Legislators are pushing back against Gov. Bill Walker’s Tuesday announcement that he was firing three board members of the Alaska Gasline Development Corporation, and ordering his members not to sign confidentiality agreements related to the Alaska LNG project and/or the smaller bullet line.
AGDC is charged with preparing the state to build a bullet line that would carry gas from the North Slope to SouthCentral Alaska. It’s a fallback agency of sorts, in case that a big line doesn’t get built. A subsidiary of the corporation is also in charge of the state’s equity interest in the big line, if comes to fruition.
On Wednesday, Alaska Speaker of the House Mike Chenault, and Rep. Mike Hawker, creators of AGDC, sent a strongly worded release about Walker’s announcement, saying that they see this as a dangerous change of course on gas commercialization. Sen. Cathy Giessel, chair of the Senate Resources Committee, also sent out a release, expressing disappointment with Walker’s firings and also the decision not to allow his cabinet members to sign confidentiality agreements related to the AKLNG project and the bullet line. She went so far as to call it “foolhardy.” (See both of the releases in full below.)
Walker fired former Senate President Drue Pearce, former BP executive Al Bolea of Big Lake, and Richard Rabinow, formerly with ExxonMobil. Chenault said that the state was losing 60 years of knowledge with the firings. The state would feel the loss of Rabinow most acutely, he said, because he’s the only one on the board with gasline construction experience. Rabinow, who lives in Texas, was with ExxonMobil for 34 years, including as the president of ExxonMobil Pipeline Company. He is a former chairman of the Association of Oil Pipe Lines and the Trans-Alaska Pipeline System (TAPS) Owners Committee. He was appointed to the AGDC board early in 2014 by former Gov. Sean Parnell.
Here are the releases in full:
From Sen. Cathy Giessel:
Today, Senator Cathy Giessel, the continuing Chair of the Senate Resources Committee, issued the following statement relating to Governor Bill Walker relieving three members of the Alaska Gasline Development Corporation (AGDC) Board:
“It is within the Governor’s purview to act as he has done, but for an administration that has vowed to get Alaska’s natural gas to market, this deprives the state of necessary tools for success in a global scale LNG project. The AGDC Board was crafted to bring the very best expertise the state can muster to commercialize our North Slope gas. Removing these individuals under the pretense of transparency gives the effect of implying a defect in these exemplary members, and gives the impression that this Governor is crafting complex policy decisions through press releases,” said Senator Giessel (NE Anchorage, Anchorage Hillside, Turnagain Arm).
Governor Walker also instructed the Commissioners of Labor and Workforce Development and Commerce, Community and Economic Development to not sign a confidentiality agreement for upcoming briefings.
“Anyone involved in municipal government that deals with labor agreements has to in most instances sign a confidentiality pledge. It is foolhardy to think that a project in the billions of dollars, in competition with other sites around the world, does not benefit the people of Alaska by confidential briefings and negotiations to maintain a competitive edge. We even expect our Permanent Fund managers to operate under confidentiality in order to generate the maximum benefit for the people of Alaska. AGDC was created to function as an effective manager in representing our state’s interest in accessing our gas and getting it to market. The burden on the Governor is to show how his actions are not hampering the progress of this long sought goal,” said Senator Giessel.
From Speaker MIke Chenault and Rep. Mike Hawker:
The legislators who sponsored the bill creating the Alaska Gasline Development Corporation today released statements in light of Governor Bill Walker’s action firing three board members and ordering his appointees to not participate in the confidentiality process.
Alaska Speaker of the House Mike Chenault, R-Nikiski, and Rep. Mike Hawker, R-Anchorage, believe the three key AGDC board members were critical in advancing a natural gas commercialization project, and brought valuable perspective and acumen to the Board. AGDC was designed to bring gas to Alaskans and more revenue to the state via its Alaska Stand Alone Pipeline (ASAP) project working parallel to the AK LNG project, which it was facilitating for the State.
“I spoke to Gov. Walker after hearing that he had fired AGDC board members Dick Rabinow, Drue Pearce, and Al Bolea,” said Chenault. “The governor certainly has the power to do that; the Legislature granted the governor that power in House Bill 4, which created and directed AGDC. I’m disappointed that Gov. Walker has chosen to eliminate these board members, who have proven their worth and commitment to Alaska in the progress made already.
