Legislative update: ACMP changes get mixed review; stranded gas amendments move to House Rules

Kristen Nelson, PNA editor-in-chief

A committee substitute for House Bill 16, amendments to the Alaska Stranded Gas Development Act, moved out of the House Finance Committee March 18, headed for House Rules.

House Finance amended the bill to include intent language related to the use of project labor agreements and reopener language in contracts entered into under the stranded gas act, and changed some of the criteria for qualified sponsors.

Project labor language was added as intent language: “in awarding contracts under the Alaska Stranded Gas Development Act, a qualified sponsor or qualified sponsor group and contractors of the qualified sponsor or qualified sponsor group may develop and enter into project labor agreements with appropriate collective bargaining organizations for each project for which a contract is entered into.”

Also added as intent language was a statement about re-openers: “each contract for payments in lieu of taxes and for royalty adjustments entered into under the Alaska Stranded Gas Development Act contain a provision by which the contract may be reopened by any party to the contract; the subject matter of the reopening may be dealt with through the use of arbitration proceedings agreed on by the parties.”

There was discussion about keeping the bill “clean” and not using it as a “Christmas tree,” but members said they wanted to recognize the importance of the gas pipeline to union labor in Alaska, and to do what they could in the bill to encourage industry to negotiate project labor agreements.

There were two changes in criteria for project sponsors (under a subhead of “meets one or more of the following criteria”). The committee further reduced a net worth requirement from “equal to at least 33 percent of the estimated cost of constructing a qualified project” to a net worth of at least 10 percent. That criteria had come into House Finance reduced from 33 percent to 15 percent.

A criteria of an unused line of credit equal to at least 25 percent of estimated cost of a project was reduced to 15 percent.

Fisheries hears coastal management changes

Those testifying from coastal communities which use the existing program said that without it local communities would not have a voice in development projects and also said it was needed to protect subsistence.

Resource groups said the present system holds up project unnecessarily. Tad Owens, executive director of the Resource Development Council, said the coastal management program is a poster child for a process that has become very inefficient. Judy Brady, executive director of the Alaska Oil and Gas Association, said companies have looked at Alaska in the last couple of years and walked away — not because of standards in the state, but because of the permitting gridlock.

The bill was held. It is scheduled to be heard in House Resources March 26 pending referral.

Gas credits moving

The bill authorizes credits against a taxpayers’ state corporate income tax liability for certain gas exploration and development investments. The bill, sponsored by Rep. Mike Chenault, R-Kenai, is for exploration and development of natural gas south of the Brooks Range. An analysis by chief petroleum economist Chuck Logsdon said the bill allows a tax credit equal to 10 percent of qualified capital investment, as well as annual labor, seismic and associated costs, to be applied against corporate income tax up to 50 percent of the corporation’s total tax liability. The credit can be taken only if gas is produced for sale and delivery.