A Citizen’s Guide

GAS LINE: The timing of the next special session of the Legislature is based on the timing of the primary election for governor.

And Gov. Frank Murkowski could do all of us a favor by rescinding his call for a special session and separating this issue from his re-election campaign.

Murkowski and the others seeking the governor’s post should use this time to argue and debate the gas pipeline contract all they want, but the administration should not try to force lawmakers into a corner with an artificial deadline created by the election, which is eight weeks from Tuesday.

Under the governor’s plan, lawmakers are supposed to meet for three days, starting July 12, and then take a week off because many key legislators will be attending an important energy conference in Alberta.

The following week they are supposed to return to Juneau, revise oil taxes and approve a rewrite of the Stranded Gas Development Act, trying to imagine all of the unintended consequences. They are to do this without feeling a hint of campaign pressure.

Forget it. It’s not possible to do justice to the tasks I’ve outlined in the time allowed.

The administration says that one purpose of the special session is to respond to public comments about the gas line deal.

But since the public comment period will not end until July 24 or later—and presumably it will take some weeks before those comments can be analyzed—why start the session July 12?

The governor will dispute this, but the only possible explanation I can see is that it will take place before the primary election Aug. 22.

The downside of going ahead July 12 is that the compressed schedule, the competing pressure of individual campaigns and the complexity of the topic will not allow the careful deliberations that are crucial for our state’s future.

I haven’t even mentioned the mental outlook of lawmakers who will be forced to give up whatever else they had planned to do in July and move into their offices for the duration because of the usual summer housing shortage in Juneau.

Why is it important for the Legislature to act with caution?

Rest assured that the oil companies will assign plenty of accountants and lawyers in the years ahead to pick apart and take the best advantage of whatever emerges on oil taxes and the amended stranded gas act.

Our legislators should approach the preparation of the finished products with the same degree of diligence.

Gas pipeline legislation could influence Alaska’s development for generations. Beware of the “Buy now or else” mentality that comes with the election season and remember that high-pressure sales campaigns should always be met with healthy skepticism.

The last special session featured hurried deliberations on complicated legislation. Specifically, the Senate spent only seven days looking at the rewrite of the stranded gas act before approving it, leaving many unanswered questions.

It’s a good thing the state House did not pass that bill because it needs more work.

One of the legislative consultants, James Eason, said that the governor’s proposed amendments contain language that is so “broad it conveys what is essentially carte blanche authority to the commissioner of revenue.”

Under the Stranded Gas Development Act, the Murkowski administration does not have the legal authority to negotiate a gas line contract that would significantly alter tax rates on existing oil and gas production.

In fact, the law specifically prohibits negotiations that would change taxes on existing oil production.

The governor has proposed to solve this problem by amending the law to allow the inclusion of oil negotiations, making it retroactive to Jan. 1, 2004.

Eason said in a June 3 memo that some portions of the bill to rewrite the act are an acknowledgment that the gas line negotiations so far “are not just beyond the scope of what was originally contemplated by the Legislature in its passage of the ASGDA, but are expressly contrary to certain provisions of the current law.”

He wrote that changes to law authorizing what had been prohibited at the time of the three competing applications to develop North Slope gas “may actually have the effect of advancing any claim by an aggrieved applicant that the ASGDA, as it then existed, was not fairly and legally applied to all applicants.”

While the authority for oil negotiations hasn’t been granted for the proposed contract now under review, the governor says a special session is needed now because “we would like the Legislature to give us the authorities we need under the Stranded Gas Act to return to the negotiating table with the producers and seek revisions to the contract.”

A variety of issues raised by Eason and other consultants deserve extended review by lawmakers. With the pressures of the campaign over the next few months, I think there’s a good argument to be made that this should be held over until the next Legislature meets in January.

The state can use this time for a detailed review of the pros and cons of the deal.

But Murkowski says the Legislature can not wait until after the elections in the fall “because the reserves tax (which is on the November ballot) will kill the gas pipeline project by killing the project economics along with oil and gas investment in our state.”

“Signing a contract ahead of that election will provide Alaskans the assurance that punitive taxes are not necessary in order to get the gas pipeline,” the governor said.

One provision of the proposed contract says that the oil companies won’t have to pay the reserves tax, no matter what the voters decide. So it’s irrelevant for the governor to suggest that signing the pact will “provide Alaskans the assurance that punitive taxes are not necessary” to get the gas pipeline.

The reserves tax may be a bad idea, but rather than ask legislators to approve a contract with a provision that would override what the voters might do, I suggest a direct campaign on the risks of that ballot initiative.

In his letter to Sen. Ben Stevens calling for the special session, the governor professed that he doesn’t want election-year politics to influence the gas pipeline discussions.

“Some pundits have suggested that due to election politics we should wait until after the elections to address taxes and the pipeline. It’s nonsense that any of us would allow election-year politics to influence such critical issues and (I) ask that you join me in condemning those who may do so,” Murkowski said.

I am not condemning anyone, but let’s be frank about this. The timing of the special session is all about election-year politics.

Dermot Cole can be reached at cole@newsminer.com or 459-7530.