Lt. Governor candidate wants AGIA legal analysis

Posted: Tuesday, November 10, 2009

FAIRBANKS - Lawmakers don't return to Juneau until January, but some are already preparing.

State Rep. Jay Ramras, R-Fairbanks, says he plans to seek a legal analysis to determine if the Alaska Gasline Inducement Act - designed to spur North Slope natural gas development - could thwart construction of a small-scale, in-state natural gas pipeline. Ramras is also a 2010 candidate for lieutenant governor.

Two years ago, the state signed contracts to help pipeline builder TransCanada begin building a large natural gas pipeline. The act commits the state to work only with TransCanada, and Ramras questioned the penalty Alaska might face if it uses financial incentives to back a competing project.

"The administration states again and again that the path forward is through the AGIA model," Ramras said. "But there are significant unanswered questions and Alaskans deserve concrete answers."

State natural gas specialists have identified limited scenarios where the penalty would be triggered. If, for example, an in-state project sends less than 500,000 cubic feet per day through a pipeline, or if it gets gas from somewhere other than North Slope, the state is safe from penalty.

But a larger pipeline, if it gets financial help from the state, could trigger the clause.

Lawmakers, who can pre-file bills starting next month, have discussed the act's potential penalties since June, when the Senate Judiciary Committee devoted a meeting to the clause. Ramras believes the penalty could reach as high as $1.9 billion, but Pat Galvin, the state's revenue commissioner, calls that figure a gross overestimate.

"There is simply no legal basis for that claim," Galvin wrote in an e-mail to the Fairbanks Daily News-Miner. He said the state's total financial exposure through the act is less than one-half of Ramras' figure.

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