SB 313-NO LEGIS APPROVAL OF AEROSPACE PROJECT    CHAIRMAN THERRIAULT announced he proposed this legislation to repeal the section of the statutes that relates to legislative approval of construction projects of the Alaska Aerospace Development Corporation (AADC). Section 14.40.886 that is proposed for repeal reads as follows: Notwithstanding any other provision of AS 14.40.821-14.40.990, a proposed construction project of $1,000,000 or more shall be submitted by the corporation to the legislature for approval at a regular session of the legislature. Repeal of this section would not and is not intended to give AADC the same standing as the railroad. If this legislation were to pass, there would still need to be an appropriation by the full Legislature for AADC to accept and expend federal funds or corporate receipts coming into the corporation. By removing this section of the statute it would be clear that Legislative Budget and Audit would be able to make modifications to that budget without having to wait for the next time the full Legislature is sitting in session. Thus AADC would be able to be more responsive to meet the needs of its clientele. Committee members had no questions but there were a number of people that wanted to testify via teleconference. STEVE CONN with the Alaska Public Interest Research Group (AkPIRG) went on record in opposition to SB 313. He said this is a public corporation and they believe passage of this legislation would rob residents and their representatives of the kind of open debate and questioning that allows them to know the benefits as well as the downside costs and risks of the various projects undertaken by AADC. With benefits come costs and risks that are more than a budgetary matter to be dealt with by a budgetary agency because they deal with things that impact quality of life. Such matters should be discussed in an open forum as originally intended. STEVEN CLEARY with the group Citizens Opposed to Defense Experimentation (CODE) testified in opposition to SB 313. He said he echoed Mr. Conn's testimony. SENATOR PHILLIPS asked whether CODE's concern is more environmental than expenditure of dollars. MR. CLEARY said his group is currently seeking to do three things. Two of those are to get an environmental impact statement (EIS) out on the Kodiak Launch Complex and to get public input into the process and they see passage of SB 313 as a matter of taking the public out of the process. STACEY FRITZ said she was representing No Nukes North, which is an organization that promotes educated opposition to missile defense activities in Alaska. There are about 300 group members that would like in depth information on this issue. "It should be deeply disturbing to all of us that Secretary of Defense Donald Rumsfeld has recently exempted the new Missile Defense Agency from normal Pentagon oversight procedures. According to Rumsfeld's orders, the Missile Defense Agency can now conduct tests without involving the Pentagon Office of Tests and Evaluations. Missile Defense Agency commanders no longer have to specify new weapons requirements. The agency no longer has to report back to the Pentagon on the project's timelines or costs and Secretary Rumsfeld has clarified that he retains the right to approve contingency or emergency deployment of any experimental defense test assets. So not only has the public been removed from information about where billions of their tax dollars are going, they can not even be assured that their federal government knows anything about it." She said passage of this legislation would remove the state's oversight of major construction projects at the Kodiak Launch Complex. Rather than making the AADC more responsive to its clientele, which is largely the Department of Defense, the people of Alaska would rather see the Legislature and the AADC be more responsive to the public. She wanted to go on record as opposing the bill and urged the Legislature to retain all oversight of missile defense activity anywhere in the state and particularly at the Kodiak Launch Complex. CHAIRMAN THERRIAULT asked her if she would still be against the legislation knowing that the full Legislature would still control the appropriation process. He informed her that any unanticipated project that is funded by the federal government or through corporate receipts would still have to be appropriated by the Legislative Budget and Audit Committee under the powers that are given to it by the full Legislature. MS. FRITZ said it is her understanding that the bill is attempting to remove state oversight of major projects on Kodiak and she doesn't feel there has been enough scrutiny of the major projects there. She hopes that money coming in from anywhere for Kodiak Launch Complex projects would be subject to scrutiny by the Legislature. CHAIRMAN THERRIAULT informed her that it already is subject to scrutiny and the passage of this legislation wouldn't change that scrutiny. No money can be received and spent by the corporation without the underlying appropriation that is made by the full Legislature. This bill simply clarifies that the Legislative Budget and Audit Committee, which is made up of Senate and House members, can make budgetary adjustments during the eight months of the year that the full Legislature is not in Juneau. It is a misconception that is largely borne out of the budget system that has led people to believe that the bill removes state oversight of AADC. MS. FRITZ said she would like to believe that is true and although she doesn't fully understand the budget system she would still like to voice her concern as a relatively informed member of the public on this issue. SENATOR PHILLIPS asked if No Nukes North is philosophically against the Missile Defense Initiative. MS. FRITZ replied they are opposed both environmentally and politically. They try to provide in-depth information on missile defense activities in Alaska to promote educated opposition to the project. SENATOR PHILLIPS told her he represents Fort Richardson and maybe Elmendorf so he has a constituency that views the issue differently than she does. He was interested in determining whether her opposition is