Lawmakers demand tax answers from BP

Posted: Thursday, February 08, 2007

Democratic critics of the controversial petroleum profits tax approved last year by the Alaska Legislature are calling upon BP to say whether it will ask the state to pick up the cost for repairs to its deteriorated North Slope oil pipelines.

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In a letter to BP-Alaska President Doug Suttles, Rep. Les Gara, D-Anchorage, asked the oil company to reveal whether it would charge the state for its costs related to last year's leaks and shutdown of the trans-Alaska pipeline.

"If BP is going to charge the state for its own failure to maintain our pipeline, they should tell us," Gara said. "We need to know so we can debate the wisdom of tax exemptions passed last year and fix them before the session ends in May."

BP spokesman Daren Beaudo said the letter was addressed to Suttles, who will be the one to respond. Company representatives haven't said whether they'll claim repair costs as expenses that can be deducted or credited from taxes under the petroleum profits tax, but some state officials say they are expecting them to do so.

"We're going to follow the law and trust that BP will do the right thing," said Charles Fedullo, spokesman for Gov. Sarah Palin. "However, Gov. Palin does not think the state should have to bear the cost of a negligent operator."

Beaudo earlier told the Empire BP will "fully comply with the law," and said Wednesday he had nothing additional to add.

The first payments of the new tax are due March 31, but a new legal opinion said that the companies have up to two years to file amended returns to claim additional deductions.

Gara said he thinks that's what BP will do, and that's why he and two other Democratic legislators called on BP to publicly state its intentions now.

"BP has been very coy about whether they are going to inflame the public by charging the public for the pipeline shutdown, repair and pipeline replacement," he said. "I want to smoke them out on this issue."

Rep. Harry Crawford, D-Anchorage, who joined Gara in making the request to BP, said he thought the tax law was flawed when it was passed last year, and the deductions highlight that fact.

"I didn't like the tax exemptions when they were passed. I suspect BP is planning on charging the state for its pipeline shutdown, and they should let us know now," Crawford said.

Gara said he thinks the public would demand the law be amended if BP tries to make the public pay for its repair costs. The new profits tax charges the oil producers about $1 billion a year less than the world average tax rate for oil, Gara said. Delaying amending the tax will cost the state that amount, he said.



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