A Citizen’s Guide

Legislative consultant Rick Harper told members of the Senate Special Committee on Natural Gas Development that the type of arbitration the state would be subject to under the proposed gas contract was not standard practice in the industry.

The contract requires the state to submit to arbitration to resolve all disputes with the producers that might arise from the pipeline project. For most disputes, the state would have to agree to something called “baseball” arbitration, so called because it’s often used in contract disputes between professional baseball players and team owners.

Under baseball arbitration, two parties write down their best offers and the arbitration panel must pick from one of those offers to settle the dispute.

This method would be used to resolve any numerical dispute, including arguments over volume, quality and value.

Harper said the arbitration process could “severely limit” the state’s ability to win fights with the producers.

The contract also includes limits on how many requests for documents the state could make of the producers during disputes (three) and how many depositions it could conduct (three to five).

“The state argues arbitration is faster but that has not been my experience,” Harper said.

He said the arbitration process outlined in the contract could actually take longer than going through the state court.