“It’s going to be hard to replace the 60 years of knowledge that these three board members bring – and in particular, the expertise of Dick Rabinow, who is the only board member to have actual gasline construction experience under his belt.
“My greatest concern is what delay is this action going to cost the AK LNG and ASAP projects? With a substantial turnover in leadership, how much longer will Alaskans wait for natural gas?”
“I am disappointed in the Governor’s action gutting the top quality board that was working diligently for Alaska,” said Hawker. “I’m deeply concerned that this signals a wholesale change of course for Gov. Walker on gas commercialization. An overwhelming majority of legislators approved creation of AGDC, and of its mission, which is clear in law – to pursue a natural gas project that delivers gas to Alaskans first, then to markets beyond.
“In creating AGDC, the Legislature carefully weighed the need for confidentiality in some issues with the need for public accountability. The legislature struck a balance between transparency to Alaskans, and the need to protect commercially sensitive information, third-party private company information, and information that, if known, could adversely impact the price Alaskans receive for its gas.
“I, too, am gravely concerned that this action by Gov. Walker will result in significant delays to the AK LNG and ASAP projects. All the key business agreements crafted by the State under confidentiality agreements will, by law, be brought back to the legislature for a fully transparent, public vetting and approval.”
Contact Amanda Coyne at amandamcoyne@yahoo.com
Some of the comments below are sadly, badly, uninformed.
Gov. Walker- Doesn’t he have decades of experience with the gas line? Wasn’t he proven correct when he told us a decade ago that the project that would work would be a LNG, export project? What if we had listened to him then?
Yes, some of the people he let go had institutional knowledge. But what did they get done over the last year? Exxon certainly has lots of institutional knowledge, but they’ve used that knowledge to keep a project from being built. Exxon has to appease Emir Sheikh Hamad of Qatar. Qatar and others Exxon does business with want Alaska gas kept in the ground.
Alaskans are better off if they have people working FOR them, not against them- even if those people have institutional knowledge.
And as for Garand Fellow’s silly remark about what Gov. Walker knows about SB-21, I find it strange. SB-21 was Parnell’s disaster. Why did we not learn how SB-21 was costing us money from Gov. Parnell and his pals in the legislature? Why did they not tell us this? Gov. Walker figured it out in his first six weeks on the job- and TOLD us how we are being screwed.
Meyer, Micciche, Hawker, Bishop, Chenauilt, Giesel, did not tell us how bad Sb-21 is. In fact, they told us it was good for us. Shouldn’t they all resign now? Isn’t that what people found to be grossly incompetent do?
Sen. Stedman should be the Sen. President now. He told us this would happen. He was the one who got it right. I say promote the competent people.
Garand,
Stolze is a bit of a chameleon and an astute reader of the “tea leaves”. He is no fiscal conservative yet will act the part when advantageous. Remember who the co-chairs of House Finance were when the unsustainable spending started and continued.
That report regarding Mr. Pierre is troubling if it means sponsors can hire staff for the legislature. I would have to see if any “office allowance” funds were used for these these trips , yet I really don’t care as long as the trip is not purchased by a lobbyist or other entity seeking influence..
Yes, I think I pretty much agree with you on all points. However, it’s positive that the state wants to avoid new debt (if in fact it does – haven’t gleaned that from the new administration).
I agree that the likelihood is that the reserves will be spent before difficult decisions can be made, and of course that will make the decisions all the more difficult. There is slightly positive news or anecdotes. I read here somewhere that Rep. (soon to be Sen.) Stoltze said he will have only 2 staffers, and if true that will show a recognition of the magnitude of the crisis. Also, some claim that legislators attending the Senator Sullivan ceremonies the other day will use personal – not state – funds to pay for the trips. And finally, the legislature’s press corps is reported to have said that McHugh Pierre will not be paid with state funds – not sure what that means or how it can be but it’s positive.
