SB 3002-STRANDED GAS AMENDMENTS  CHAIR SEEKINS called the meeting back to order at 3:50 and announced SB 3002 to be up for consideration. He reminded committee members that the proposed committee substitute (CS), Version F as amended, had failed to move from the committee yesterday. He emphasized the importance of allowing the commissioner enough time to prepare a summary of the public comments he received in response to the proposed contract and the preliminary findings and determinations and to accomplish the rest of the tasks in AS 43.82.430(a). 3:53:00 PM CHAIR SEEKINS said he wanted to give the commissioner enough time to gather the aforementioned information and respond to the comments, prepare a list of amendments, and to make his final findings and determinations as to whether the proposed contract and any proposed amendments meet the requirements and purposes of the chapter. He then moved to adopt CSSB 3002(NGD), Version Y, as the working document. There being no objection, it was so ordered. 3:53:28 PM SENATOR DYSON asked if his implication was that last night's bill failed because it gave the commissioner 60 days. CHAIR SEEKINS answered no, that was just a part of the bill that failed. SENATOR DYSON asked him to explain the rationale for using 120 days. CHAIR SEEKINS replied that he didn't think there was a hurry and wanted an adequate job. This allows a maximum timeframe for the commissioner to do that. They know that 30 days isn't enough; 60 days is questionable and 120 days is a maximum. 3:55:45 PM SENATOR DYSON expressed concern about getting the results back in time for the legislature to ratify it. SENATOR BEN STEVENS asked Senator Dyson if he was ready to ratify a contract. SENATOR DYSON responded that he was if he could see it. SENATOR BEN STEVENS asked how they could complete a contract if they won't pass the amendments to enable it to be completed. SENATOR DYSON replied, "I guess under the same regime that's allowed it to be negotiated over the last year and a half - not having the amendments hasn't stopped that process. " SENATOR BEN STEVENS said he was encouraged to hear Senator Dyson was ready to ratify a contract when it was presented to the legislature. SENATOR DYSON replied that it wouldn't be a rubber stamp and not being able to see it is part of what's holding it up. He was also interested in seeing the LLC and the fiscal interest finding. SENATOR BEN STEVENS noted that they all are interested in seeing those. 3:57:16 PM CHAIR SEEKINS said they had attempted to address other issues in terms of fiscal certainty, work commitments, and Alaska hire and had chosen not to give the Administration any direction on that in terms of the law. So, he wanted to give them the extra time to be able to work on those issues. 3:57:38 PM ^Bill Corbus, Commissioner, Department of Revenue BILL CORBUS, Commissioner, Department of Revenue, noted the public comment period had closed July 24 with a little over 2,000 comments; they were in the form of written comments, emails, verbal comments made at the public hearings. About 25 written comments were very scholarly and well-prepared, including a 50-page document. He received comments from legislators, public interest groups, and people with direct commercial association with the project other than producers. He was in the process of analyzing them and putting together a response. Certainly, he said 30 days is unrealistic to do justice to the public comments. He said the Administration supports the chairman's proposed amendment. 4:00:13 PM SENATOR STEDMAN asked what direction the legislature is giving the Administration. Was it going to renegotiate anything it wanted and then come back and find it doesn't have support for some of it? CHAIR SEEKINS replied he wasn't sure. He thought the committee did some good work last night and its only alternative now is to wait and see. "It's a trust me deal." SENATOR STEDMAN asked if he was right to infer that this extension would put it in to the end of November so they would be dealing with this next January and February. CHAIR SEEKINS replied that it wasn't his intent to do that, but he didn't want to give the Administration an artificial boundary that would hinder or delay or force it into a premature effort. 