Congressional delegation discusses gas condemnation option

Posted: Sunday, November 09, 2003

FAIRBANKS - Alaska's congressional delegation is discussing an option of having the government condemn North Slope natural gas owned by oil companies as a fallback method of getting the gas to market.

The condemnation proposal became public last week after it became apparent that a proposed tax credit on income from sale of Alaska North Slope gas probably wouldn't be included in a national energy bill.

Major North Slope oil and gas owners have said they need the tax credit to make a gas line to the Lower 48 feasible.

Rep. Don Young, an Alaska Republican, on Wednesday suggested the possibility of condemning North Slope gas. Condemnation is a process by which the government takes property for a "public purpose," paying fair market value for it.

Sen. Ted Stevens, an Alaska Republican, said Thursday he had seen the proposal.

"I would have no problem with it, providing it was well-articulated," he said.

The idea is to ask the U.S. Army Corps of Engineers for a study of whether North Slope gas could be condemned, he said. Condemnation could require an act of Congress, he said.

The concept is to form "a consortium of state and federal and private people, and Native organizations, getting together to build the line," he said. "Then one of the governments, either the state or the federal government, would have to condemn that gas if the producers didn't want to sell it."

Stevens said he wasn't pushing condemnation, but thought it ought to be looked at as an option. He said questions do exist about whether the gas is owned by the oil companies or still held by the state of Alaska, which sold the leases on which the wells sit.

"I think we have to look at the ramifications of it and discuss it with the state," Stevens said. "There's a serious question of who owns the gas now."

Don Duncan, vice president of government affairs for Conoco Phillips in Washington, said he had read about Young's comments but he also reserved any detailed comment. Still, he wondered at the approach.

"The federal government has seen fit not to move the project forward" with tax credits, Duncan said. "Why would they then turn around and say it's in the public interest" to do it through condemnation?

Steven Eagle, a law professor at George Mason University in Arlington, Va., said he wasn't familiar with North Slope gas. But given a brief description of the situation, he said it appeared it could be condemnable.

If a government wants to distribute a resource, say to enhance the security of the supply, it could be considered a legitimate public purpose, he said.

But Eagle said a condemnation proceeding would be an odd choice.

"It's unusual to see a case of condemnation with regard to a resource that can simply be purchased," he said. "Wouldn't it make more sense to just buy it from the companies? Presumably the companies would be willing to sell it at fair market value."

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