A Citizen’s Guide

Dozens of local residents turned out Thursday for a special question and answer session with Interior lawmakers about the administration’s proposed natural gas pipeline contract.

Most spoke critically of the proposed contract, and many urged the lawmakers to take their time studying the proposal.

“It needs to be done right, and not fast,” said Tammy Wilson of North Pole.

Residents expressed concerns about the proposed contract’s provisions relating to Alaska hire, the freezing of tax rates, the use of arbitration to resolve disputes and the lack of firm commitments to build the line.

Others questioned the state’s ownership role in the project and its ability to regulate a project in which it is participating.

A few urged the lawmakers to move forward with the contract.

“For 29 years this has been talked about,” said Chad Gerondale of North Pole, who carried a newspaper from 1977 about gas pipeline plans. “There’s going to have to be some concessions made by everybody.”

The seven lawmakers who attended the meeting answered questions about the contract and expressed their own views on it. A few said they would not support the contract even with revisions.

Sen. Ralph Seekins, R-Fairbanks, who chairs the recently formed Senate Special Committee on Natural Gas Development, said the comments would help lawmakers construct their own feedback to the administration on the proposed contract.

“It’s wise to have as many eyes as possible look at that document,” he said.

Seekins and Sen. Gene Therriault, R-North Pole, attended the five-hour meeting at the Carlson Center, as did Republican Reps. Mike Kelly, Jim Holm and Jay Ramras of Fairbanks, House Majority Leader John Coghill of North Pole, and Democrat Rep. David Guttenberg of Fairbanks.

Revenue Commissioner Bill Corbus and Natural Resources Deputy Commissioner Ken Griffin also attended the meeting.

A number of residents argued the proposed contract did not do enough to ensure that pipeline jobs would go to Alaskans.

Seekins, who led the meeting, said he agreed that the language should be stronger and that he did not think the language would stay in the contract.

Many raised the issue of freezing various taxes faced by the oil companies.

Therriault responded that he also was concerned about locking in the production tax on oil and property taxes on the trans-Alaska oil pipeline together with gas taxes, especially for a long period of time. He questioned the reasoning behind the lock-ins by arguing that the state has been “fairly prudent” in changing taxes in the past.

“We’ve not made changes willy-nilly,” he said.

Seekins said a provision in the contract to freeze oil taxes for 30 years “would never survive.”

Wilson, the woman from North Pole, took issue with a provision of the proposed contract that bars the state from using the court system to resolve disputes with the oil companies over the contract.

“I don’t understand why the contract would even give that up,” she said. “That’s our protection.”

Coghill said he wasn’t sure the state should give up the right.

Mark Sharp of Fairbanks asked the lawmakers about the commitment to build the pipeline and whether the line could be build over the top of the state into Canada.

Seekins said the contract was for fiscal terms and was not a construction contract, but reminded people that the oil companies had proposed the project in the first place.

“You hope that that’s really what they really want to do,” he said, adding that lawmakers were still discussing work commitments.

Therriault explained that if the oil companies did not perform under the contract, the state’s only remedy would be to terminate the contract. The one thing the state wanted the most—the pipeline—is what it would have to give up, he said.

Therriault said the contract language seemed to block a route across the top of the state.

Fairbanks lawyer Lance Parrish argued that state investment in the project would create a conflict when the state already acted as protector of the people and a regulator of the environment and of utilities.

“Those roles are in direct conflict under the contract,” he said.

Andy Warwick of the Alaska Natural Gas Development Authority made a similar argument, and added that his organization was concerned about the contract’s provisions for in-state purchase of gas.

He urged lawmakers to reject the contract and start over.

“You’re not without options,” he said.

Garry Hutchison was one of a handful who clearly supported the contract. He encouraged the lawmakers to work with their hired consultants and with the administration and to move forward on a deal with the oil companies.

Many of the lawmakers spoke critically of the contract.

Ramras called it a “deeply flawed” and said it couldn’t be fixed with minor changes. He said he hoped the Legislature would pass a new oil production tax during the upcoming special legislative session in July but leave the contract until January, when the regular session starts.

Coghill said he objected to the premise of state participation in the line and wouldn’t support the contract but wanted to ensure changes were made in case he was outnumbered in the Legislature.

Kelly said the contract had “significant problems” and would take time to rework.

“I’ve never seen a deal where the person in a hurry comes out well in the end,” he said.

Guttenberg also took issue with the contract.

“This contract does not have us negotiating from a position of strength … and that’s problematic to me,” he said.

Holm said he didn’t think the contract in its present form would go anywhere in the Legislature.

Seekins, who closed out the meeting, said he saw his job as trying to get the gas converted to cash in a reasonable amount of time.

“We’re passionate about doing the right thing,” he said. “That’s why we’re here.”

Staff writer Stefan Milkowski can be reached at smilkowski@newsminer.com or 459-7577.