Legislature(2015 - 2016)BARNES 124

03/06/2015 01:00 PM House RESOURCES

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Moved CSHB 109(RES) Out of Committee
-- Public Testimony --
Scheduled but Not Heard
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 109-OIL AND GAS LITIGATION SETTLEMENTS                                                                        
2:31:41 PM                                                                                                                    
CO-CHAIR  NAGEAK announced  that the  next order  of business  is                                                               
HOUSE BILL NO. 109, "An Act  relating to the duties and powers of                                                               
the  attorney   general  with  respect  to   certain  settlements                                                               
directly related to oil and  gas leases; providing exceptions for                                                               
certain  tax  and  regulatory  matters;   and  providing  for  an                                                               
effective date."                                                                                                                
2:31:52 PM                                                                                                                    
MARY  HUNTER GRAMLING,  Assistant  Attorney General,  Oil, Gas  &                                                               
Mining  Section,  Civil  Division  (Juneau),  Department  of  Law                                                               
(DOL),  on behalf  of the  administration,  sponsor, thanked  the                                                               
committee for hearing HB 109.                                                                                                   
SUSAN POLLARD,  Chief Assistant  Attorney General,  Legislation &                                                               
Regulations Section,  Civil Division (Juneau), Department  of Law                                                               
(DOL), said the  governor submitted HB 109  for the legislature's                                                               
consideration due  to his  concerns over  development of  oil and                                                               
gas leases.   The bill relates to the authorities  and the powers                                                               
and  duties of  the attorney  general (AG)  with regard  to civil                                                               
litigation  related  to  oil  and gas  leases  under  the  Alaska                                                               
National  Interest  Lands  Conservation  Act (ANILCA).    In  the                                                               
instances where  a development  oil and gas  lease gets  to civil                                                               
litigation,  the bill  would place  in statute  requirements that                                                               
the attorney  general make determinations that  any settlement is                                                               
necessary to the  issues at litigation.   This excludes unrelated                                                               
matters and does not alter other procedures required by the law.                                                                
2:33:55 PM                                                                                                                    
MS. HUNTER GRAMLING  noted the bill has a zero  fiscal note.  She                                                               
provided a sectional  analysis, explaining Section 1  of the bill                                                               
amends  AS 43.05.070,  related  to  the compromise  of  a tax  or                                                               
penalty.   She explained  that AS 43.05.070  is found  within the                                                               
Department of  Revenue (DOR) statutes  for the  administration of                                                               
tax.  This statute generally  provides that before the Department                                                               
of Revenue may  compromise a tax or penalty, the  approval of the                                                               
attorney general  is required.   Section 1 adds a  new subsection                                                               
(c) to clarify that the requirements  set forth later in the bill                                                               
in  AS 44.23.020(i)  would not  apply to  the attorney  general's                                                               
approval of a compromise of a  tax or penalty.  This provision is                                                               
necessary to  clarify that the  existing ability of  the attorney                                                               
general  on approval  of  a compromise  of a  tax  or penalty  is                                                               
unchanged.  Section  2 of the bill amends AS  44.23.020(d).  This                                                               
is the section  of statute relating to the Department  of Law and                                                               
the general powers  and duties of the attorney  general.  Section                                                               
2  provides conforming  language  to indicate  that the  attorney                                                               
general  has  the  existing broad  settlement  powers  except  as                                                               
otherwise  provided  in  the  new subsection  (i),  which  is  in                                                               
Section 3 of  the bill.  Section 3 amends  AS 44.23.020 by adding                                                               
new  subsections (i),  (j), and  (k).   New subsection  (i) would                                                               
require  the  attorney  general before  finalizing  a  settlement                                                               
directly related  to an oil  and gas  lease under ANILCA  to make                                                               
three  determinations:    1)  that   the  settlement  before  the                                                               
attorney general  is limited to  matters necessary to  settle the                                                               
action; 2) excludes matters unrelated  to the action; and 3) does                                                               
not  alter constitutional,  statutory,  or regulatory  procedures                                                               
required  by  law.    New   subsection  (j)  clarifies  that  the                                                               
requirement for a  determination in new subsection  (i) would not                                                               
apply to the attorney general  in matters related to the function                                                               
of the  Department of  Law and  the attorney  general as  a party                                                               
before  the Regulatory  Commission of  Alaska (RCA).   Subsection                                                               
(j) also  clarifies that the  requirements in new  subsection (i)                                                               
would not apply to the attorney  general in matters related to an                                                               
oil and  gas pipeline or  products pipeline under  the Regulatory                                                               
Commission of  Alaska or  another regulatory  agency.   She noted                                                               
that "the  Regulatory Commission of Alaska  or another regulatory                                                               
agency" is a  term of art here because that  language is found in                                                               
the production tax statutes as  well; "another regulatory agency"                                                               
is generally  interpreted to mean  the Federal  Energy Regulatory                                                               
Commission (FERC).   Subsection (j) clarifies  that the authority                                                               
of the attorney  general to settle matters  before the Regulatory                                                               
Commission   of  Alaska   and  the   Federal  Energy   Regulatory                                                               
Commission  would be  unchanged by  HB 109.   New  subsection (k)                                                               