4:03:11 PM SENATOR ELTON asked to hear what the commissioner considers his duties are under AS 43.82.430(a)(2) and (a)(3). He asked if this authorizes an extended period of time for the commissioner to work on proposed amendments to the contract and to the Stranded Gas Act, as well. COMMISSIONER CORBUS replied yes; he would interpret it that way. CHAIR SEEKINS added that in this timeframe, he and the other parties would be renegotiating changes to what he would propose as a final contract. COMMISSIONER CORBUS replied that was correct. They have learned that negotiations always take longer than they expect. He said they badly need the extra time and commented that once negotiations are consummated, they must incorporate the changes in the fiscal interest finding. CHAIR SEEKINS asked whether it is his opinion that negotiations that take place inside a tight timeframe might put one party or the other at a disadvantage. COMMISSIONER CORBUS replied yes, particularly the state. 4:06:12 PM at ease 4:08:06 PM CHAIR SEEKINS asked if there was any objection to adopting work draft CSSB 3003(NGC), Version Y. There were no objections and it was so ordered. 4:08:19 PM SENATOR BEN STEVENS moved to adopt Amendment 6 and objected for discussion purposes. He mentioned that it was drafted to Version G, but he asked that members give the latitude to insert it in the new Version Y. OFFERED IN THE SENATE BY: SENATOR BEN STEVENS TO: CSSB 3002(NGD) (24-GS2095\G) Page 1, line 3, following "terms;": Insert "providing for an advisory vote,treatment of  certain laws, and approval and ratification regarding  a stranded gas fiscal contract;" Page 8, following line 8: Insert new bill sections to read: "*Sec. 14. AS 43.82.430(b) is amended to read:  (b)After considering the material described in (a) of this section and securing the agreement of the other parties to the proposed contract regarding any proposed amendments prepared under (a) of this section, if the commissioner determines that the contract is in the long-term fiscal interests of the state, the commissioner may execute [SHALL SUBMIT] the contract [TO THE GOVERNOR]. Sec. 15. AS 43.82.430(c) is amended to read:  (c) The commissioner's final findings and determination under (a) of this section and decision  regarding whether to execute the contract under (b)  of this section are final agency decisions under this chapter. Sec. 16. AS 43.82.440 is amended to read: Sec. 43.82.330. Judicial review. An [A PERSON MAY NOT BRING AN] action challenging the constitutionality of a law authorizing a contract developed under this  chapter [ENACTED UNDER AS 43.82.435] or the enforceability of a contract executed under a process  authorized by [A] law may not be brought [AUTHORIZING A CONTRACT ENACTED UNDER AS 43.82.435] unless the action is commenced within 120 days after the date that the contract was executed by the state and the other parties to the contract." Renumber the following bill sections accordingly. Page 11, line 30: Delete all material and insert the following: "*Sec.23. (a) AS 43.82.435 is repealed. (b) AS 43.82.445 is repealed. " Page 11, following line 30: Insert new bill sections to read: "*Sec. 24. The uncodified law of the State of Alaska is amended by adding a new section to read: APPROVAL AND RATIFICATION. Notwithstanding AS 43.82.435, repealed by sec.23(a) of this Act, the provisions of the Alaska Stranded Gas Fiscal Contract between the State of Alaska and BP Exploration (Alaska) Incorporated, ConocoPhillips Alaska, Incorporated, and ExxonMobil Alaska Production, Incorporated, as amended to conform to the provisions of the Act, are approved, and the process and procedures followed in formulating that contract are ratified. *Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to read: SUSPENSION OF OTHER LAW. The provisions of the Alaska Stranded Gas Fiscal Contract between the State of Alaska and BP Exploration (Alaska) Incorporated, ConocoPhillips Alaska, Incorporated, and ExxonMobil Alaska Production, Incorporated, as amended to conform with the provisions of the Act, are effective notwithstanding the provisions of any other law, including AS 43.82.200-43.82.270. Any inconsistency between the Alaska Stranded Gas Development Act (AS 43.82) and the fiscal contract executed under AS 43.82 are cured and authorized by this section. *Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to read: ADVISORY VOTE. At the 2006 general election to be held on November 7, 2006, in substantial compliance with the election laws of the state, the lieutenant governor shall place before the qualified voters of the state a question advisory to the governor and the commissioner of revenue. Notwithstanding other laws relating to preparation of the ballot proposition, the question shall appear on the ballot in the following form: QUESTION Shall the commissioner of revenue sign and make binding upon the State of Alaska the Alaska Stranded Gas Fiscal Contract between the State of Alaska and BP Exploration (Alaska) Incorporated, ConocoPhillips Alaska, Incorporated, and ExxonMobil Alaska Production, Incorporated? Yes [ ] No [ ]" Renumber the following bill sections accordingly. Page 12, line 7: Delete "Sections 2-14 and 17-20" Insert "Sections 2-13, 17, 20-22, and 23(b)" Page 12, following line 9: Insert new bill sections to read: "*Sec. 29. CONDITIONAL EFFECT. Sections 14-16, 23(a), and 24 of this Act take effect only if a majority of the votes cast in the 2006 general election on the ballot proposition in sec. 26 of the Act favor execution by the commissioner of revenue and binding effect on the State of Alaska of the Stranded Gas Fiscal Contract between the State of Alaska and BP Exploration(Alaska) Incorporated, ConocoPhillips Alaska, Incorporated, and ExxonMobil Alaska Production, Incorporated. *Sec. 30. If secs. 14-16, 23(a), and 24 of this Act take effect under sec. 29 of this Act, they take effect on the date that the director of elections certifies the results of the 2006 general election."   Page 12, line 10: Delete "This" Insert "Except as provided in sec. 30 of the Act, this" SENATOR BEN STEVENS said he agreed with the Chair's and Senator Stedman's comments about the work that was completed on the issues before the committee. He said he wouldn't reoffer the amendments they had already voted on, but if any other member offered those amendments, he would vote for them again. He was offering this amendment that hadn't been voted on. He explained: It puts the ability to execute the contract at the discretion of the commissioner, it would remove legislative approval upon a vote of the general public, and the sections that have a meaningful change to the Stranded Gas Act are all contingent on a conditional effect in Section 29. Mr. Chairman, I think that the actions that we have taken previously on these subjects to address work commitments, to address fiscal certainty on oil, to address fiscal certainty on gas, to address public project labor agreements, to address sovereignty agreements, to address collateral and arbitration clauses, to address calculation of educational funding, to address payment in lieu of taxes to municipalities, all the issues that we've done for the last two special sessions are without any standing now. And so, from my position the only standing we have for those to be incorporated in the contract is to give the commissioner - empower the commissioner - to get those enacted. We heard comment that there's concern that 120 days may be too long for the public period before the contract comes before us, but if we don't give the commissioner the authority to negotiate, we'll never get what we expect to see from the product of the negotiation. This is a simple amendment that says one thing: the legislature can't make a decision on changing the Stranded Gas Act to enable negotiation to go forward; let the public make the decision. 4:11:29 PM SENATOR DYSON asked if this amendment passes and the people vote and the Governor executes the contract, what would be the provisions for modifying the Stranded Gas Act to come into conformity with the contract. SENATOR BEN STEVENS replied that those provisions would be included in Section 25 of the amendment, the enabling legislation. SENATOR DYSON asked if the contract would supercede state law on any difference between it and the conditions of the contract. SENATOR BEN STEVENS replied that is correct. 4:12:48 PM CHAIR SEEKINS said no matter what pathway they take, if the legislature ever authorizes the execution of the contract under the current law, the authorizing bill would more than likely read "notwithstanding any other provision in law," which is often put in statute to keep lawsuits from happening. 4:14:24 PM SENATOR BEN STEVENS responded that there had been a lot of discussion about the concept of whether the negotiators have been working within the bounds of the law and as a result the state has lost standing in the contract. It's my opinion that the people that have been negotiating this contract, the commissioner of revenue, the members of the DNR staff, the members of the Administration staff, have one thing in common and that is to get a project that's in the best interest of the state. And we continually are saying to the Administration and saying to our lead negotiators, 'You're going outside of the law and you're giving away the state's assets.' And I have yet to see that come to reality. We in the legislature have done nothing but criticize the negotiation in terms of what they've produced and I think that the fact that a project is before us for ratification - granted it's not ready for ratification - we still haven't seen key components of it - but because of the fact that they have produced something that is to the benefit of the state, which is a project to move forward, is an example of the work that they've done. I've had it to the point where I can't listen to it anymore about the fact that the legislature or