These are small from a dollar standpoint but my observation is that often the larger the crisis the more that symbolism matters to finding solutions. And this is a large crisis. The old Frank Murkowski percent of market value would not yield enough today to fill this budget hole. That is, 5% of the PF corpus for state operations, leaving 3% for inflation-proofing of the corpus would not be enough to balance the FY2015 budget.
Garand,
I got substantially the same message from D. Cole and B. Walker
I think we both agree that the “great leveler” now will be revenue. Doesn’t make any difference what these politicians want; because, if they are not willing to liquidate assets, they don’t have the necessary revenue, they are not willing to tax Alaskans or Alaskan business more, and they are concerned about incurring bonded indebtedness, they are stuck. The only political and expedient option (which they favor over courageous and wise) is to forestall the crisis by consuming our $14 Billion reserves – and that is exactly what they are going to do.
The fact is this state has applied, for the last decade, the methodology of “trickle-down economics”. That was best illustrated in the comment of the current Speaker of the House lamenting (now) that a lot of money was spent to avoid the “economic doldrums” that befell the lower 48 after the housing bubble burst. So, how did pouring billions of capital spending into the top of economy on plans and various public work endeavours work to create a sustained benefit?
Some politicians might now want to reflect on that method of sustaining Alaska’s economy. That said, I already am tired of the equivocators and apologists for the last decade already blaming Governor Walker for their angst. .
Garand, Thanks for your circumnavigation & circumspection of INSTITUTIONS & the “knowledge” they store in their silos of paperwork.
I’m an engineer/scientist type, and typically eschew lawyers,
despite being offered full sponsorship to “flaw skool” on more than one occasion.
I’m old enough to remember what Alaska’s oil taxes were like before the first oil-well was drilled on the Kenai…
Engineers found the oil, that part was beautifully simple,
then the oily-lawyers swooped in like bats from a cave in Texas,
that’s when the obfuscation & confusion began.
Our tax codes on everything nationwide (oil included) are unnecessarily overcomplicated because of institutionalized incompetence & corruption.
Overwritten & unabandoned tax-codes are like leaky abandoned oil-wells.
In the middle of TAPS construction I quit working on that project in disgust, knowing it should have been a gasline instead.
I often refer to TAPS as a “box of bandaids on stilts”.
The petroleum industry is still blindly crawling on it’s hands & knees out of the Age Of Coal & Steam & Steel…
tax-incentives don’t make you more intelligent & more efficient,
good science does that…
…the fundamental chemistry lessons of Balance In Nature are still not widely known;
Simplicity is the shortest path to Abundance.
THINK HYDROGEN
In 1836 the hydrogen fuel-cell was invented, this was the same year the first internal combustion engine was built…
In 2015 we see the introduction of the Toyota Mirai FCV,
and soon with the developments of miniaturized Graphene/BoronNitride/TiO2 photolytic hydrogen process, we will be able to own a car that extracts all the fuel it needs from the air of our atmosphere…
…while it purifies the smog.
Trying to fix Alaska’s Oil Taxes is like trying to Fix Stupid…
…and many of us with gray hair have learned in the Skool of Hard-Knocks,
that you can’t Fix Stupid…
…you need to start fresh with a blank sheet of paper.
BigOil has yet to learn that PlasmaGasifiers are just as important as DrillingRigs…
…for the past 50years we have had the technology to “blow down” all associated-gas and repressurize oil-fields by using tailormade SYNgas, which is much more efficient for EOR.
[maybe BigOil already knows this, but is playing STUPID to avoid further tax-exposure ??]
Alaska needs to learn about the cycle of addiction & codependence & enabling,
then get divorced from BigOil.
Time, you’re right but losing institutional and other types of knowledge when administrations and legislatures change is the nature of our system. It’s not unique this time, and I don’t know that the Walker administration has done more of it. The oddity this time is having a former Juneau mayor and outsider to the administration do so much of the hiring, and there are Democrats from long ago who have now showed up on the state payroll for the first time in decades. But each new incoming administration is odd; at least Governor Walker isn’t pregnant, and I think all of his children are married so there is no chance any of his children are hatching a – well, you know the rest.