adds  a definition  for  oil  and gas  lease  and references  the                                                               
definition found in the production  tax statutes at AS 43.55.900.                                                               
This definition  was chosen so  it is clear  that when HB  109 in                                                               
Section 3 references  oil and gas leases it means  an oil and gas                                                               
lease  and potentially  a  gas-only  lease.   Section  4 adds  an                                                               
applicability section that  would be in uncodified  law.  Section                                                               
4 clarifies that  the determinations in new  subsection (i) would                                                               
apply prospectively  and would not  have any  retroactive effect.                                                               
Section 5 provides  for an immediate effective date  of the bill.                                                               
She pointed  out that Section 3,  subsection (i), is the  meat of                                                               
the bill.   The other sections primarily  give additional clarity                                                               
of what the  bill does not do.   It does not  relate any criminal                                                               
matters arising out of an oil and  gas lease.  It does not relate                                                               
to  any tariff  litigation  or  tax issues.    It  is a  narrowly                                                               
targeted bill to address primarily  the governor's concerns about                                                               
oil and gas lease development cases.                                                                                            
2:39:30 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON asked  why the  demarcation of  concern                                                               
with oil and gas lease cases and not all sorts of cases.                                                                        
MS.  POLLARD replied  it  is limited  to oil  and  gas leases  in                                                               
recognition of  the vital  importance of oil  and gas  leasing to                                                               
the state  and the reality that  the state is a  leaseholder with                                                               
the lessees.   Because it  is a long-term relationship  the state                                                               
will  be  having lease  discussions  40  years  from now.    Some                                                               
issues,  particularly  the oil  and  gas  development issue,  are                                                               
capable of  continuing because the  state will be in  the process                                                               
of  managing   the  development.    The   Department  of  Natural                                                               
Resources  will  need  to  continue to  assure  that  leases  are                                                               
developed  in accord  with the  lease terms.   Due  to the  great                                                               
public importance  of this,  and that  much of  the leasing  is a                                                               
fairly well-known public process  within that competitive bid and                                                               
findings  for leases,  the administration  thinks it  is wise  to                                                               
limit it to  just oil and gas leases because  the potential issue                                                               
here  is   that  the  administration   wants  to   recognize  the                                                               
importance of that  issue to the state.   The administration also                                                               
recognizes that this  is, for the Department of  Law, somewhat of                                                               
a limitation on  the attorney general's authority.   It is saying                                                               
in statute for the attorney  general in a settlement negotiation,                                                               
and a  settlement with typically  very, very broad  authority, to                                                               
take  a  pause  and  to   really  consider  when  entering  these                                                               
settlements the three issues brought up in the bill.                                                                            
2:41:26 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  concluded that  in effect  the governor                                                               
is asking  to surrender  some power here  to other  policy makers                                                               
and to the people.                                                                                                              
MS. POLLARD responded  she is not sure she would  put it quite in                                                               
those [words],  but that might  be a conclusion that  folks would                                                               
make.  The way the  administration has described it internally is                                                               
that it is just a pause, "just  a recognition that in the oil and                                                               
gas  world,  ... particularly  at  the  time this  bill  applies,                                                               
because ...  the provisions of  this bill don't come  into effect                                                               
unless you are already in litigation,  you are already in a civil                                                               
action  by  just  trying  to  settle  this  and  ...  settlements                                                               
themselves are difficult anyway."   The administration feels that                                                               
while this  pause and consideration  is being put in  the statute                                                               
to emphasize the  importance of oil and gas  development, it does                                                               
so  in a  way that  is not  overly limiting  or that  would delay                                                               
projects in any way.                                                                                                            
2:42:35 PM                                                                                                                    
REPRESENTATIVE HAWKER agreed the entire  substance of the bill is                                                               
really  involved  in  Section 3  which  basically  imposes  three                                                               
findings.  The word in in  this section is "determine" that it is                                                               
limited to  certain issues, does not  include anything unrelated,                                                               
and  does  not  alter constitutional,  statutory,  or  regulatory                                                               
procedures required  by law.   He inquired whether these  are the                                                               
only  criteria  that  are  relevant.   He  said  he  doesn't  see                                                               
anything  that says  the  attorney ought  to  determine that  the                                                               
settlement is  in the  best interest of  the state,  and inquired                                                               
whether that is irrelevant.                                                                                                     
MS. HUNTER GRAMLING replied it  isn't an irrelevant consideration                                                               
but said that that general  provision is probably found elsewhere                                                               
in AS 44.23.020.   The attorney general is already  to defend the                                                               
state constitution and the constitution  of the U.S.  The general                                                               
legal requirements  for the attorney  general to follow  are laid                                                               
out in  statute, this is  just additional  instruction particular                                                               
