My turn: House needed time to review bill

Posted: Thursday, May 24, 2007

The Anchorage Daily News editorial crew continues to get it wrong.

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On the one hand, we frequently hear them ranting at the Legislature, and the government in general, for "open and transparent" processes that assure a multitude of opportunities for public input and involvement.

When it suits their purpose, they demand immediate action, regardless how little time the Legislature may have available to properly consider the issue.

Such was the case with the Daily News' May 15 editorial complaining that I, as the co-chairman of the House Finance Committee, did not move quickly enough to hear Senate Bill 80. That is the bill that seeks to make sure BP is not able to deduct the cost of repairing its gathering lines at Prudhoe Bay from its tax bill.

No doubt this is a good idea, and it ought to be adequately considered and debated in an open and transparent public process. Nevertheless, the bill sat in the Senate Resources Committee for just short of three months, and has not been through one House committee hearing.

By the time the House received the bill on May 11, legislators had just five days left in the session to work on the following major public policy issues: a sustainable increase in education funding, retooling and addressing the Public Employees' Retirement System/Teachers' Retirement System's unfunded liability, community and municipal revenue sharing, the governor's Alaska Gasline Inducement Act, the capital budget and the operating budget. The Legislature is constitutionally mandated to pass the last two items on this list before adjourning.

There are some very good questions about Senate Bill 80 that need answering in an open and transparent public process. The House expects to give it a complete vetting at the soonest possible opportunity. This may be done during a special session on the Petroleum Profits Tax, or it may entail hearings during the interim.

BP is under a federal investigation for its apparent neglect of maintenance of the gathering lines. Shouldn't any new law we adopt reflect the actual facts of the federal investigation, especially in light of news that the company cut out funding for corrosion inhibitors to save money, admitting this in e-mails and in testimony before Congress?

As the Daily News editorial points out, the Petroleum Profits Tax already disallows deductions for "gross negligence." If the state and federal investigations conclude that BP was grossly negligent, we are already covered in the current statutes.

The editorial also makes a curious point, that when the gathering lines were shut down and the flow through the trans-Alaska oil pipeline was reduced to about three-quarters, this resulted in "costing the state millions of dollars." Yes, it reduced the state's revenue for the time period in which it took place, but if you consider that the oil will be pumped sooner or later, the revenue has only been postponed.

The state, also under current statutes, has the ability to seek to recover the lost economic opportunity that resulted from the Prudhoe Bay shutdown. The Department of Law is spending $8.5 million to pursue damages and could recover significant damages as a result. Fortunately, it happened at a time of high oil prices and high revenues, so it did not affect our ability to provide essential state services. Hopefully, the oil that did not get produced will be produced when the price of oil is even higher.

I hope the Daily News' editorial writers will agree that looking at the entire scope of the issue, taking the time to do the job right, is more important than passing a knee-jerk reaction bill.

• Rep. Mike Chenault, R-Nikiski, is co-chairman of the House Finance Committee.

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