The radio news this morning has Grace Jang saying that Governor Walker is just learning about the oil taxes we have, and that is a surprising admission for this governor – perhaps any Alaska governor. I am happy to report that if you read what Governor Walker wrote in the newspapers yesterday and put it beside what D. Cole wrote about oil taxes in the ADN yesterday you will see in the latter a darn good explanation of where we are with oil taxes; what Governor Walker wrote not so much. I don’t often recommend D. Cole by the way.
I am not an oil tax expert whatsoever but something that I think is key to a misunderstanding Governor Walker may have is that the oil tax credits of which he complains are substantially a subsidy aimed at generating Cook Inlet natural gas. Everyone probably recalls that not that long ago there appeared to be an energy crisis in Anchorage, and these subsidies were part of the response. I think they were a reasonable response as no one could foresee that by the end of 2014 the world would be awash in oil and gas (at the very least, state revenue forecasters didn’t see it so maybe that part of the institutional knowledge is best lost?). But Governor Walker looks more than a little uninformed castigating the oil industry for this, and perhaps that circles back to the loss of institutional knowledge about which Time has lamented.
People, wake up! Look at the institutional knowledge Walker has let go since he has been in office, for some strange reason this man thinks he can lead a better Alaska (as he promised in his campaign) and dismiss the best and the brightest. He is a Governor on training wheels. I predict the next four years are going to be painful for Alaskans.
@Birchstick, Are you saying that Alaska’s economy is largely the result of State Government Spending?
Governor Walker’s op-ed in the Empire today leaves no doubt where he is with the producers. He says, “I think we can all agree that an oil production tax that nets negative returns to the state does not meet Alaska’s constitutional mandate to develop our resources for the maximum benefit of the people.”
Possibly as an oversight, the op-ed talks like the production or profits tax is the only petroleum revenue we receive when in fact it’s (especially now) of little importance to current revenues. The state also receives royalties, property tax, etc. By the way, it’s useful to emphasize here that Walker’s op-ed isn’t directed at SB21; his message would have been even more the case under ACES.
However, this is perhaps the first signal move by the new administration indicating they don’t believe in a gas line. The producers have said all along they need oil and gas tax stability for them to stay in the gas line game. But if the gas line is 20 or more years out then who cares what the producers want (some in the administration may say)? I understand that rhetorical question has been asked at DNR this year. And someone at DNR said that DNR has the Revenue Commissioner to do it; however I don’t know what that means.
I have heard that someone in the Walker administration has indicated there will be oil tax legislation coming soon. No one will tell me (but they won’t say no) whether to expect a budget that balances provided a new oil tax is adopted; that is, a balanced budget based upon revenues derived from enacting soon to be proposed Walker oil tax changes. That would be a way for Governor Walker to not reduce spending but still be able to say he balanced the budget. Remember you read if first on amandacoyne.com.
Senator S wants the sessions moved to Anchorage. Maybe he sees special sessions (entirely possible) and wants to be close to whatever. There isn’t room in that big, expensive building for legislative hearing rooms, 30 to 50 more offices, etc. but it might make the costs incurred thus far easier to swallow (or more difficult to forget – you choose). This could be the most exciting year in Alaska state government.
Lynn,
As usual, your assertions are quite appropriate. The waggling of tongues by
legislative folks are simply a ruse to cover up their frustration of the
new Guv cutting some of their buddies from Sean’s herd. To say that a
pipeline can’t be built without Drue Pierce is moronic.
The prescientific view, rather than the political view, indicates that this big round thingie will not be economical. Rather than dealing with reality, lets have a hissy fit about keeping a bunch of studies and feckless Boards alive to further drain the coffers. After all, the main reason for government to exist is to hire buddies, in-laws and sycophants (see Mr. Pierre hiring).
I don’t care what the party moniker behind your name is, touting an economic
loser just because someone else did is simply dumb. To espouse such dastardly consternation involving changing some members of a losing proposition is political ego. The legislators need to sit down, shut up and get the budget under control.
Stop worrying about something that will never happen, focus on doing the job you
were elected to, and curtail the whiny carping about fantasy projects and their
irreplaceable staff who mostly political hacks (read the bios).
