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Natural gas line bill threatens initiative

Supporter of all-Alaska route says he would sue

Posted: Tuesday, April 16, 2002

The chief sponsor of an initiative on an all-Alaska natural gas pipeline says he will file a lawsuit if it's taken off the November election ballot.

Scott Heyworth of Anchorage, who's also a Democratic candidate for lieutenant governor, takes sharp exception to a legal opinion calling the initiative "substantially the same" as a pending bill by Republican state Rep. Jim Whitaker of Fairbanks. Whitaker's bill for state pipeline ownership doesn't restrict the route to Alaska.

"I'll file a lawsuit in a second if they pass a bill like that," Heyworth said during a telephone interview from Anchorage on Monday. "To pass that bill would be to displace the will of 42,000 voters who knew exactly what they were signing."

When legislation is enacted to accomplish the same basic purpose as an initiative, the constitution allows the lieutenant governor, with the concurrence of the attorney general, to remove the initiative from the ballot.

Whitaker told the House Resources Committee on Monday that requiring the all-Alaska route, involving a plant at tidewater to liquefy the gas for shipping, would constrain market forces. An industry consortium has concluded the project isn't viable.

"We've gone beyond that, and I think we would muddy the waters significantly," Whitaker said.

Whitaker's bill, unanimously approved by the committee with almost no discussion, is neutral between the all-Alaska route and the "southern" route favored by Gov. Tony Knowles and most legislators. The southern, or highway, route would be nearly 2,000 miles from the North Slope, first along the oil pipeline and then along the Alaska Highway through Canada to connect with the existing North American grid.

Both Heyworth's initiative and Whitaker's bill envision state ownership of the pipeline through a public corporation under the Department of Revenue. Such a project would be tax-exempt, improving the economics of a $15 billion to $20 billion project that North Slope producers have yet to endorse.

But Whitaker said his bill leaves the question of state ownership open. The bill calls for the Joint Committee on Natural Gas Pipelines to prepare a report and feasibility study on the proposed public corporation for the next Legislature.

"It does not tie the Legislature's hands," Whitaker said. "It does not tie industry's hands. It lets the market work."

Whitaker would have the corporation contract for pipeline construction and operation, whereas the initiative would have the state buy the gas and undertake the project.

While there are material differences between the bill and the initiative, they fall within the Legislature's constitutional prerogative to "substitute its judgment and to take corrective action," according to a Jan. 21 memorandum from Jack Chenoweth, assistant revisor of statutes for the Legislature.

Heyworth emphatically rejected the idea that Whitaker's bill and the initiative accomplish the same objective.

"That is absolutely false," he said, describing the 800-mile, all-Alaska route to Valdez as integral to the initiative.

That route is popular because it maximizes jobs, revenues and gas for Alaskans, Heyworth said, predicting an easy victory in November. The intended market is the West Coast, not Asia, as is often misstated, he said.

Meanwhile, Gov. Tony Knowles has a bill pending that would allow the Alaska Railroad to issue $17 billion in bonds for the gas line, another way to avoid about $1 billion in federal taxes. The risk would be borne entirely by the private pipeline developers/owners and bond-holders, according to administration officials.

An advisory council report to the governor and a Department of Revenue study have not recommended state ownership of the pipeline.

The Senate Resources Committee discussed a bill Monday that could provide regulatory, tax and royalty incentives to pipeline developers who made certain commitments - including a good-faith effort to hire Alaskans and contract with in-state firms - if necessary to make the project viable. But BP Exploration, one of the three major North Slope producers, considers the bill unlikely to provide either financial or regulatory relief, according to written testimony by Senior Vice President Ken Konrad.

As of Monday, no gas legislation was on the House Republican majority's priority list for passage by the end of session, according to Rules Committee Chairman Pete Kott of Eagle River. State legislation depends in part upon congressional action on gas line-related amendments proposed for the energy bill, said Rep. Hugh Fate of Fairbanks.

Bill McAllister can be reached at billm@juneauempire.com.



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