HCR 12-JOINT SPECIAL COMMITTEE ON MERGERS Tom Wright, Legislative Aide to Speaker Brian Porter, sponsor of HCR 12, explained that the measure establishes a joint committee on mergers to study issues related to the proposed merger of BP Amoco and ARCO. The Federal Trade Commission (FTC) will begin its own investigation of the merger in the near future therefore input from state officials needs to be developed within the next few months. The joint committee will closely examine both state and federal laws that influence the acquisition. The primary issues that need to be reviewed are: revenues generated through oil production and transport; employment opportunities for Alaskans; environmental impacts; future oil and gas exploration and development; the sale of natural gas from the North Slope; and fostering a healthy competitive environment for the industry in Alaska. The joint committee will meet during and between sessions of the 21st legislature and will be terminated when the 22nd legislature convenes. SENATOR TAYLOR cited page 3, line 7, and asked why the legislature needs a committee to determine whether or not we should require the divestiture of oil and gas leases that are in excess of the allowable amount under Alaska statute. He expressed concern that the legislature will be creating a committee to decide whether state law should be enforced. CHAIRMAN HALFORD said he thought divestiture of assets, other than leases, could be required. TED POPELY, legislative counsel to the Senate and House Majority, agreed that the terms of the resolution indicate divestiture in general; it does not necessarily limit divestiture to the acreage that is referenced in statute. SENATOR TAYLOR asked what the timeline is for approval of the merger by the companies and the FTC, and whether the legislature can wait until the next session before it acts. CHAIRMAN HALFORD replied the Hart-Scott-Rodino filing, which is a filing before the FTC, will be submitted within the week. That filing has a 30 day window. The information is highly confidential and consists of the business plans for the companies in the years to come. A second filing virtually always occurs after the companies meet with the FTC. He noted the FTC requests a huge amount of information. In addition, the Administration has assembled a team of lawyers, economists, and others to study the merger. The timeline for approval is expected to take six to nine months. The legislature is unlikely to get access to the information submitted to the FTC in the first filing without concurrence of the companies. The executive branch is likely to file a lawsuit based on Alaska antitrust law for discovery. He noted the first difficulty will be gathering and sorting information and that a legislative committee will have the power to subpoena, although he does not want to take that route. SENATOR TAYLOR expressed concern that some of these matters may be resolved and concluded before the legislature has an opportunity to act. CHAIRMAN HALFORD stated that the legislature, as a sovereign, may have the powers to respond if the actions are detrimental to the state. Number 125 SENATOR LINCOLN referred to page 3, line 3, which reads, "and take whatever other actions may be appropriate to ensure that the best interest of the state is protected." She questioned what role the Administration will play in this process if the joint committee is comprised of legislators only. CHAIRMAN HALFORD indicated the Administration will lead the process, and will probably be spending two to three times as many resources in terms of research. The Administration has promised to give the legislative branch any information it obtains as long as it does not breach confidentiality, however the Administration has recommended that the legislature run a parallel process so that it has a format from which to operate and obtain independent professional advice. Two sides of the merger issue need to be investigated: the legal aspect and the economic aspect. SENATOR LINCOLN asked why members from the Administration will not be sitting on the joint committee. CHAIRMAN HALFORD replied he does not think the Administration wants the legislature directly involved in its efforts. It will cooperate as far as providing the joint committee with information. SENATOR LINCOLN asked if the joint committee will be taking action. CHAIRMAN HALFORD replied the joint committee can only make recommendations to the legislature. SENATOR LINCOLN disagreed because of the language she referenced earlier on page 3, line 3. She noted HCR 12 has no fiscal note and asked how the joint committee will be funded. CHAIRMAN HALFORD said the committee will be funded by the Legislative Council. He repeated that the Administration wants to maintain some independence from the legislative branch while it does its investigation. SENATOR MACKIE noted in the past the legislature has discouraged participation by the Administration in joint activities. SENATOR TAYLOR maintained that there is good reason for the separation. There is an important distinction between the role the Administration can play through the Attorney General's office and the role the legislature can play. In addition, someone will have to take responsibility for access to proprietary information. SENATOR MACKIE asked if the process outlined in HCR 12 will allow for, and protect, the issues of discovery and information that can be shared. CHAIRMAN HALFORD said yes, however the level of confidentiality may be required by the companies if they control the details of the Hart-Scott-Rodino filing. The companies might allow review of that information with the condition that the information cannot even be discussed, making it difficult to draw conclusions from the information, or the companies might limit access to information to the lawyers involved in the case. SENATOR MACKIE moved HCR 12 from committee with individual recommendations. Without objection, the motion carried. CHAIRMAN HALFORD adjourned the meeting at 3:55 p.m.