If hiding your buddies and political supporters in these massive money pit groups
is your priority, I hope with every bone in my body that you get unelected
ASAP. Yea I said it, but don’t forget, you can be appointed to a six figure job with the ASAP pipeline group if you need a job.
“There is ample room in this bloated operating budget to bring balance without new revenues.”
Where? How? You seem to be a smart fellow, GF, but my lord, cutting $3-4B off of operating expenses, in one year? With NO new revenues?
Utterly, without a doubt impossible, unless you truly want to crash Alaska’s economy. These sorts of statements are foolhardy.
Snow, we will soon know whether your confidence in Governor Walker is misplaced. I agree that every dollar spent was and had to be appropriated by each legislature and signed into law by each governor (forgetting possible mechanical conventions which are rare and of little financial consequence). If you are correct in putting all the blame on past legislatures and legislators, and upon past governors, and if your implication that Governor Walker will do differently is correct then we can expect Governor Walker to submit a truly balanced budget – paring spending down to recurring revenues – and to veto the budget from the legislature back down to a break-even budget if the legislature adds spending with adding concomitant revenues. If Governor Walker keeps his campaign promises by doing that and thereby is a competent fiscal manager (exactly at the time Alaska needs it most) then I will be the first to thank him.
There is ample room in this bloated operating budget to bring balance without new revenues. Politicians, elected and appointed, can be prone to say otherwise but I hope in Governor Walker we have found an honest man. If oil prices don’t double and then triple not long afterwards then the budget will be balanced at about current revenue levels. The state has no money supply to manipulate, and law and Wall St. demand states balance their budgets. The only question is whether elected leaders have the courage and intelligence to balance it now while there are still cash reserves apart from the Permanent Fund or whether they spend those reserves now and make balancing the budget all the more painful for Alaskans just a few years from now.
Why do I get the feeling that Cathy’s letter is really saying, “Help, I don’t know what I am doing!” and “How am I supposed to be a leader in the legislature if I don’t have these guys holding my hand?”
This is where Walker is not being smart. He will need to learn that at a minimum he’ll need a working relationship with the legislature if he hopes to be successful. He has little real experience surrounding him. His COS is a wannabe who wasn’t much of a player or enjoyed much respect when in the legislature. Wish people would work together more.
Wonder how Walker/Mallott decide which campaign promises to keep and which ones to ignore ? To date, it seems that he’s more intent on keeping the stupid ones. Walker has some real integrity issues and his agenda doesn’t seem to be in the best inyterests of the state.
Walker’s an amateur.
Alaska Constitution:
Article 3, the Executive.
Sec. 1 “The executive power of the State is vested in the governor.”
Legislators that have sour grapes would do the state a real service by not trying to be back seat drivers. They’d only crash the ship of state if they got the wheel, anyway.
These are the loons that have given us a $4 billion dollar budget deficit while massively growing spending. They clearly aren’t conducting their own affairs well. So, trying to run the executive branch is a sick joke.
Secrecy only deceives the public…
In these modern times virtually all “private information” can be accessed for a small fee.
click on my nick^
Virtually all bigshots and corporations regularly traffick in “secret info”…
some more than others,
and some corporations perform industrial espionage as their mainstay business activity.
goog: saic spying
goog: saic agdc
goog: saic fraud
It is fairly obvious that SAIC was fishing around in Alaska’s pockets for $500million to pay off their fraud penalty in NewYork…
…so they dug in the garbage can for some crappy LNG project plans that any hi-school kid could find on the web.
All the alcoholics of Anchorage bought it hook, line, & sinker.
…..but many of us Real (sober) Alaskans from frozen Fairbanks and everywhere else actually read more than the goofy gashogs give us credit for.
========
Bloomberg> Mar 14, 2012 12:02 PM PT
Science Applications International Corp., the contractor hired to overhaul payroll systems for New York City agencies, agreed to pay $500.4 million under a deferred-prosecution agreement to resolve claims that it conspired to defraud the city.
SAIC admitted it failed to investigate claims that a manager of the CityTime payroll project directed staffing tasks to a single subcontractor, Technodyne LLC, in exchange for kickbacks, according to documents unsealed today by federal prosecutors. The McLean, Virginia-based company also failed to notify the city of the claims, according to the agreement.