for oil and gas lease litigation.                                                                                               
2:44:11 PM                                                                                                                    
REPRESENTATIVE HAWKER  opined that these are  extremely broad and                                                               
are  things already  in  statute.   He  asked  whether this  bill                                                               
really does anything  that isn't already provided for  as part of                                                               
the  attorney  general's   responsibilities  in  reviewing  state                                                               
settlements.   He said  he would  be surprised  to find  that the                                                               
attorney  general  would  not  take  into  consideration  whether                                                               
something   alters  constitutional,   statutory,  or   regulatory                                                               
procedures, or looking to see  that the settlement related to the                                                               
issues necessary to settle it,  and didn't already make sure that                                                               
the  settlement didn't  go to  things that  had no  nexus to  the                                                               
settlement.  He further asked whether he is missing something.                                                                  
MS. POLLARD  responded she doesn't believe  Representative Hawker                                                               
is missing  anything.  She  said the  question is typical  of the                                                               
few  questions the  administration  has been  getting about  this                                                               
bill.   In  regard to  Representative Hawker's  earlier statement                                                               
about the  best interest of  the state,  she said that  the topic                                                               
sentence of  what the chief  legal officer  of the state  does is                                                               
always in  the best interest of  the state.  The  bill would then                                                               
bring it down  to this subset of items that  are not currently in                                                               
statute.  The  administration's desire is to  have something that                                                               
is  within the  statute to  make clear  that in  these particular                                                               
kinds  of  settlements  in  such  an  important  area,  that  the                                                               
attorney  make   a  determination.    It   doesn't  say  "written                                                               
determination," it's "determination" -  a pause, a consideration,                                                               
a checking  off of  the boxes  that all  of these  conditions are                                                               
considered in entering that settlement.                                                                                         
2:46:18 PM                                                                                                                    
REPRESENTATIVE  HAWKER  maintained   that  this  legislation  was                                                               
inspired by  the administration's concern that  the Point Thomsen                                                               
settlement had been entered into  illegally, that it did not meet                                                               
all the  necessary requirements for  a proper settlement.   Until                                                               
starting discussion  on this  bill, it had  been the  position of                                                               
the Department of  Law that the Point Thomson  settlement did not                                                               
violate the constitution or any state  law.  He asked whether the                                                               
Department of  Law has changed  any of its previous  positions on                                                               
the legality  of the  Point Thomson settlement,  given it  is now                                                               
presenting this bill.                                                                                                           
MS. POLLARD  answered the  department sees this  bill as  a going                                                               
forward  bill  for how  potential  settlements  will be  handled.                                                               
Regarding the aforementioned 2012  settlement, there is currently                                                               
no issue  related to  that settlement and  the Department  of Law                                                               
typically wouldn't comment  on something like that  if there were                                                               
litigation.   She  said  the  Department of  Law  did defend  the                                                               
settlement  and the  Department of  Law would  defend settlements                                                               
entered in by the attorney general on behalf of state agencies.                                                                 
2:48:09 PM                                                                                                                    
REPRESENTATIVE HAWKER stated there is  no longer any challenge or                                                               
litigation related  to that settlement  so it seems to  him there                                                               
would be  the freedom to discuss  it.  He noted  that Ms. Pollard                                                               
said the department  defended the settlement, but  didn't say the                                                               
department still  held the position talking  about going forward.                                                               
He again asked whether the  Department of Law still believes that                                                               
the Point  Thomson settlement was  legitimate.  He  further asked                                                               
whether there is concern at the  Department of Law that there has                                                               
been   a  practice   of  the   attorney  general   entering  into                                                               
settlements that violate the law and so this bill is needed.                                                                    
MS. POLLARD replied  yes, the administration believes  there is a                                                               
need  for  this bill  and  it  has been  crafted  in  a way  that                                                               
provides  the protections  and the  indications  in the  statutes                                                               
that will  help in future  settlements assure that  everything is                                                               
considered, and,  in particular,  when talking about  these long-                                                               
term types of settlements or issues with oil and gas leases.                                                                    
REPRESENTATIVE HAWKER said, "We  are talking circles here because                                                               
if  you do  believe  that there  was no  problem  with the  Point                                                               
Thomson settlement and there has been  no practice in the past of                                                               
the AG entering  into settlements that violate state  law, I fail                                                               
to see a need for the  bill."  However, he added, the legislature                                                               
often does things  that it doesn't see  a need for.   He said the                                                               
House Judiciary Standing Committee will  be able to sort this out                                                               
much better than he can.                                                                                                        
2:50:08 PM                                                                                                                    
