Gov. Sarah Palin is scheduled to sign the Alaska Gasline Inducement Act in Fairbanks today after pushing the keystone of her young administration into place through months of legislative debate.
Numerous changes were proposed to the bill, but Palin's staff said no unacceptable amendments made their way into law.
Eventually it passed in May with a single "no" vote, that of House Majority Leader Ralph Samuels, R-Anchorage.
Samuels, considered to be one of the Legislature's most knowledgeable members on oil and gas issues, said he feared the bill would exclude the big oil companies and fail to produce enough qualified applicants to yield a capable licensee.
The pipeline may cost $20 billion or more.
"The fear is we do not (find qualified applicants) and we pick that sole applicant, and we pick the wrong applicant," Samuels said.
Former Gov. Frank Murkowski had previously tried to win a gas pipeline deal for the state, but the Legislature balked at approving the deal he'd reached with the state's big three oil companies, Exxon Mobil, BP and ConocoPhillips.
Palin AGIA proposal doesn't specify a pipeline builder. Instead, it sets up a process where applicants compete to win a state license to build the line, and it offers a series of inducements to go with it.
$500 million, anyone?
One of the first parts of AGIA to get critical scrutiny was a plan for the state to contribute half a billion dollars to help the eventual winner of the state's license pay for early development efforts.
That contribution would later benefit the state by lowering shipping costs, the Palin administration said.
Oil companies testifying before the legislature suggested the money might simply help a financially unqualified company win the pipeline license and do the state more harm than good.
Some legislators objected as well. The $500 million state contribution was also the focus of Anchorage talk radio opponents of AGIA. But when the bill passed out of the Legislature, it still contained the $500 million.
Tax freeze and the constitution
The oil company representatives told legislators that they needed "fiscal stability" in order to make the project work. They defined that as very long-term tax rate freezes. Murkowski proposed a tax freeze for more than 30 years.
Numerous legislators objected, citing the Alaska Constitution's prohibition on one legislature's ability to restrict subsequent legislatures' ability to change tax rates.
"If it's not constitutional for 30 years, why would it be constitutional for 10 years?" asked Senate President Lyda Green, R-Wasilla, leader of the bipartisan coalition that controls the Senate.
The Legislature and the governor tweaked the language to provide a tax credit to compensate the gas pipeline builder for any increase in tax rates, and approved the AGIA with the 10-year tax freeze.
A vote to reject or approve
When Palin submitted AGIA, it included a provision for legislative review that gave the Legislature 30 days in which it could chose to reject the licensee selected by the administration.
The Legislature objected to that process, however, and instead wanted a requirement that it approve the contract rather than fail to reject it.
"We do understand the difference between approval and disapproval," said Sen. Charlie Huggins, R-Wasilla, chairman of the Senate Resources Committee.
Huggins was joined by Democrats such as Rep. Beth Kerttula of Juneau, the House minority leader, in strengthening the role of the Legislature.
That difference between power to deny and the ability to approve was a tougher hurdle for the governor, but the administration approved that change in language as well. The final version gives the Legislature 60 days to approve any deal.
Signing ceremony
Palin is scheduled to sign the inducement act, which Press Secretary Meghan Stapleton called "historic legislation," today at the Fox Visitor Center near Fairbanks.
The backdrop for the event is the trans-Alaska pipeline, completed in 1976.
Palin said she hopes AGIA will bring the state a revenue-producing gas pipeline in time to make up for declining oil production.
• Contact Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.
