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Instate pipeline bill would create most powerful state agency

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Posted: Friday, March 16, 2012 11:41 pm | Updated: 1:43 pm, Wed Jan 16, 2013.

FAIRBANKS — The text of House Bill 9, a measure backed by the Speaker of the House, would transform a subsidiary of the Alaska Housing Finance Corp. into the most powerful agency in state government.

The superagency would be responsible for getting a $7.5 billion pipeline built from the North Slope to Anchorage.

The proposal would give the Alaska Gasline Development Corporation extraordinary powers for a state agency.

The AGDC, which already exists and is planning an instate pipeline, is linked to the state housing entity not because of any business logic, but because key lawmakers think Dan Fauske, the leader of AHFC, is able to leap tall buildings with a single bound.

Fauske is the CEO and executive director of the AHFC, the state housing agency, and he is also the president of the subsidiary charged with taking steps to get a 24-inch pipeline built from the North Slope to Anchorage.

Under House Bill 9, the AGDC would have the power to:

1. Decide the form of ownership of an instate pipeline.

2. Enter agreements for joint ownership or operation of a pipeline.

3. Use eminent domain to acquire land. The use of eminent domain “may not exceed the permissible exercise of the powers by the state.”

4. Purchase or lease shipping capacity in a pipeline system.

5. Sell all or part of an in-state pipeline project.

6. Finance, build or operate spur gas lines, if they are deemed to be in the best interest of the state, after work starts on the instate line.

7. Sell an unlimited amount of bonds and go into debt.

8. Spend and invest a $200 million natural gas pipeline fund.

9. Get priority treatment from other state agencies when it seeks information.

10. Receive state permits and state resources such as water, sand and gravel at no cost.

11. Enter into agreements to keep information confidential “to carry out its functions.” The language would give the corporation broad powers to decide what should be kept secret.

12. Limit the power of the Alaska courts to right of way leasing decisions. A claim “alleging the invalidity of this subsection” in the law would have to be filed within two months after the law is passed.

13. Retain the AGDC exemption from the state procurement code.

14. Constrain the Regulatory Commission of Alaska in its ability to review contracts after they are approved by the RCA or if the contracts have not been approved within 180 days after submission to the RCA.


The bill, which is championed by House Speaker Mike Chenault, deserves a more detailed examination and more news coverage than it has received to date.

In his sponsor statement, Chenault said, “This legislation is enabling and it does no harm.”

If it is a good idea to make this the most powerful agency in state government, the specific powers should not be granted lightly, especially those about keeping information secret, limiting regulation and judicial oversight and spending $200 million.

In addition, the decision to place this venture — which could be the largest energy project in the United States — under the housing agency should be re-examined.

Even though Chenault and others have  a high regard for the current head of AHFC, that doesn’t make it logical for the housing authority to get into the gas pipeline business.

The board of the agency is made up of seven people, four of whom are supposed to have specific expertise in real estate and housing. One member is someone with experience in finance or real estate. One member is a rural resident with expertise in a regional housing authority. One member has expertise in energy-efficient building. One member has expertise in senior or low-income housing.

The commissioners of the departments of revenue, commerce and health and social services are also on the board.

Dermot Cole can be reached at or 459-7530.

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