people in Anchorage are. MR. FIELDS related that ANGDA knocked on his door five years ago and he and others were excited when that happened; however, since then it has been a complete roller coaster of whether a pipeline is happening. He said he is opposed to HB 9 and has not met anyone in the Copper River Basin who is for the bill. He urged the committee to do what is the best long-term solution for the whole state, not a short-term solution for the biggest population area. A long-term solution will count in matters of tourism, he said; if the Interior goes away, then only the coast will have tourism. He said people of the Copper River Basin are listening and aware of this issue, but they are busy trying to make ends meet when it is 50 below and there is no fuel subsidy. 2:51:17 PM CO-CHAIR SEATON presumed that Mr. Fields is in favor of an in- state gasline and in-state gas supplies to communities, but that Mr. Fields is fearful of the proposed route that would go down the Parks Highway. MR. FIELDS responded that that was the case originally. However, after listening to the other testimony he is now fearful of the whole idea because it takes away the mandate of the people and takes away certain rights. He said he is therefore fearful of both and he thinks that ANGDA should stay in place and go forward as the people wanted it to. 2:52:16 PM MERRICK PEIRCE testified that he has spent the last half decade working to see the voter-mandated All-Alaska Gasline built. He noted that he is a board member and CFO of Alaska Gasline Port Authority (AGPA), but that his comments today are his own. He said something very important is missing from the presentations he has heard today as well as on 2/6/12. To explain, he presented a scenario in which he brings forth a piece of legislation that would do everything HB 9 proposes, but instead of building a gas pipeline his legislation would build a multi- billion dollar water pipeline to transport ocean water from the Arctic Ocean to Cook Inlet. He predicted that committee members would respond to his proposed legislation by saying that there is plenty of water in Cook Inlet and a water pipeline is a pointless costly boondoggle. He said this absurd scenario helps illustrate the most fundamental of the many problems with HB 9, which is: Why would Alaska spend billions to take gas from Prudhoe Bay to Cook Inlet when there are trillions of cubic feet of Cook Inlet gas that can be delivered to customers at a fraction of the cost of the bullet line? MR. PEIRCE maintained that to take HB 9 seriously, committee members would have to believe that the U.S. Geological Survey (USGS), other agencies, and various gas companies are all wrong in their belief that there are trillions of cubic feet of gas in Cook Inlet. He respectfully suggested that the committee invite these experts to explain why they believe there are trillions of cubic feet of gas under Cook Inlet and to explain their concerns about marketing that gas. 2:54:30 PM MR. PEIRCE said the real question is what to do with all the gas in Cook Inlet. He related that the USGS believes 19 trillion cubic feet of gas are under Cook Inlet, in 2004 the U.S. Department of Energy estimated 21-25 trillion cubic feet, Buccaneer Energy has told him it thinks 16 trillion cubic feet are likely, and Escopeta recently found 3.5 trillion cubic feet in its first well in the Kitchen Lights Unit. Therefore, he asserted, this question is so fundamental that it must be addressed for the evaluation of HB 9 to have any credibility. He pointed out that one trillion cubic feet of gas would be an 11-year supply for the Railbelt at its current usage of 240 million cubic feet per day. Ten trillion cubic feet, about half of what USGS believes exists, would be a supply of 111 years. The 3.5 trillion cubic feet in the Kitchen Lights Unit could be as much as a 40-year supply for the Railbelt. 2:55:22 PM MR. PEIRCE argued that the bullet line, also known as the pipeline to poverty, is not what Alaska voters asked for because it follows the wrong route and bypasses Fairbanks, North Pole, the state's critical military bases, and the vast mineral resource potential along the Richardson Highway corridor. It only offers two gas take-off points for the entire state and has no economy of scale, so it will not deliver affordable energy to Alaskans. He said it is known that the cost of gas - based upon current usage and no Cook Inlet supply - would be over $20 freight on board (FOB) Anchorage, and offers no new substantial revenue to Alaska. This AGDC project is a disaster, he charged, which is why so many entities that have carefully looked at this project are opposed to it, among them the City of Valdez, City of North Pole, Fairbanks North Star Borough Assembly, and the Alaska Municipal League. He added that the league voted nearly unanimously in favor of building the All-Alaska Gasline and that vote was after hearing from AGDC, AGPA, and ANGDA. He said he is really disappointed that the legislators sponsoring HB 9 took office by the will of the people, but once elected worked to subvert the will of the people that was expressed in the 2002 voter mandate. He urged defeat of HB 9. 2:57:21 PM CO-CHAIR SEATON closed public testimony after ascertaining no one else wished to testify. He noted there would be invited testimony from the RCA and possibly others at a later date. [HB 9 was held over.]