the Administration has given away state's rights. I just don't think it's justified any longer! And we can continue to sit as a legislature and say, 'We need more. Why did you give this away; why did you give that away.' And we're not making progress. So, the amendment does one thing. If we can't make progress, let the general public take the progress. By the way, this doesn't take away the fact that we can do it before the November 7 election. The other thing that this doesn't do - it's irregardless of who is in control after the elections. It lays all the responsibility on the general public to say if nothing is done by November 7, should we vote to ratify or not. 4:17:13 PM SENATOR DYSON said the Administration has always been very clear with the legislature that if there were changes to be made to the Stranded Gas Act, they would deal with them at the appropriate time after they negotiate the contract. "That's the process we've been in. At no point have I ever said that they were operating outside of the law and an intimation that I was saying so is unfathomable." CHAIR SEEKINS said he didn't interpret it that way. SENATOR BEN STEVENS said he could interpret his comments any way he wants, but that's not what he intended to say. 4:18:51 PM CHAIR SEEKINS invited Dennis Bailey to sit with the committee. SENATOR STEDMAN said he comes from a district that is as far from this gas line project as one can get, but the people there are very interested in monetizing the resource and moving the state forward. They are not afraid of deciphering complex issues and making the correct decision. He supported Amendment 6 and was glad it was before them today because the people he had talked to in his district about it didn't want to vote. "They want a gas contract and if there's inaction in the legislature, that can be taken care of in the ballot box." 4:20:53 PM SENATOR ELTON diverted attention to Sections 23 and on and Sections 14, 15, and 16. He had asked for someone to be available from Legislative Affairs [Mr. Bailey] to see if his view of those sections is correct. He thought it read as follows: "Section 14 authorizes the commissioner to execute the contract." He asked if this bill passes with this amendment, would that authorize the commissioner to execute the contract the day it is signed. SENATOR BEN STEVENS said that was not correct. Section 23(a), which removes legislative ratification until after a vote of the people, doesn't go into effect. CHAIR SEEKINS said the entire process of Section AS 43.82.430 with fiscal findings and final determinations would become an agency decision, which are challengeable under the Administrative Procedures Act, as the Judiciary Committee discussed. Then it would not become effective until it was ratified by a vote of the people. He asked Senator Stevens if he was correct. SENATOR BEN STEVENS responded it was most important to first understand Section 29 [Amendment 6] on page 3, which lay out the dates the sections take effect. Sections 14, 15, 16, 23, and 24 are all conditional on a positive vote on a general ballot. Nothing is significantly altered until that point. 4:23:52 PM SENATOR ELTON agreed with the sponsor that Section 29 provides a conditional effect, but that doesn't necessarily allay his concern. He asked, assuming SB 3002 is passed as amended in this manner, and that the commissioner recognizes that he can execute a contract, but it may not take effect because of the conditional dates in Section 29, what the need was for Sections 14, 15, and 16. 4:25:57 PM ^Dennis Bailey, Legislative Legal Services CHAIR SEEKINS asked for an explanation of Section 43.82.440 - Judicial review. SENATOR BEN STEVENS deferred to Mr. Dennis Bailey. DENNIS BAILEY, Attorney, Legislative Legal Services, agreed with the understanding expressed by Senator Ben Stevens that Sections 14, 15, 16 don't take effect until after a public vote. In Section 30, after the director of elections certifies the results, the commissioner has the authority to sign the contract. The timing there is currently 30 days after the public comment period, which has already occurred. So, his reading is if there was a positive vote, Section 29 would make Sections 14, 15, and 16 effective; Sections 14 and 16 would become effective after the certification and then the commissioner could sign the contract. He thought the 120 days referred to after the date the contract was executed by the commissioner. SENATOR ELTON asked if the commissioner could not sign the contract until after the certification of the election. MR. BAILEY replied that was right - that is what Section 30 says. CHAIR SEEKINS added that was 120 days after final execution by all parties. MR. BAILEY replied yes. 4:29:01 