REPRESENTATIVE JOHNSON  said he sees  circular logic in  what the                                                               
administration is saying  here.  The administration  is saying it                                                               
wants everything to  be considered, but certain  things are being                                                               
taken off the table to not  be considered.  The administration is                                                               
saying everything should be considered  but then saying that this                                                               
is to  limit the powers of  the attorney general to  some extent.                                                               
When talking  in his office  it was  said that a  settlement does                                                               
not set  any type of precedent  and so [the state]  is not locked                                                               
into  doing the  same thing  again in  the future  for any  other                                                               
settlements.  Settlements are agreements  between two parties and                                                               
are not  like a  court case where  there is a  ruling.   He asked                                                               
whether this is accurate.                                                                                                       
MS. POLLARD responded  that in describing the bill it  is hard to                                                               
describe exactly because a balance  is trying to be found between                                                               
recognizing the need for great  care in entering into settlements                                                               
related to  oil and gas  matters.  She  said she realized  as the                                                               
words came  out of her  mouth that limiting the  attorney general                                                               
was incorrect;  it isn't  really limiting and  she was  trying to                                                               
find the  best word for  this.  The administration  is attempting                                                               
to strengthen  the statutes in  this oil and gas  litigation area                                                               
so that future settlements related  to oil and gas development on                                                               
state land don't bypass any legal obligation.                                                                                   
MS.  HUNTER  GRAMLING added  that  HB  109 recognizes  there  are                                                               
different   approaches  to   settlement   negotiation  and   that                                                               
generally the attorney  general does have broad  powers to settle                                                               
and,   if  needed,   enter  into   more  global-type   settlement                                                               
agreements.  However,  HB 109 reflects policy  decision that some                                                               
more sideboards  are needed for  civil litigation of oil  and gas                                                               
lease  issues.    There  is  potential that  it  could  speed  up                                                               
negotiation when  it is known  ahead of  time what the  limits of                                                               
authority are.                                                                                                                  
2:53:05 PM                                                                                                                    
REPRESENTATIVE  JOHNSON  remarked  that  when  dealing  with  the                                                               
producers  the  state  is  dealing  with  the  most  "lawyered-up                                                               
companies on the planet" and  he therefore doesn't understand why                                                               
the state  would want to  take anything off  the table or  put on                                                               
sideboards when  negotiating.  He  said he would think  the state                                                               
would want  to be able  to approach that  with the full  force of                                                               
law, the full  power of the attorney general using  every tool in                                                               
the state's toolbox, as opposed to  putting sideboards on it.  He                                                               
said the  sideboards might  have the  opposite effect  of slowing                                                               
down the  process knowing  there is  only a  narrow window  for a                                                               
settlement as opposed to the state  having all of its power to be                                                               
brought forward.   He said  he doesn't  think there has  been any                                                               
real justification for doing this, but  he won't hold up the bill                                                               
because the House Judiciary Standing  Committee is the best place                                                               
to handle the bill.                                                                                                             
2:54:33 PM                                                                                                                    
REPRESENTATIVE  OLSON  returned   to  Representative  Josephson's                                                               
first comments, and  said he can see situations  where this could                                                               
apply to  the telecommunications industry, the  mineral industry,                                                               
fishery issues,  and utilities.  He  inquired as to why  not make                                                               
this applicable across the board.                                                                                               
MS. HUNTER  GRAMLING answered  the administration  submitted this                                                               
bill to  address a particular  policy concern  that it had.   She                                                               
said she thinks the Department  of Law would generally be opposed                                                               
to expanding  it to apply  to other  areas, not that  those other                                                               
areas aren't important but there may be unintended consequences.                                                                
REPRESENTATIVE OLSON  said another  situation that comes  to mind                                                               
is  the  Trans-Alaska Pipeline  System  balancing.   He  said  he                                                               
doesn't feel comfortable  with the bill in its current  form.  He                                                               
noted that some time ago the  committee requested that one of the                                                               
attorney generals who  had handled the state's  defense come give                                                               
the committee a  wrap-up, but a different person  came who didn't                                                               
address the issues that the committee was looking for.                                                                          
2:55:57 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  stated that relative to  Point Thomson,                                                               
constitutionality,  and  the  governor's opinion,  he  understood                                                               
that the governor as a  civilian opposed the settlement while the                                                               
previous administration  found it  acceptable.  He  surmised this                                                               
is well known.                                                                                                                  
MS. POLLARD  replied that if  Representative Josephson  is saying                                                               
the governor  did not  support the  settlement, she  cannot speak                                                               
about the litigation.                                                                                                           
