JUNEAU -- Gov. Bill Walker warned legislators Friday that he would go through with his veto of a bill that would stymie his plans for a state-controlled natural gas pipeline from the North Slope, saying the bill would undermine Alaska's leverage on a larger pipeline project it's pursuing with three big oil producers.
Walker sent a letter to legislators late Friday afternoon reinforcing his earlier threats to veto House Bill 132, which had heavyweight support in the Alaska Legislature. It was filed by House Speaker Mike Chenault, R-Nikiski, and co-sponsored by most of the House leadership and several Republican committee chairmen, and it has the support of Senate President Kevin Meyer, R-Anchorage.
The seven-page letter, which Walker said he wrote over Easter weekend, became part of an exchange of letters with legislative leaders in their attempts to reach a compromise and head off a high-stakes, late-session vote on a veto override. That exchange quickly became public.
Walker said in an interview that he hopes he can avoid that by working out a deal with Meyer and Chenault, though he still plans to veto Chenault's bill sometime before the end of the legislative session, currently scheduled for April 19.
Both pipeline projects are still years away -- if they're ever built -- and would each cost billions of dollars. But some in the Capitol are starting to worry that the contest of ideas could delay or derail the Legislature's work on other key issues like the state's budget package and the expansion of the public Medicaid health care program.
"The big issue of this session is the pipeline, and there's a real struggle for the heart and soul of Alaska here," said Sen. Bill Wielechowski, D-Anchorage, who backs Walker's plans. "My guess is it impacts everything."
The dispute has been simmering since before the start of the legislative session, when the newly elected Walker in early January dismissed three members of the board of a public corporation charged with managing the state's two pipeline projects.
Then, in February, Walker published an opinion piece describing his plans to increase the size of the smaller, state-controlled project known as ASAP -- a shift he says is necessary to make the project economical.
Those moves prompted an outcry from Chenault and Rep. Mike Hawker, R-Anchorage, who have led the Legislature's pipeline policymaking efforts and were comfortable with the existing framework for the projects. In March, Chenault introduced his bill, which would effectively block the Walker administration from carrying out its plans for the ASAP line.
Chenault and his allies say that scaling up the ASAP project threatens to undermine the state's cooperation with the oil producers by competing with the larger project, known as Alaska LNG. And they say they don't have enough specifics to allow close to $200 million in state spending on Walker's new plans for ASAP.
Friday began with a three-page letter from Walker hand-delivered to Chenault's office. It laid out more detail about the governor's ideas for a larger ASAP pipeline, including a section of costs and a list of a half-dozen Asian companies that have expressed interest in the state's gas.
In the letter, Walker wrote that he thought he'd provided the details demanded by the House speaker. And he concluded by asking Chenault whether he would still try to override Walker's veto.
In an interview, Chenault said the need for his bill was unchanged by Walker's letter and added that a number of the sections in it "cause more questions or concerns." He cited Walker's proposed timeline for the scaled-up ASAP pipeline and said it aligned too closely with the schedule for Alaska LNG.
Developing the two projects on similar schedules interferes with the state's cooperation on the Alaska LNG project with the oil producers, Chenault said.
"That brings a competing project into negotiations," Chenault said.
Chenault and Meyer drafted their own letter back to Walker later Friday that panned the specifics he'd offered, saying the details have "significantly increased our concerns."
"Dueling projects will confuse the marketplace, allow buyers to leverage the state, and deter financiers unable to see the full commitment of Alaska behind any one alternative," the letter from Meyer and Chenault says.
Late Friday afternoon, Walker sent all legislators a copy of his second letter of the day, which stretches nearly seven pages and had handwritten postscripts for some recipients -- though not for Chenault.
In it, Walker wrote he was grateful to Chenault and Meyer for their many hours of negotiations with him, but he said he was still vetoing Chenault's bill because the discussions didn't resolve "significant points of disagreement."
The letter urges lawmakers to vote against overriding his veto. It covers much of the same territory as the governor's earlier letter to Chenault, though it adds some bolded portions for emphasis, like: "Our shareholders are the people of Alaska."
The letter also includes some of Walker's personal history with natural gas pipeline projects, which he says he has pushed for since 1978.
"I wanted everybody to have the same information," Walker said in an interview. "It's important to me that people understand where I'm coming from."
His letter concluded with a shot at one of the co-sponsors of Chenault's bill, Rep. Hawker, an Anchorage Republican who's not officially part of the leadership team but is close to it. Walker said the bill would tie his hands much like Hawker tied the Legislature's hands when he negotiated a no-bid contract for the rebuilt Anchorage Legislative Information Office, where many lawmakers will work when they're not in Juneau.
"The sole source LIO lease is yet another example of sole source negotiations that resulted in the highest per square foot lease rate in Alaska's history," Walker wrote. "Alaska must keep multiple options in play when it comes to a gasline."
Hawker said he hadn't read the letter and declined to comment late Friday.
Walker can wait up to 15 days -- not including Sundays -- to issue his veto, and the bill was transmitted to him April 1.
It takes 40 of the 60 Legislature's members in a combined vote of the House and Senate to override the governor. Chenault's measure passed in the House with 24 votes, though one member of the Republican majority caucus was absent. In the Senate, it got 13 votes, putting the combined total two shy of the 40 members required.
Like Walker, Chenault said he hoped an override vote could be averted.
"It'll be a black eye for the governor," Chenault said. "It'll be a black eye for the Legislature."