A Citizen’s Guide

JUNEAU–A decision Thursday by the Senate committee studying the gas pipeline contract to reject a piece of proposed legislation is highlighting conflicting views in the Capitol and raising calls of putting the cart before the horse.

The administration has argued the legislation is needed before a final draft of the contract can be completed. But two committee members Saturday said they wanted it the other way around. Show us some changes to the contract, and we’ll give you the legislation you need, they’re saying.

“We’re out of sequence,” said Sen. Gary Wilken, R-Fairbanks.

Wilken said he wants to wait on the legislation, which would have expanded the administration’s authority in certain areas and limit it in others, until he sees how the administration will respond to the 2,000-plus public comments received on the proposed contract and other details about the pipeline deal with BP, ConocoPhillips and Exxon Mobil.

Gov. Frank Murkowski and his administration have been pushing hard to get lawmakers to make changes to the Stranded Gas Development Act, the law used to negotiate the proposed gas line contract with the oil companies. They have portrayed the process as an opportunity for lawmakers to give direction to the administration regarding the contract. But the Senate Special Committee on Natural Gas Development on Thursday turned down that opportunity in a vote that stumped both the administration and the committee’s chair, Sen. Ralph Seekins, R-Fairbanks.

The bill they voted not to forward would have granted the authority to negotiate tax freezes on oil but would have decreased the allowable period of tax freezes on gas and forced a significant financial commitment from the three oil companies. The package also included requirements relating to labor agreements and payments to affected municipalities.

Seekins said he was puzzled by the no vote because none of the roughly 20 sections of the bill raised much objection from lawmakers individually.

He said he saw the process as largely one of giving direction. If a committee member was reluctant to grant authority on oil, he could have asked to remove that section.

“Now we’ve really given the administration no direction,” he said Saturday.

Wilken said the amendments would have improved the Stranded Gas Act better and demonstrated what was important to lawmakers, but the exclusion of a proposal relating to payments in lieu of taxes and the belief that the process was out of sync caused him to vote no.

“It’s premature,” he said.

An agreement between the state and oil companies establishing the entity that would build and own the pipeline has not yet been released to lawmakers, and the administration has not responded to public comments or produced revisions to the contract.

He said he and other committee members were concerned about granting “broad authority” at this stage of the game.

Wilken said he thought the Stranded Gas Act amendments, including those needed by the administration to legitimize certain provisions in the proposed contract, would not get passed during this special session, which ends Aug. 10.

“We’re going to run out of time,” he said.

On Friday, the committee approved a version of the bill that would only give the administration more time to work on the final draft of the contract.

Sen. Kim Elton, D-Juneau, gave a similar explanation for his no vote on the amendments. He said he would not vote for an amendments package until he had seen the LLC agreement between the companies and state, and a final version of the proposed contract.

He described the amendments package as an “umbrella bill” that granted too much authority to the administration, in part because of a change to the purpose of the law that would allow the administration to make deals with the oil companies for all “oil and gas business activity” in the state. Elton said it was important to wait on the amendments because lawmakers might only get one shot at using them to set parameters on the contract.

Jim Clark, the governor’s chief of staff and chief gas line negotiator, questioned the rationale for waiting on the amendments.

“The fact that they did not give us any direction is really terrible,” he said.

The lack of firm requirements set by the changes would inhibit the state’s negotiations with the oil companies, he said.

“This is like going to your teacher and saying, ‘How am I doing?’” he said. “And she says, ‘I’m not going to tell you.’”

Clark said the idea would make sense if there was any chance that lawmakers would accept a renegotiated contract and bill of amendments at the same time. Clark suspected lawmakers would want additional changes to even a renegotiated contract, forcing the administration to renegotiate again with the oil companies.

By not giving the administration direction now, Clark said, “(the Legislature has) made one more step in the process.”

Wilken acknowledged that the process he favors could require multiple negotiations.

“Those negotiations won’t happen over tea and crumpets,” he said. “It will take a while.”

The vote gets to the heart of the administration’s frustration at what it has described as an inability or failure of the Legislature to act on the pipeline deal.

Elton said he agrees with the administration that the faster the state acts on a pipeline, the better, but said moving forward would require some flexibility from the administration on the contract’s contentious issues.

“So far it’s the governor’s football, and he’s inflexible on the rules,” he said. “It’s been somewhat frustrating.”

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