MS.  HUNTER  GRAMLING stated  she  thinks  it  fair to  say  that                                                               
attorneys can  have good faith  differing interpretations.   This                                                               
bill isn't to address  that, it is to look at  going forward.  It                                                               
may be that  going forward, if this bill were  to pass, different                                                               
attorneys general would take different  interpretations of when a                                                               
determination  is required,  but  this is  the particular  policy                                                               
choice at this time.                                                                                                            
REPRESENTATIVE JOSEPHSON said he is  reminded of Rule of Evidence                                                               
408 which talks about what is  shared in settlement.  He surmised                                                               
Rule 408  would apply  relative to the  question about  whether a                                                               
current administration  thinks something was proper  or improper.                                                               
The nature  of the  settlement is immaterial  at this  point, the                                                               
settlement is  over and any  lawsuit has been withdrawn,  and DOL                                                               
is looking to a new day.                                                                                                        
MS.  HUNTER  GRAMLING  believed  Rule of  Evidence  408  is  more                                                               
targeted  towards admitting  settlement negotiations  as evidence                                                               
in litigation, so HB 109 doesn't impact that court rule at all.                                                                 
REPRESENTATIVE  JOSEPHSON said  the spirit  of the  rule is  that                                                               
discussions in  settlement are for  the settling parties  and, in                                                               
that sense, answering  the merits or demerits  of that settlement                                                               
is beyond the scope of this bill.                                                                                               
MS.  POLLARD responded  she would  agree with  that as  a general                                                               
matter.   As a specific matter,  she noted that Ms.  Gramling was                                                               
not with the Department of Law at the time of the settlement.                                                                   
2:58:45 PM                                                                                                                    
REPRESENTATIVE SEATON  said that  as a legislator  he appreciates                                                               
HB 109 because  he doesn't think that the  attorney general, when                                                               
faced with  a case,  should reach out  and change  other statutes                                                               
because  the  settling  party  wanted   to  come  in  and  change                                                               
something else.  If the state  does that in a settlement, that is                                                               
overriding the  legislature's authority to create  statutes.  The                                                               
same applies  to regulatory  processes that  weren't part  of the                                                               
settlement, because then it would  be having the attorney general                                                               
override  legislative authority  as  well as  the authorities  of                                                               
regulatory bodies.   However, he continued, he  is more concerned                                                               
with  broadening  this  out, given  "the  Ketchikan  lawsuit,"  a                                                               
current civil suit.   Unless the attorney  general is constrained                                                               
to the  portions of the  lawsuit, the attorney general  might get                                                               
in  and determine  to change  the  funding formula  to make  this                                                               
settlement work  with this settling party.   He said he  wants to                                                               
ensure that this  is more like a limited conference  where it can                                                               
be settled  between the two  parties' positions and  cannot reach                                                               
out beyond and  pull in new things, which is  what he thinks this                                                               
accomplishes  for oil  and gas.   He  offered his  hope that  the                                                               
House Judiciary Standing Committee will  broaden this so that the                                                               
attorney  general in  settlements of  lawsuits can  only function                                                               
within the parameters of the  state's position and the litigant's                                                               
position and  cannot be leveraged  or encouraged to  change other                                                               
factors.  While  he thinks that should be  the attorney general's                                                               
constraint right now,  it isn't because a law doesn't  have to be                                                               
violated in  a settlement to  change another law because  the law                                                               
isn't being  violated, it  is just making  the exception  to that                                                               
law for  that lawsuit.   Therefore, these are  extremely valuable                                                               
determinations for  the legislature  to ensure that  this applies                                                               
to  all settlements  because otherwise  the attorney  general and                                                               
the  administration could  be  preempting legislative  authority.                                                               
He said he  thinks the context of  HB 109 is right  in looking at                                                               
going  forward and  not looking  back  at past  settlements.   He                                                               
again urged  that the House Judiciary  Standing Committee broaden                                                               
this  authority to  look at  other civil  litigations and  ensure                                                               
settlements do not go beyond  the boundaries or sideboards of the                                                               
settlement.    He   said  he  does  not  look  at   the  bill  as                                                               
constraining the state's ability to  settle but as a sideboard to                                                               
settle within  the bounds of  the lawsuit  and not reach  out and                                                               
change  other  statutes or  regulatory  processes.   He  inquired                                                               
whether there  is anything in his  aforementioned statements that                                                               
the Department of Law would like to dispute.                                                                                    
MS.  POLLARD answered  that often  litigation  is because  people                                                               
have a  disagreement over a  statutory interpretation.   So, care                                                               
must be  taken about  any kind  of broadening  because oftentimes                                                               
the  parties  are going  to  do  the  best  they can  within  the                                                               
settlement so  that everybody can  go forward.  The  judgement in                                                               
there is that  that's less of a risk than  continuing on with the                                                               
settlement.   She reiterated that  the Department of  Law doesn't                                                               
