JUNEAU — The deal the Parnell administration cut with North Slope oil producers to partner on a natural gas pipeline requires legislative approval, by the end of the 90-day session.
But what’s unclear is just how far the Legislature can go without losing the oil companies — or even the administration.
The 49-page bill document sets gas taxes, creates a new state corporation to deal with the large-diameter pipeline, sets up confidentiality process for the contracts and determines the state’s ownership share of the pipeline among dozens of other provisions.
The state’s partners — North Slope producers Exxon Mobil, ConocoPhillips and BP, as well as pipeline company TransCanada — all hold the right to walk away if they don’t like the Legislature’s work.
“The industry has given themselves an enormous exit ramp,” said Sen. Hollis French, D-Anchorage, during a press briefing on Wednesday.
More than one Republican lawmaker called a “take-it-or-leave-it” situation.
Fairbanks Democrat Rep. David Guttenberg said it is “simply not acceptable,” and Rep. Max Gruenberg, D-Anchorage, was critical.
“No one can put something on the table and can say ‘take it or leave it.’”
During the House Resources Committee meeting on Wednesday, Rep. Mike Hawker, R-Anchorage, and one of the lawmakers who called it a “take-it-or-leave-it deal,” outlined his concerns to Department of Natural Resources Commissioner Joe Balash.
“We don’t have a lot of latitude,” he said. “We really are not in a situation here as a Legislature where we have much say in the policy development. … How much the latitude does the Legislature have without jeopardizing the agreements?”
Balash acknowledged that, yes, the oil companies will need to review the final legislation before all the parties decide to move forward with the multi million-dollar work of pre-engineering the 800-mile liquefied natural gas pipeline, but the parties won’t be absent from those discussions.
“We fully respect the independence of this body,” he said. “The parties in this case have agreed to this set of terms and we have agreed to agree to transition agreements, but depending upon the conditions or limitations included in the legislation they may walk, but that’s a decision they will make and it’s something that I’m confident that in the process of developing legislation that they will have the opportunity to review.”
In an interview with the Fairbanks Daily News-Miner, Balash reiterated the notion that the bill isn’t final.
“It’s not that the Legislature can take it or leave it, but if they’ve got a counter, they need to get it on the table and let all the parties respond to it,” he said.
TransCanada Vice President Tony Palmer took the stand in front of the Senate Resources Committee on Wednesday, and Exxon Mobil’s pipeline engineer will present to the Legislature today. More company representatives are expected to be in Juneau next week.
Hawker’s questioning didn’t end there, though. He asked whether the administration will stand by the Legislature’s work.
“Capital P ‘Parties’ is actually both the administration and the other guys,” he said, referencing the agreements’ exit clauses. “Is that a commitment from you that no matter what legislation passes here the administration will stand by it and put the sole onus of walking away from it on the other guys?”
Balash said it’s possible the Legislature could pass a bill that’s not in the state’s best interests.
“There may be circumstances, or conditions or limitations in legislation that’s passed by this body where (Revenue) Commissioner (Angela) Rodell and I are going to decide in our respective positions if the course laid out is in the interest of the state,” he said.
Hawker said he was pleased that the state wouldn’t be promising to stand by the final legislation because, after all, “it’s entirely possible for us to pass something that you as an administration find an inappropriate reason and for whatever reason they might love it.”
Rep. Eric Feige, R-Chickaloon, was more reserved on his opinions of the legislation when asked about the process the House Resources Committee, which he chairs, will take to evaluating the legislation. He said it’s a complex and complicated bill and the Legislature’s best approach is to gather as much information before jumping to any conclusions.
“There’s a lot to be understood there, and until you understand exactly what those foundation documents say and mean, you’re not going to make a good decision on the enabling legislation,” he said. “We’re opening the door to the next two years, do we move along in the phased approach? It’s obviously worth looking at.”
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.