Bill could keep gas contract out of court

Critics say legislation would cut judiciary out of the process

Posted: Wednesday, April 19, 2006

Bills scheduled to be heard Wednesday in Alaska House and Senate committees are meant to bar a court from halting or delaying a legislative review of a natural gas deal by Gov. Frank Murkowski and the state's three largest oil producers.

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But what the proposed law would really do is circumvent the legal process and cut out the third branch of government - the judiciary - say opponents of the measure.

Before the Legislature can ratify a fiscal contract for a North Slope natural gas pipeline, the Alaska Revenue commissioner must make an official finding and determination that the contract is in line with the Stranded Gas Development Act and is in the long-term fiscal interest of the state.

The Stranded Gas Development Act is the law by which Alaska officials can negotiate and ratify a contract to develop the 35 trillion cubic feet of proven North Slope gas reserves.

The bills, introduced last week in the Senate and Tuesday in the House, would keep the commissioner's findings and determination from being "subject to review, stay or injunction by any court."

Constitutional challenges would still be allowed.

The intent is to make sure the Legislature has the final say in executing a contract, and that lawmakers' authority is not held up by a lawsuit, according to Senate Judiciary Chairman Ralph Seekins, R-Fairbanks, whose committee is sponsoring the Senate version of the bill.

"I've got this little toy train set at home. It runs all around our room. We don't put the caboose between the engine and the coal car," Seekins said. "We're trying to make sure the judicial challenge is at the end of the train."

Gov. Frank Murkowski has finished negotiations with BP PLC, ConocoPhillips and Exxon Mobil Corp. on fiscal terms that would move plans for a $25 billion Alaska-to-Canada pipeline to the next phase. The contract is being held, however, while lawmakers consider a change to the state's oil production tax that would be inserted into the contract.

Revenue Commissioner Bill Corbus said if a lawsuit were filed against the findings he plans to make, it may stymie the process of getting the contract to the Legislature and to the public. He said he supports the bill.

"I feel that we want to make the contract and the fiscal interest findings available for the public process. The way it is now, the public process could be blocked," Corbus said. "I think the purpose of it is so that we will make sure that the Legislature is not precluded from considering the Stranded Gas Act."

Opponents of the bills say the proposed law would prohibit a challenge of the commissioner's findings, even if his findings are wrong.

For example, a challenge could be made to a finding that North Slope gas reserves are stranded. Stranded gas is defined as that which is not being developed and sold because of the costs or price of gas.

Former Natural Resources Commissioner Tom Irwin has said North Slope gas can no longer be considered stranded because of the current market value.

Fairbanks North Star Borough Mayor Jim Whitaker, who participated in a rewrite of the Stranded Gas Development Act as a legislator in 2003, said lawmakers writing the law back then considered limiting judicial review but decided not to.

"The checks and balances of the law are integral to good government and good decisions by government. To eliminate one of those checks and balances specifically to circumvent the law is egregious," he said.

Whitaker is chairman of the Alaska Gasline Port Authority, which has a competing pipeline proposal to that of the three energy companies. But Whitaker said the port authority was not considering a lawsuit against the findings and that was not the reason for his opposition to the bills.

"This has nothing to do with litigiousness, and everything to do with trust," Whitaker said.

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