“The people of New York City have half a billion reasons to celebrate,” Manhattan U.S. Attorney Preet Bharara said at a press conference today, calling the scheme the “single largest fraud ever perpetrated on the city.”
The $500 million, which the company must pay to the U.S. Attorney’s office “within one business day,” represents the “largest by dollar amount arising out of any state or government contract fraud in history,” Bharara said. It ensures the city will be reimbursed for all the money it overpaid, plus a penalty, he said.
The city was billed about $690 million for SAIC to create a now-operational Web-based, time-keeping payroll management system, according to Marc LaVorgna, a spokesman for Mayor Michael Bloomberg. City officials intend to use the windfall to help close a $3 billion deficit in a $72 billion budget projected for 2014, Bloomberg said.
This is where legislators look silly, SLR. Art. 3 vests executive power with the governor. Art. 2 tells the legislature what they can do, essentially, pass laws and go on junkets.
These legislators are not allowed- by the constitution- to run the executive branch, so they should shut the hell up. They are fools- at least the ones that wrote the letters.
This is probably not the best place for the gov to stand on principle. But these legislators obviously have not digested their sour grapes yet. They need to get over that their team lost and understand that Alaskans are looking for a new direction.
Walker praises REI and signs an agreement with them to work on a LNG project with great fanfare. REI is getting money from AIDEA. (Why a company like REI needs state money is unclear. It is also unclear what the state is getting in return.) AIDEA is forced to keep REI’s info confidential. Is this a problem for Walker too?
Lynn,
I don’t disagree; I was responding to the sentiment that the legislature should butt out of the executive branch’s activities. I also agree with Giessel’s further statement that the burden is on the gov to show that he’s not mucking things up with his decisions.
Radical,
From Senator Giessel’s press release:” “It is within the Governor’s purview to act as he has done,…..”
You can possess Marijuana for personal use, not because of the legislature, but because of the Supreme Court of Alaska.
I like having the three separate branches of government. It is sometimes our only hope.
More “snotty letters” from the legislature blaming Walker for arguably the ineptitude of those writing the letters. This gas line deal is in serious jeopardy, not because of any lack of confidentiality agreements, but because the State of Alaska was (and is) not structured or intended to function as a profit generating business. Changing market conditions and the disappearance of key Administration officials and legislators after the election is demonstrating that reality.
I contend that the purpose of government should not be to enhance the financial well being of select businesses especially by being a source of investment capital for them. President Andrew Jackson (1829 -1837) is credited with a keen observation regarding Government favoritism. He stated that if Government “would confine itself to equal protection, and, as Heaven does when it rains, shower its favors alike on the high and the low , the rich and the poor, it would be an unqualified blessing”.
While I suppose President Jackson didn’t mean that policy to apply to everyone (particularly slaves or indians) he did intend that policy to apply to citizens in general and to the then Bank of the United States ( B.U.S) in particular .
Apparently 2/3 of the legislature doesn’t see this confidentiality access as such a big deal to insure success of the project. As of November 28th, according to the ADN: ” Twenty of the state’s 60 lawmakers signed the agreement, almost all of them Republicans.”
If we want it rain on private enterprise than it should not be fair to seed the clouds only above a few select beneficiaries.
News flash: the legislature is the constitutionally-empowered body of policy makers for the state. If the Governor wants to change policy, he has the right to introduce legislation in order to do so. Until then, it is the legislature’s right and responsibility to eatablish laws that the executive branch must follow. That’s the way it’s supposed to work, not each branch doing their own thing.
This is the first shot across the bow by Governor Walker to do it his way aka what is best for all Alaskans, especially those living in Valdez. This is the beginning of the battle to rehome the gas line from Nikiski to Valdez, a battle that will devour the legislature’s and governor’s time. Follow the money–it always pays. This will be to Governor Walker the same that the Affordable Care Act has been to President Obama. Relationships will be very strained, partisanship will abound, and all Alaskans will suffer.
Legislators that have failed to get us a gas line now want to micro manage the governor? This is twice in the last two weeks where they’ve tried to run the executive branch.
If they can not manage their own affairs, then they should but out.