philosophical or fiscal because he has fiscal concerns. MS. FRITZ said she is fiscally opposed as well but it is difficult for her to separate the environmental from the political because she believes missile defense will create a new arms race in space and on earth. This is globally destabilizing and environmentally unsound. C SEAN MGUIRE testified in opposition to SB 313. It is disturbing to him to have political leaders try to remove information from the public on any level and he believes this makes the public wary. SIDE B 4:25 p.m. CHAIRMAN THERRIAULT said he understands that the budget process is complicated but this legislation would not change the fact that AADC is a state corporation that cannot receive or expend any money without the approval of the full Legislature. This would make it clear that while the Legislature is not in full session, the Legislative Budget and Audit Committee would be able to make modifications to the budget that was passed by the Legislature. The meetings would be publicly noticed and would take into account public testimony. This committee is comprised of members of the House and members of the Senate with the chairmanship alternating between the bodies every two years. The Legislature is still well informed of monies received and projects that are approved. Current wording is a redundancy that was incorporated when AADC statutes were first put into place because the Legislature was unsure how the corporation would develop. Part of the concern was that the corporation had the power to issue bonds for projects. The Legislature was somewhat concerned that they would issue bonds in amounts that exceeded $1,000,000 and expend those receipts without Legislative oversight. With the passage of this bill, oversight and accountability are maintained with the added benefit of increased flexibility. C SEAN MGUIRE replied that does make him somewhat more comfortable but it still makes him uncomfortable when four or five members of some committee are making these decisions because this is taking away from a whole range of ideas and views. c SENATOR PHILLIPS corrected Mr. MGuire on the composition of the committee and said opportunities arise that might be lost if it's necessary to wait until the next legislative session. ED DAVIS from Fairbanks said he wanted to give his historical viewpoint regarding military launches taking place on state subsidized facilities. Between the mid 1980s and into the early 1990s he was a leader in starting a group called Sane Alaska, which encouraged a sane nuclear policy. As AADC was beginning, his group was losing membership because the Cold War was coming to an end and the threat of an arms race was reduced. However, one of the last issues they became involved in was the Star Wars research that was planned at the University of Alaska Poker Flat Research Range. With the exposure of what that really meant they were told there was no intention of delving into things that might destabilize global security by triggering an arms race. With respect to SB 313, he doesn't want to lose any public disclosure or Legislative oversight that would prevent doing something that might not be in the best interest of the state, the country or the world. CHAIRMAN THERRIAULT said it is in the operating budget where the Legislature authorizes the University of Alaska Legislature to receive and expend funds that come from different sources. Because of the university size, the authorization number is large. They have a bit of leeway in their appropriation and when some of the research money that was previously referred to came available, they had authorization on the books to receive and expend that money. With respect to AADC, they are proposing that rather than making an empty appropriation of $10 or 20 million in anticipation of projects that may come in, they would like Legislative Budget and Audit to be able to look at those projects as they come in and reserve judgment until they come in. Viewed this way, the bill provides the opportunity for more oversight because there wouldn't be any blanket authorization. MIKE MILLIGAN from Kodiak testified in opposition to SB 313. He has always been a strong supporter of the rocket launch facility in Kodiak and is excited about its future. He wants to go on record as reminding the people with CODE that a fantastic job is being done in preserving the democratic exchange of information. He said that if we are to automatically get away from missile defense it doesn't mean that India and Pakistan will stop building missiles. However, he is generally opposed to legislative bodies giving up authority. This democratic society operates with oversight and this appears to be an attempt to make it easier for some of the federal interests that are involved in a rocket launch facility to come in whenever they want to. The Kodiak facility is in the development stage and the development and proposals need to be planned and held up for review. Kodiak recently had a very exciting Athena rocket launch with four satellites. The launch facility offers an opportunity for Alaska and humankind. The future of the facility is bright but it is a future that needs dedicated legislative oversight. Personally he wants to see the military continue to use the launch facility because they are best prepared to contribute the resources that will make it a viable facility. They can do that with the understanding that the Legislature meets in the spring and that is when they need to present their proposals. This will ensure both legislative and public oversight. SENATOR STEVENS addressed his comments to everyone who had testified via teleconference. He questioned whether any of them had read the statutes that deal with the AADC because all the concerns voiced regarding relinquishing oversight are stated in the statutes. He found it disturbing that they would say Legislators are not doing their job when they obviously haven't even read the statutes. He suggested they should read the statutes before testifying. MR. CONN said, "You're absolutely incorrect. We believe that the current situation requires more oversight not less oversight during the summer, in a period in time