A Citizen’s Guide

JUNEAU–A bill introduced by Gov. Frank Murkowski relating to the proposed natural gas pipeline is puzzling lawmakers and has led to a questioning of the administration’s motives.

“It just seems really weird,” said Rep. Les Gara, D-Anchorage, during a hearing Tuesday of the House Judiciary Committee.

The bill, which would amend the law used to negotiate the contract with BP, ConocoPhillips and Exxon Mobil, differs significantly from a version introduced during the last special legislative session.

A consultant hired by the Legislature suggested earlier this month in a memo that the bill could be an attempt to bring the law into compliance with the proposed contract in one fell swoop rather than piece by piece, as the previous version would have done.

The administration denied Tuesday that that was its intent.

The bill would amend the Alaska Stranded Gas Development Act to allow the administration to include certain provisions in a contract, including provisions relating to existing oil production. In the last special session, the governor introduced a 10-page bill detailing areas where the law would need to be changed. At the start of the current special session earlier this month, he introduced a five-page bill with few details.

The legislative consultant, lawyer Phillip Gildan, addressed the change in a memo to lawmakers July 13.

“The Administration appears to have switched emphasis from a micro level restructuring of the SGDA to a macro level restructuring,” he wrote.

By changing the stated purpose of the Stranded Gas Act, the bill could authorize a wide range of contract provisions, he said.

The purpose of the act currently precludes the development of a contract that “significantly (alters) tax and royalty methodologies and rates” on existing oil and gas production. The bill would change the purpose to allow changes to “oil and gas agreements and taxes related to oil and gas business activity in the state.”

“That’s pretty much anything,” said Republican Rep. Lesil McGuire of Anchorage, during the hearing. McGuire is the committee’s chair.

According to Gildan, an existing section of the Stranded Gas Act could give legal power to the act’s stated purpose.

The previous bill also amended the act’s purpose, but specified that oil and gas agreements relate to a “qualified sponsor,” “qualified sponsor group” or “related party.”

During the committee meeting Tuesday, Joe Donahue, a lawyer under contract with the Department of Law, denied the suggestion that the administration was taking a “macro” approach and said the administration intended to add the details back in later.

“The administration intends to work with this committee and the Legislature,” he said, to make the bill look like the version passed by the Senate during the last special session.

His remarks during the hearing left McGuire wondering. Why did the administration switch from the detailed approach to the broad one, only to go back again? she asked.

Kevin Jardell, the governor’s legislative liaison, gave an answer when asked about it during a press conference Tuesday.

He said the administration considered several different ways of introducing the legislation and chose this one.

During the last session, the bill was tweaked into different versions by the House and Senate, he said. Introducing just a few parts of the bill–which Jardell described as “pretty noncontroversial”–would allow the administration to work with the Legislature to put together a bill lawmakers wanted.

“It gives the committees the ultimate flexibility,” he said.

Jardell denied Wednesday that the administration was trying to cover everything with the shorter bill.

“There’s nothing insidious about it,” he said, adding that he didn’t think the current bill would provide blanket authority.

Jardell said he didn’t know why the amendment to the purpose was changed for the new version.

Regardless of the administration’s intent, the bill has lawmakers on their toes.

McGuire put discussion of the bill on hold until Monday and asked that the administration submit its proposed additions in writing.

The Senate Special Committee on Natural Gas Development considered the bill July 24 but did not discuss the changes to the purpose or the scope of the bill.

Sen. Ralph Seekins, R-Fairbanks, the committee’s chair, said Tuesday he expected the Legislature to end up with something like the bill from the last session.

“I can’t imagine that any legislator wants to give carte blanche on something that’s this important,” he said. Seekins said he didn’t think the new bill would cover all the contract provisions, and that if it did, he didn’t believe that was the administration’s intent.

Nonetheless, the committee will consider the Gildan memo today or Friday, he said.

“We have to decide whether there really is a boogie man in the shadows,” he said.

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