think this  would be  as manageable  in other  areas as  is being                                                               
done here with the limiting to  oil and gas lease issues that the                                                               
Department of  Natural Resources  is handling.   This is  in part                                                               
because  going forward  it is  more predictable  types of  issues                                                               
happening  for future  settlements, where  in other  areas it  is                                                               
very difficult  to actually tell  what is  going to end  up being                                                               
within litigation.                                                                                                              
3:04:22 PM                                                                                                                    
REPRESENTATIVE SEATON appreciated Ms.  Pollard's answer, but said                                                               
in  looking at  the  Ketchikan  school lawsuit,  if  it would  be                                                               
easier  to  settle by  going  over  and  changing things  in  the                                                               
foundation formula, that should  be the legislature's prerogative                                                               
to create and change that and he  would not like to see the state                                                               
get  into  the situation  where  those  kinds of  expansions  are                                                               
allowed.   He added he  is not  saying that the  current attorney                                                               
general would  do that, but it  is a going forward  thing that is                                                               
important and he is glad it is being brought forward.                                                                           
REPRESENTATIVE  JOHNSON  disagreed  with  Representative  Seaton,                                                               
saying  this  is  the  appropriate  committee  to  introduce  the                                                               
amendment given  that many of  the leases are regarding  land and                                                               
water.  If the House  Judiciary Standing Committee disagrees with                                                               
the amendment, he  continued, it can take the amendment  out.  He                                                               
said he  has a problem with  singling out a single  industry.  If                                                               
the legislature  is going to  treat regulations  and settlements,                                                               
the   legislature  should   be  consistent.     He   agreed  with                                                               
Representative  Seaton  that  the legislature  doesn't  want  the                                                               
attorney general  circumventing the statute or  the constitution.                                                               
He urged  the committee to make  the amendment today or  bring it                                                               
before the committee on another day.                                                                                            
3:06:47 PM                                                                                                                    
CO-CHAIR NAGEAK  opened public testimony  on HB 109,  then closed                                                               
it after ascertaining no one wished to testify.                                                                                 
3:08:13 PM                                                                                                                    
REPRESENTATIVE  HAWKER moved  to adopt  Amendment 1,  labeled 29-                                                               
GH1126\A.1, Nauman, 3/5/15, which read:                                                                                         
     Page 1, line 2:                                                                                                            
          Delete "directly related to oil and gas leases"                                                                     
     Page 1, lines 13 - 14:                                                                                                     
          Delete "directly related to an oil and gas lease                                                                      
     under AS 38.05.005 - 38.05.990 (Alaska Land Act)"                                                                          
     Page 2, line 7:                                                                                                            
          Delete "related to an oil and gas pipeline or                                                                         
     products pipeline"                                                                                                         
     Page 2, lines 9 - 10:                                                                                                      
          Delete all material.                                                                                                  
REPRESENTATIVE SEATON objected for purposes of discussion.                                                                      
3:08:55 PM                                                                                                                    
REPRESENTATIVE  HAWKER explained  Amendment 1,  saying he  thinks                                                               
all  of the  committee members  have the  concern that  the state                                                               
needs to  treat all  of its resource  settlements similarly.   He                                                               
said he  is not  comfortable with the  sponsor's characterization                                                               
that the  bill was being  limited to oil  and gas because  of the                                                               
importance of the  oil and gas industry and that  the oil and gas                                                               
industry  involves long-term  relationships.   He said  long-term                                                               
relationships  occur  in  the   geothermal,  mining,  and  timber                                                               
industries.  Mining  is an industry that has the  potential for a                                                               
lot of  settlements that could be  very material to the  State of                                                               
Alaska,  the  Pebble  Mine  being  an example.    The  spirit  of                                                               
Amendment  1 is  that it  leaves  the same  requirement that  the                                                               
attorney general make  findings.  The amendment  leaves Section 3                                                               
intact  except  it  makes  this  legislation  applicable  to  all                                                               
settlements that come under the  purview of the attorney general.                                                               
He  said this  committee is  making decisions  based on  resource                                                               
concerns  and  the  House Judiciary  Standing  Committee  is  the                                                               
proper place for the discussion of the legal details.                                                                           
3:11:30 PM                                                                                                                    
REPRESENTATIVE SEATON drew attention to  lines 8-9 of Amendment 1                                                               
relating to  page 2, line  7, of the bill.   He pointed  out that                                                               
this subsection  of the  bill is  an exception  that it  does not                                                               
apply to certain things, and said  he is therefore unsure that is                                                               
a deletion the committee really wants to make.                                                                                  
The committee took a brief at-ease.                                                                                             
3:12:49 PM                                                                                                                    