when the citizenry is not focused on what you are doing in Juneau." SENATOR STEVENS said, "You ought to read the statute and then read the Executive Budget Act in 37.07. It says everything that every one of you has spoken about is already in statute and this act that Senator Therriault has introduced doesn't repeal any of that. You're not reading what's already in statute." MR. MILLIGAN was somewhat opposed to the comments made by Senator Stevens. Alaska has a political season and [balance indecipherable because he and Senator Stevens were talking at the same time.] SENATOR STEVENS interjected, "You're not reading, you're not listening to what I said. If you read 37.07 it says in section 6: 'Public participation and development of an annual budget including opportunity for public to review and comment on the plans and programs of the office of the governor and all state agencies.' It already says that in law. You're not reading-- you're telling us to do what's already in statute. And you're using it to try to further your mechanism to prevent the development down there and saying we're not doing what's already there. It's already in law." CHAIRMAN THERRIAULT said that gets back to one of the issue that was brought up concerning the university proposal that caused concern in Fairbanks. That kind of blanket appropriation is the other way of dealing with this situation and provides little to no oversight. In that type of instance, a blanket authorization would be given so that any proposal coming in would be pre- authorized. In contrast, this request requires that the Legislative Budget and Audit Committee look at and evaluate each proposal as they come in, which offers more oversight than the system under which the university currently operates. The existing statute says you can only act during the four month window of opportunity when the Legislature is sitting in session. That has turned out to be unworkable. For example the Legislature is frequently unable to tell whether a client will want a range safety upgrade in any one of the eight interim months or whether there will be federal or corporate money for that upgrade. Without this legislation, the only other way for the Legislature to deal with that potential scenario is to give a blanket authorization even though none of the specifics of a project would be known. MR. MILLIGAN wanted to comment on a conversation he had with some British aerospace technicians that were in Kodiak for the launch that took place the previous summer. He said that ultimately, it will be necessary to have range safety equipment permanently in place at the Kodiak launch facility. He then asked Chairman Therriault why changes couldn't wait until the regular legislative session. While the facility is still in the development stage, he thought it important to put the appropriations on a calendar year format. CHAIRMAN THERRIAULT countered that if they anticipated that equipment would be needed at the range but they weren't sure when it would be authorized in the federal budget, they could pass a capital appropriation that would stay on the books for five years. Such an appropriation would be pre-authorized and could be used at any time. There would be no further legislative interaction at that time, which is exactly the concern voiced today. With the passage of this bill, any proposal would have to go to the administration and they would have to propose that the Legislative Budget and Audit Committee take it under consideration. If it were close to the regular legislative session, it would probably be put off, but if it was just after a regular session, the administration would have to take it to Legislative Budget and Audit and they would have to have a meeting and then take action. The authorization for Legislative Budget and Audit to take action is only granted to the committee on a year-by-year basis. Passage of this bill would keep the Legislature from having to consider a blanket authorization, which contributed to the controversy at Poker Flat. He didn't think that any of the testifiers would want to see that sort of situation repeated. PAT LADNER, President and CEO of the Alaska Aerospace Development Corporation, wanted to clarify that the portion in statute that refers to leasing Poker Flat has to do with the origination of AADC because the launch complex was initially meant to be at Poker Flat. The language is in statute so that AADC could, as a corporation, be allowed to use Poker Flat. Regarding public scrutiny of the Kodiak Launch Facility, there have been four environmental assessments done by three separate federal government agencies. The public did have an opportunity to participate in the process and they all resulted in a finding of no significant impact. The Ballistic Missile Defense Office has made it clear that they anticipate conducting environmental documentation that complies with the law at the Kodiak facility. UNIDENTIFIED SPEAKER wanted to respond to Senator Stevens's comments and said the language that would be repealed refers to appropriations over $1 million. He said he used to work for the Army Corp of Engineers and is familiar with how federal and private appropriations work. There is a significant planning cycle required for appropriations of that size and he can't imagine that there would be any difficulty tying the planning cycle into the regular legislative session. With that in mind, he didn't think there was a big problem that needs to be addressed by the passage of this bill. There was no further testimony. CHAIRMAN THERRIAULT said the bill is straightforward, but there is misunderstanding on how it impacts the budgeting system. Once again he clarified that the bill would still require Legislative oversight and interaction before any client could go to AADC and propose that a capital project be undertaken. There was no committee substitute and no amendments were offered. He noted the zero fiscal note from the aerospace corporation. He asked for the will of the committee. SENATOR STEVENS made a motion to move SB 313 and attached fiscal note from committee with individual recommendations. There being no objection, SB 313 moved from committee.