Lawmakers say consultant memo highly revealing

Posted: Friday, January 26, 2007

A memo released Thursday shows a former consultant for the state privately expressed concern over parts of the natural gas pipeline deal he publicly supported and helped broker for then-Gov. Frank Murkowski.

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Lawmakers long critical of Murkowski's failed plan because they felt it gave away too much to Big Oil say the memo from Pedro van Meurs should serve as a cautionary tale for any upcoming proposed natural gas pipeline legislation from new Gov. Sarah Palin.

"This memo was a wake-up call to the fact that the state has its sovereignty, and we need to keep that in mind when we negotiate," said Sen. Tom Wagoner, R-Kenai.

Murkowski had an agreement in principle with three natural gas producers to build a 3,600-mile natural gas pipeline from the North Slope through Canada to the Midwestern states.

Many lawmakers, however, didn't approve of the contract proposal, saying portions favored the big corporations.

In the document released by lawmakers on Thursday, Van Meurs lists three such concerns in a memo to former Murkowski Chief of Staff Jim Clark, who led the negotiations with BP PLC, Exxon Mobil Corp. and ConocoPhillips.

The concerns were:

• Freezing tax rates for the companies producing gas, providing what companies call fiscal certainty. Van Meurs wrote: "This is a degree of fiscal stability that is normally reserved for highly corrupt and completely unreliable states . . . There is absolutely no need to treat Alaska as a banana republic in order to secure the gas line."

• Should the state not fulfill its financial obligation to the project, it would give up some of its share of the gas from the project. Van Meurs wrote: "The recoupment provision from gas in kind has nothing to do with fiscal stability."

The state needed a guarantee from the parent companies, not just a state subsidiary whose contract won't be honored by a Canadian subsidiary. Van Meurs wrote: "(T)he best way to protect the interests of the State in this respect is to have the parent company guarantee in the Contract. I believe this should absolutely be insisted upon."

These concerns were not made widely known to lawmakers as Murkowski pushed hard but unsuccessfully for their support.

Van Meurs on Thursday told The Associated Press the memo was simply for internal discussion among Murkowski's team of negotiators, and that he stands by the administration's work.

"As a consultant you have to sit back and say, 'Was this good for the state of Alaska?' Yes, it was," he said in a telephone interview from Canada. "The best route for Alaska is to keep doing the work that we were doing.

"They are greatly endangering the entire state of Alaska by dilly-dallying around with this whole process and not sticking to the path we set."

Palin last week criticized the Murkowski contract in her State of the State speech as a "no deal," and said her team would not go down that same path.

The memo "confirms there were problems with that negotiated deal," Palin said Thursday.

"I think it was very significant and very revealing, literally revealing, that there were obvious problems in that negotiated deal," she said.

Last year, Democrats tried to get this memo and others under the state's open-records laws, but their requests were denied.

House Minority Leader Rep. Beth Kerttula, D-Juneau, renewed the request and received the memo after Palin took office in December.

Kerttula said she wasn't trying to rehash an old argument or berate the past administration. She simply wants lawmakers to be mindful of past mistakes.

"We've spent millions on something that is unworkable," she said. "That's why we can't just throw away or forget all this information."

Senate Minority Leader Sen. Gene Therriault, R-North Pole, said lawmakers need to continue being diligent in holding consultants accountable.

"The consultants are not elected officials, but we need to pay attention to what we are hearing from them," Therriault said. "And sometimes we need to question what we are hearing from them."

• Associated Press writer Anne Sutton contributed to this report.

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