REPRESENTATIVE SEATON moved  to adopt Amendment 1  to Amendment 1                                                               
to delete lines  8-9.   There being no  objection, Amendment 1 to                                                               
Amendment 1 was adopted.                                                                                                        
3:13:27 PM                                                                                                                    
REPRESENTATIVE SEATON requested an  explanation of lines 11-12 of                                                               
Amendment  1, which  propose to  delete all  material on  page 2,                                                               
lines 9-10, of the bill.                                                                                                        
REPRESENTATIVE  HAWKER replied  that  this is  a  new section  of                                                               
statute and  these lines in the  bill state, "For the  purpose of                                                               
this section,  'oil and gas  lease' has  the meaning given  in AS                                                               
43.55.900."   He  explained  that  since the  term  "oil and  gas                                                               
lease" is  being eliminated from the  bill it doesn't need  to be                                                               
3:14:08 PM                                                                                                                    
CO-CHAIR   NAGEAK  inquired   whether   there   is  any   further                                                               
discussion.   There being no further  discussion, Co-Chair Nageak                                                               
stated that Amendment 1 has been amended.                                                                                       
3:14:25 PM                                                                                                                    
REPRESENTATIVE  JOSEPHSON  noted  that   the  Department  of  Law                                                               
earlier stated  its position in  this regard, but  requested that                                                               
DOL be invited to comment on  the amendment and again explain its                                                               
MS. POLLARD stated DOL does  not support Amendment 1 and believes                                                               
it  is premature.   When  DOL drafted  this bill  it was  done in                                                               
conjunction  with  discussions  with the  Department  of  Natural                                                               
Resources;  it was  felt that  the  bill was  limited and  spoken                                                               
about with the  agency that it would affect.   She suggested this                                                               
amendment could have unintended consequences  and said it has not                                                               
been  discussed in  a general  matter  with anybody  else in  the                                                               
Department of Law.                                                                                                              
3:16:25 PM                                                                                                                    
REPRESENTATIVE  HAWKER said  he  understands the  concern of  the                                                               
sponsor, but said  the amendment is offered as  a House Resources                                                               
Standing Committee jurisdictional  item, one that is  a matter of                                                               
policy statement.  In supporting  this amendment he said he wants                                                               
to make  the policy statement  that all resource  settlements are                                                               
of equal  concern and magnitude  and deserve  equal consideration                                                               
by  the  attorney general.    For  example, a  mining  settlement                                                               
related to Pebble  Mine should not be less important  than an oil                                                               
and gas  settlement.  He further  noted that this should  also be                                                               
looked at by the House Judiciary Standing Committee.                                                                            
MS. POLLARD understood what Representative  Hawker is saying, but                                                               
stated she has  not been able to vet these  potential changes and                                                               
therefore  it is  premature for  her to  say that  this amendment                                                               
would be acceptable to the Department of Law.                                                                                   
3:18:18 PM                                                                                                                    
REPRESENTATIVE SEATON drew  attention to language in  the bill on                                                               
page  1,  lines  1-2,  which states,  "with  respect  to  certain                                                               
settlements".  He  inquired whether the word  "certain" should be                                                               
deleted now  that "directly  related to oil  and gas  leases" has                                                               
been removed.                                                                                                                   
REPRESENTATIVE  HAWKER replied  he  is  comfortable with  leaving                                                               
that sort  of detail  to Representative  Gruenberg [of  the House                                                               
Judiciary Standing Committee].                                                                                                  
3:19:04 PM                                                                                                                    
REPRESENTATIVE  SEATON  understood, then,  that  as  the bill  is                                                               
being looked at  now the specification to "certain"  is not still                                                               
restrictive to oil and gas.                                                                                                     
REPRESENTATIVE  HAWKER responded  that  this  is for  settlements                                                               
that  the attorney  general is  settling; certain  settlements as                                                               
opposed to  the universe of  all settlements  in the world.   The                                                               
word  "certain"  here  is  not   overly  restrictive  nor  overly                                                               
permissive.   He  added  that  the bill  would  still retain  the                                                               
concern  that   it  does  not   involve  settlements   under  the                                                               
jurisdiction  of   the  Regulatory   Commission  of   Alaska,  so                                                               
"certain" is  a limitation indicating  that it is not  the entire                                                               
universe of all possible settlements that exist in the world.                                                                   
3:20:19 PM                                                                                                                    
CO-CHAIR NAGEAK  announced the committee  has dispensed  with the                                                               
amendment.  [Amendment 1, as amended, was treated as adopted.]                                                                  
3:20:31 PM                                                                                                                    
REPRESENTATIVE HAWKER moved to report  HB 109, as amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal note.                                                                                                               
REPRESENTATIVE  JOSEPHSON  objected,   recalling  that  when  the                                                               
governor  came before  the  committee the  governor  said he  was                                                               
going to  file this bill.   Although  there is litigation  on all                                                               
