Gov. Bill Walker says he wants broader representation and more transparency on the Alaska Gasline Development Corp., but Republican critics in the Legislature assailed his decision to reshuffle its board of directors.
The Republican leader of the state House, Rep. Mike Chenault of Nikiski, said he was disappointed in Walker's decision to remove two former oil company executives and a former legislator from the seven-member board.
"I have concerns. There's 60 years of experience there that we got rid of," Chenault said, referring to former Exxon executive Richard Rabinow of Texas, former legislator Drue Pearce and former BP executive Al Bolea.
The state-owned corporation has a major role in the proposed in-state pipeline, envisioned by Chenault and others as a backup plan in case the larger Alaska LNG project—in which AGDC has a secondary role—does not move forward.
"The longer we delay it, the least likely it is either one goes forward, and if so, we're back to square one, and Alaskans still don't have gas," Chenault said.
During his campaign for governor, Walker challenged the theory that the smaller Alaska Stand Alone Pipeline makes economic sense. He has temporarily placed that project and others on hold pending further budget review.
Walker said he does not agree with Chenault's claim that replacing three board members means a delay of any sort. And he challenged the suggestion by others that a confirmation fight is inevitable. Walker said he plans within the next 30 days to appoint three new members, who will be subject to a confirmation vote by legislators this session.
"I think things will work out," Walker said. "I just thought it was appropriate to make some changes on the board. I don't see any scenario that this would slow anything down, as they still have a quorum and can conduct business."
Chenault and Anchorage Rep. Mike Hawker, who both championed the 2013 bill that led to the creation of the AGDC, included a provision in the original bill that would have prevented the governor from removing board members without cause. But the Legislature amended the measure so the members would serve at the pleasure of the governor.
Only two of the five people appointed by then-Gov. Sean Parnell—Fairbanks attorney John Burns and Palmer construction executive Dave Cruz—found favor with Walker and remain on the board. Recent additions to the board include Labor Commissioner Heidi Drygas and acting Commerce Commissioner Fred Parady.
Serving on the board is not a job for the five public members, but they are paid $400 a day plus expenses, usually meeting three days a month on company business.
Walker said he believes the board members should live in Alaska, which is why he replaced Rabinow, a former president of ExxonMobil Pipeline Co.
Regarding Pearce and Bolea, who live in Southcentral Alaska, Walker said he wants "broader representation" on the board, including more people who do not live in areas served with natural gas. "I think there's a built-in motivation when people are tied to diesel fuel because they want to get off diesel fuel," he said.
"The only one not on the road system is a guy from Houston, Texas," he said.
In addition to the board changes, Walker also instructed the two state commissioners who serve on the board to not sign a confidentiality agreement instituted by the AGDC. He said it makes sense that some business is conducted in executive session, but not with the additional layer that requires signing a secrecy pledge.
"I'm not a fan of that process that they've set up," he said. Walker said the situation is somewhat different on the larger Alaska LNG export project in which the state has partnered with the major oil companies and TransCanada.
He said he approved having Natural Resources Deputy Commissioner Marty Rutherford sign a confidentiality pledge to deal with that project, as that arrangement includes private funds, not just state money. "I'm willing to do that because we're not funding it 100 percent," he said, unlike AGDC.
Rutherford has the responsibility of briefing the governor and other state officials on key details while maintaining confidentiality of certain information from the companies. "If she wasn't allowed to sign off on that it would make it awkward and just a bit disruptive and I don't want to do that," Walker said.
Chenault questioned that arrangement, saying Rutherford won't legally be able to brief the governor on some of what she learns if Walker doesn't sign the confidentiality agreement. Chenault said if Rutherford can't inform the governor, "how does the administration make an informed decision?"
Hawker said the governor's decision to "summarily fire" board members in the "dark of night," including the only two with experience building pipelines – Rabinow and Bolea – has left him concerned progress will be delayed.
"The most important element in Alaska's economic future is a viable, in-service North Slope natural gas line, and we can't sacrifice this opportunity on the altar of politics one more time," he said.
He said the governor's proposed replacements on the board will be closely reviewed as they come before the Legislature for confirmation.
"I have grave concerns, because when he fired those three people, he fired 60 years of accumulated experience in the right subjects," Hawker said. "So as he brings forward new nominees, they will be scrutinized very carefully to make sure they possess the same degree of experience and ability to perform the job."
About the member from Texas, Hawker said that basing the decision on residency is "just denying the face of reality," he said.
"The record of testimony shows we wanted the absolute best, brightest and qualified people in the world working for AGDC," Hawker said.
As for Walker's concerns over transparency, Hawker said the governor "has completely distorted and misrepresented" the issue.
Confidentiality agreements are a common business practice in many state agencies, he said.
"What the governor has done is said, 'I want to operate blindly, I do not want to participate in the negotiation process,' " Hawker said. "So as a result, the entire Alaska LNG process is probably going to falter because he has withdrawn the state from its participation in achieving a gas line."
Bolea, who lives in Big Lake and has more than 30 years of experience building pipelines and working on oilfield projects, said he has never talked to Walker. But he said it's normal for a governor to change political appointments on critical boards.
"I would have loved the chance to talk to him," Bolea said. "But am I surprised? No, given everything on his plate."