Home / Energy / Walker’s campaign promise of transparency sets up clash with industry, Legislature on pipeline project

Walker’s campaign promise of transparency sets up clash with industry, Legislature on pipeline project

JUNEAU — Alaska’s big oil producers and the state Legislature are objecting to new rules requested by Gov. Bill Walker aimed at opening the state’s natural gas pipeline project to more public scrutiny.

Alaska is working on the proposed $55 billion project with oil producers ExxonMobil, ConocoPhillips and BP, as well as pipeline company TransCanada. Legislation passed by the Republican-led House and Senate and signed by former Republican Gov. Sean Parnell gave the state broad authority to keep information about the project confidential.

Parnell’s administration justified secrecy surrounding the proposed pipeline by saying disclosure could hurt the state’s ability to get the best price for its gas.

But Walker, a Republican-turned-independent, was elected last year after attacking Parnell for using the legislation to keep development of the pipeline out of public view, and he promised to require public disclosure.

New rules released in September by the state-owned Alaska Gasline Development Corp. would narrow confidentiality provisions to apply only to materials like income tax returns, financial statements and trade secrets. By default, the corporation is supposed to assume that information can be publicly disclosed, “absent clear indication or demonstration to the contrary.”

That’s the same general policy for most other state records.

But Republican lawmakers at a special session on the pipeline have targeted those provisions in meetings over the last few days, after representatives from the three oil companies appeared at an October Alaska Gasline Development Corp. hearing to say that they wouldn’t work.

“If we’re going to be in business and participate with business, why wouldn’t we act like business?” Rep. Lynn Gattis, R-Wasilla, said at a hearing Sunday. In a reference to the state’s decades-long effort to build the pipeline, she added: “Are we going to make money? Are we looking for profits? Or are we going to be this big bureaucracy that stalls and stymies something that we have looked for for 40-plus years?”

On Monday, Rep. Gabrielle LeDoux, R-Anchorage, issued a warning to the Walker administration after Attorney General Craig Richards declined her invitation to defend the rules before the House Judiciary Committee, which she chairs. LeDoux told her colleagues on the House floor that if the proposed rules are approved, there would likely be a bill proposed to rescind them.

“And then we’ll see whether the Attorney General will honor us with his appearance to defend those regulations,” she said, in a speech that drew applause from other lawmakers.

Related: Walker aims to convert Alaska Permanent Fund to endowment for funding government

Richards, in an interview later Monday, said Walker’s office is responsible for decisions about who to make available for testimony. After LeDoux’s speech Monday, he said, he called to offer to appear before her committee at another time.

The governor, Richards said, feels very strongly about the new confidentiality rules — even if they’re not palatable to the oil companies.

“It’s been their position from the very beginning of this process that they want as much confidential as possible — and I think from their position, any amount of sunshine is undesirable,” Richards said. “I don’t think it’s reasonable from the public’s perspective.”

In a hearing Sunday before the House Finance Committee, AGDC’s lead attorney walked lawmakers through the corporation’s existing confidentiality rules, which he said allow ample authority to keep records out of public view. Some of the confidentiality agreements, in fact, are themselves confidential, said the attorney, Ken Vassar.

“It sounds a little silly — that you sign an agreement but you can’t even say that you’ve signed an agreement because the agreement itself is confidential,” he said.

The current tension, he added, is that the oil companies want to reveal as little as possible, while the Walker administration wants the state to operate as transparently as possible.

At AGDC’s public hearing on the proposed rules in October, representatives for the oil producers took turns offering criticism, in extensive and frank terms that are relatively rare for the companies.

An ExxonMobil representative called the rules “unnecessary and harmful” and said they would stop AGDC from continuing its work on the pipeline project. A ConocoPhillips negotiator said the rules would put the state in an “awkward position” and slow down its decision-making process. And a BP manager called confidentiality an “essential part of doing business in a technically and commercially competitive world,” adding that the new rules would hurt the pipeline project by stifling exchanges of information.

The companies also submitted written comments. ExxonMobil’s letter included 27 questions, one of which asked whether the Alaska Permanent Fund or the state’s university system disclosed their own commercial agreements.

The clash is only the latest between traditional public policy and oil industry business practices. Lawmakers have also expressed discomfort with a proposed $600,000 salary that the Walker administration wants to pay a public employee to sell Alaska’s gas.

When it comes to the new proposed rules, “the public’s desire to know can conflict with running a business,” said Larry Persily, the former federal pipeline coordinator who’s now an oil and gas advisor to the Kenai Peninsula Borough mayor.

“The state and its partners have got to figure out what they can both live with that doesn’t damage the project,” Persily said in a phone interview.

The question, he added, is whether the state’s primary concern is its business deal, or disclosure.

Ultimately, the decision to approve the new rules will be up to AGDC’s board of directors. One of Walker’s appointees, former Republican Sen. Rick Halford, said that he’s “not sure we have a solution yet.”

“If we don’t, we need to keep working on it,” he said in a phone interview.

It’s unclear, he added, whether the rules would be approved in their current form.

“Usually the solution’s in compromise,” Halford said. “But sometimes a compromise means something unworkable.”

This article was written by NATHANIEL HERZ from Alaska Dispatch News, Anchorage and was legally licensed through the NewsCred publisher network.