PM SENATOR BEN STEVENS removed his objection to the amendment. SENATOR ELTON objected saying he was going to vote no, because he disagreed with any assertion that the legislature has been dilatory. He, personally, had started with a minimal amount of knowledge, and while he wouldn't say he is an expert in petroleum economics, he has greatly increased his knowledge from there. He was now prepared to make a decision on what is good for state after seeing the contract and the LLC and he wouldn't vote against the contract just because it contains some elements he didn't like. 4:32:56 PM CHAIR SEEKINS recognized Senator Elton's attendance and participation as having been stellar. SENATOR STEDMAN said he had no hesitation in taking the contract to the voters. 4:33:57 PM SENATOR WAGONER said it's a matter of having the background and knowledge to be able to vote. His constituents have said they don't want to vote on this issue; it's a matter for the legislature to decide. 4:34:37 PM SENATOR DYSON said he identified with Senator Elton's remarks. He said our founding fathers set up our government as a constitutional republic in which elders are elected to take care of the people's business and the time and resources were set up to allow them to do that. He was a "strong no vote on this." 4:36:41 PM SENATOR HOFFMAN said Alaskans want a gas line; it's a financial key to our future and our children's future. He was sent to Juneau to make those decisions; that is why he supported the Stranded Gas amendments. They haven't done their job here and he doubted that they would this session. He still wanted to get the job done, but it seemed that they were being placed in a box and they would let the window of opportunity slip by. He was glad the Governor had kept legislature here to get its work done. He said this issue is critical to the financial well-being of the state and if this is the best chance to get a gasline built, if the legislature can't do the work in one regular session and three special sessions, maybe they should adopt the amendment and send it to the people to vote on. "I believe they will make the right decision and get the gasline built." 4:40:50 PM SENATOR OLSON spoke against the amendment and in support of letting the legislature make the decisions. 4:43:09 PM CHAIR SEEKINS said he didn't know if this was the right time to put it to a vote before the people and he would vote no on the amendment. 4:45:58 PM SENATOR BEN STEVENS provided closing comments on Amendment 6 saying there are 89 days until November 7 and it doesn't remove the legislature's authority then. He stated that the project needed to move to the next phase. 4:48:30 PM SENATOR ELTON maintained his objection. A roll call vote was taken. Senators Hoffman, Senator Ben Stevens, and Stedman voted yea; Senators Kookesh, Olson, Wilken, Elton, Wagoner, and Seekins voted nay; so, Amendment 6 failed by a vote of 3 yeas and 7 nays. SENATOR WILKEN moved to adopt Amendment 13. AMENDMENT 13  TO SB 3002 BY SENATOR GARY WILKEN "An Act amending the time allowed under the Alaska Stranded Gas Development Act, for the commissioner of revenue to summarize public comments, propose amendments, if any, and make findings; and providing for an effective date." CHAIR SEEKINS objected for a discussion. SENATOR WILKEN said he thought Version Y was good, but he was a little concerned that the title didn't define what the bill does, which could lead to delays over the next six days as this takes what could be a tortured path through the legislature. 4:50:24 PM MR. BAILEY said he had no difficulty with this amendment since it was similar to the title on the original CS. 4:51:17 PM CHAIR SEEKINS removed his objection and asked if there was further objection. SENATOR STEDMAN objected and said he would prefer to leave the title the way it is. CHAIR SEEKINS declared that as the introducer of this particular CS, he didn't intend it to have an open title nor was there any discussion with any other person in the other body about the title. 4:52:35 PM SENATOR STEDMAN maintained his objection. A roll call vote was taken. Senators Kookesh, Dyson, Wilken, Elton, and Wagoner voted yea; Senators Ben Stevens, Stedman, Hoffman and Seekins voted nay; so, by a vote of 5 yeas and 4 nays, Amendment 13 was adopted. 4:53:32 PM SENATOR WILKEN asked Commissioner Corbus if this would allow him to collect and synthesize information for after the election. He asked if that was his intent. COMMISSIONER CORBUS replied that it was their intent to get all this work done before the election. 4:54:15 PM SENATOR BEN STEVENS moved to report CSSB 3002(NGD) Version Y as amended out of committee with individual recommendations. There were no objections and it was so ordered.