sorts  of subjects,  the Point  Thomson matter  lasted years,  he                                                               
pointed out.   There were 23  years when requests to  develop the                                                               
field were  made and ignored.   Many Alaskans believed  that what                                                               
was  achieved  was  no  different  than  what  should  have  been                                                               
achieved  decades before.   Incorporated  in that  settlement was                                                               
tax and other issues that  were arguably extraneous to developing                                                               
the field.   He said he  thinks this could  be a step too  far to                                                               
enable the attorney  general the job he or she  is allowed to do,                                                               
particularly in a  strong governor model like Alaska's.   For all                                                               
he knows,  the state could  need another 20 attorneys  general if                                                               
HB  109 is  passed.   Therefore, given  his uncertainty,  he must                                                               
3:22:58 PM                                                                                                                    
REPRESENTATIVE SEATON said the meat of  the bill on page 2 states                                                               
that  a settlement:   is  to be  limited to  issues necessary  to                                                               
settle  the action,  does not  include matters  unrelated to  the                                                               
action,  and   does  not  alter  constitutional,   statutory,  or                                                               
regulatory procedures required by law.   He opined that all three                                                               
of those  things need  to be  there for every  settlement.   If a                                                               
settlement is going  to do any of those three,  then it should be                                                               
a settlement that  is proposed to the legislature  and should get                                                               
legislative  approval  if  it is  altering  statute  or  altering                                                               
constitutional  or regulatory  procedures.   He  said he  doesn't                                                               
think it limits the authority  of the attorney general to propose                                                               
a settlement, but if it is  going beyond the confines of what the                                                               
action is, then  it should have to come back  to the legislature.                                                               
That is why, he continued, he will be supporting this.                                                                          
3:25:06 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  stated that  if all of  the settlements                                                               
were  reviewed by  a court  of  law he  wouldn't be  particularly                                                               
concerned because no court can adjust  the rules of court up to a                                                               
point or  the statutes  or constitution.   A  court will  come as                                                               
close as  it can  but it  will not cross  the line.   He  said he                                                               
thinks  this will  also impede  the DNR  commissioner's authority                                                               
because the DNR commissioner plays  a pivotal role as essentially                                                               
an adjudicator of  some of these disputes, and  the committee has                                                               
not vetted  what that means  to the  job of the  attorney general                                                               
and to the DNR commissioner.  He maintained his objection.                                                                      
CO-CHAIR  TALERICO agreed  with  Representative  Seaton and  said                                                               
rather  than   seeing  more  attorneys   general  he   fears  the                                                               
legislature would  be doing legislation  eventually for  each and                                                               
every industry in the state to  level this playing field and make                                                               
this consistent.   This will provide a level  of consistency that                                                               
would stretch throughout all of the  industries in the state.  He                                                               
said he therefore supports this amendment.                                                                                      
3:27:15 PM                                                                                                                    
REPRESENTATIVE  JOHNSON said  this conversation  raises flags  to                                                               
him because he  is wondering what settlements  have been contrary                                                               
to  statute, constitution,  or regulation  given  he didn't  know                                                               
that could  even be  an option.   He said this  goes back  to his                                                               
original statement that  he is unsure this law is  needed, but he                                                               
thinks this  amendment is needed  if this  law is to  go forward.                                                               
He  offered  his  strong  support   for  the  amendment  and  the                                                               
REPRESENTATIVE JOSEPHSON maintained his objection.                                                                              
3:27:46 PM                                                                                                                    
CO-CHAIR NAGEAK requested  a roll call vote on  reporting HB 109,                                                               
as amended.                                                                                                                     
A roll  call vote  was taken.   Representatives  Hawker, Johnson,                                                               
Olson, Seaton, Talerico,  and Nageak voted in  favor of reporting                                                               
HB 109, as  amended.  Representative Josephson  voted against it.                                                               
Therefore, CSHB 109(RES) was reported  out of the House Resources                                                               
Standing Committee by a vote of 6-1.                                                                                            

Document Name Date/Time Subjects
3.6.15 HRES HJR 8 - Sponsor Statement.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - CSHJR 8(ENE).pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - Summary of Changes.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - Fiscal Note.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - AK Power Association LOS.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - GVEA LOS.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 - RCA Summary on EPA's Clean Power Plan.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HJR 8 EPA Clean Power Plan Fact Sheet.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HB 109 Fiscal Note.pdf HRES 3/6/2015 1:00:00 PM
HB 109
3.6.15 HRES HB 109 Legislative Legal Analysis.pdf HRES 3/6/2015 1:00:00 PM
HB 109
3.6.15 HRES HB 109 Sectional Analysis.pdf HRES 3/6/2015 1:00:00 PM
HB 109
3.6.15 HRES HB 109 Transmittal Letter Oil And Gas Litigation Settlements.pdf HRES 3/6/2015 1:00:00 PM
HB 109
3.6.15 HRES HB 109 ver A.pdf HRES 3/6/2015 1:00:00 PM
HB 109
3.6.15 HRES HB 132 Sectional.pdf HRES 3/6/2015 1:00:00 PM
HB 132
3.6.15 HRES HB 132 Sponsor Statement.pdf HRES 3/6/2015 1:00:00 PM
HB 132
3.6.15 HRES HB 132 29-LS0623 E.pdf HRES 3/6/2015 1:00:00 PM
HB 132
3.6.15 HRES House Letter to Gov AK LNG Policy.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES Gov Letter for AK LNG Policy.pdf HRES 3/6/2015 1:00:00 PM
3.6.15 HRES HB 132 Fiscal Note.pdf HRES 3/6/2015 1:00:00 PM
HB 132
3.6.15 HRES HB 132 - H Heinze comments 3.17.15.pdf HRES 3/6/2015 1:00:00 PM
HB 132
3.6.15 HRES HB 132 - The Alliance - Letter of Support.pdf HRES 3/6/2015 1:00:00 PM
HB 132