The Honorable Bill Walker
AGO JU2015200326
No. JU2015200326
Alaska Attorney General Opinions
May 5, 2015
The Honorable Bill Walker
Governor
State of Alaska
P.O. Box 110001
Juneau, Alaska 99811-0001
Re: SCS CSHB 105(FIN) am S: Alaska Industrial Development and Export Authority Our file: JU2015200326
Dear Governor Walker:
At the request of your legislative director, we have reviewed SCS CSHB 105(FIN) am S, relating to the Alaska Industrial Development and Export Authority (AIDEA) bonds, programs, loans, and liquefied natural gas project.
The bill does four main things. First, the bill amends ch. 26, SLA 2013 under which the AIDEA is pursuing the Interior Energy Project. Second, the bill creates new provisions restricting AIDEA from entering into contracts for gas supplies or gas reserves in certain instances. Third, the bill amends the dollar limitations in AIDEA's statutes regarding bonds it issues for projects. And fourth, the bill repeals several old bond authorizations that AIDEA has not used or did not use in full.
I. Description of bill sections.
A. Interior Energy Project sections.
Sections 1, 8, 9, 10, 13, and 14 of the bill concern the Interior Energy Project that AIDEA has been pursuing under ch. 26, SLA 2013. The Interior Energy Project is AIDEA's effort to bring natural gas to the Fairbanks area to lower the cost of energy and decrease air pollution.
Section 1 of the bill is an uncodified legislative intent section expressing two separate points about the bill's intent: (1) the removal of "North Slope" restriction on the gas source for the Interior Energy Project is meant to allow only for "geographic flexibility" and it is not meant to "expand the scope of the project" or to authorize activities beyond those needed to achieve the Interior Energy Project goals; and (2) that AIDEA use "an open and competitive process" to develop a liquefied natural gas (LNG) production capacity and affiliated infrastructure.
Section 8 of the bill amends the definition of "qualified energy development, " which is applicable to AIDEA's sustainable energy transmission and supply development (SETS) program and fund. The financing authorized by ch. 26, SLA 2013 for the Interior Energy Project was to be from the SETS fund. Section 8 of the bill makes it possible for a pipeline with a diameter of 12 inches or less that transports natural gas to the Interior to meet the definition of a "qualified energy development" so as to qualify for SETS financing. Section 8 of the bill also defines "natural gas" as including propane or a mixture of propane and air.
Section 9 of the bill amends the provision of ch. 26, SLA 2013 that authorized AIDEA to provide up to $275, 000, 000 in financing for an LNG plant and a natural gas distribution system to serve Interior Alaska. Section 9 removes the requirement that the LNG plant be located on the North Slope. Instead, sec. 9 provides that the LNG plant need only be located "in the state." This section also adds the requirement that AIDEA's board approve a project plan before providing the authorized financing. The project plan has to identify the source of the natural gas to be used, the estimated cost of the project, and the estimate price of the natural gas as supplied to the natural gas utilities in the Interior.
Section 10 of...
