Industry, legislators and signature gatherers ready for another big oil tax fight

The Trans-Alaska Pipeline runs alongside the Dalton Highway near the Toolik Field Station on June 9, 2017, in the North Slope Borough. (Photo by Rashah McChesney/Alaska's Energy Desk)

The trans-Alaska Pipeline runs alongside the Dalton Highway near the Toolik Field Station on June 9, 2017, in the North Slope Borough. (Photo by Rashah McChesney/Alaska’s Energy Desk)

If the Alaskans behind the campaign group “Vote Yes for Alaska’s Fair Share” have their way, oil taxes will be on everyone’s mind for the next several months. 

That’s because they want to get enough signatures, 28,601 to be exact, to get their proposition on the ballot next year.

“So that the citizens of Alaska can create a law about our getting our fair share of oil income from the development of oil on state owned lands,” said Jane Angvik.  She’s part of the group sponsoring the initiative. 

Legally, they have a year to get enough signatures.  But, to get it in front of voters next year they need to get all of those signatures before the Legislature gavels in on Jan. 20, 2020. If they miss that deadline, it won’t be on the ballot until 2022.

Angvik said that means it’s time for a massive grassroots effort to get signatures from all over the state. 

“So our goal is to, No. 1,  get volunteers, and No. 2, raise a million dollars to be able to wage our campaign,” she said.

The Fair Share Act would raise the minimum tax and eliminate oil tax credits for the state’s largest legacy fields. That’s Prudhoe Bay, Kuparuk and Alpine. 

It would also require all of the state’s major oil producers to publicly report how much money the spend and make in the state. 

Right now, BP, ConocoPhillips and ExxonMobil are the major owners of Prudhoe Bay. ConocoPhillips owns Kuparuk and Alpine. 

BP is currently selling its interest to Hilcorp. Hilcorp did not respond to a phone call. Neither did ExxonMobil. That company also didn’t answer emailed questions about how the initiative could impact the company, or if it would consider a legal challenge. 

ConocoPhillips told the Anchorage Daily News in August that the initiative appeared to be a substantial tax increase that would make investing in the state less attractive.   

Kara Moriarty, president of the Alaska Oil and Gas Association said if passed, it will make investing in the state less attractive. 

She also said that an increase in taxes, while targeted at just the three existing largest fields in the state, will have a chilling effect on investment in new fields. Because anyone wanting to develop a field in the state could eventually produce enough oil to get bumped it into this new tax regime. 

“Make no mistake about it, every company in Alaska will be impacted. The sponsors can say all they want — this is not impacting the new fields,” Moriarty said.

A legal analysis from the state’s Department of Law also came out on Tuesday, raising questions about how the initiative would be implemented and if it’s constitutional. 

There is room in state law for a legal challenge to the decision to certify the initiative, but Moriarty said her group is still reviewing that opinion and she’s not sure that going to court is an option. 

“The attorney general says it is constitutional, it’s just a bad piece of legislation,” she said.

So, Moriarty said her group is probably going to take their message directly to Alaskans.

Anchorage-based oil and gas attorney Robin Brena is one of the backers of the initiative. He said expects to end up in court because “most things involving a billion dollars do.” 

There’s also the possibility that the initiative backers could go to court challenging the language included in the books they must use to gather official signatures for the petition. State law requires that the language be an “impartial summary of the proposed law.”

Brena and others in the group don’t think the summary recommended by the Department of Law meets that standard.

“The concept is that the initiative sponsors have an opportunity to bring to the Superior Court a summary of the initiative that they don’t feel is impartial and non-argumentative and fair,” Brena said.

He said he’ll reach out to the Division of Elections first, before they challenge it in court.

“So, rather than go to the Superior Court and argue about these things, I’m just going to propose a few changes and see if we can work it out,” he said.

Another way to keep the initiative off the ballot is that the Legislature could weigh in and pass a similar law.

But some lawmakers said they aren’t sure there’s the appetite to take up oil taxes this session. 

House Speaker Bryce Edgemon, an independent from Dillingham, said he’s not sure if oil taxes will get bumped to the top of the agenda. But typically, he said, those discussions can take a lot of time and require cooperation between the House, Senate and governor’s office to be productive. 

Gov. Mike Dunleavy’s spokesperson Jeff Turner emailed a statement pointing to a growth in exploration and capital investment on the North Slope as an indicator that the state’s current petroleum tax structure is working.

“The petroleum tax system has been changed eight times in the 14 years,” he wrote. “Another change could have the unintended consequence of costing Alaskans billions of dollars in lost revenue in the years ahead.”

When asked if the Senate would likely take up oil taxes this year, Senate President Cathy Giessel, R-Anchorage, didn’t commit to directly addressing it with a bill.

“We certainly will be discussing (the petition’s) potential impacts, I would foresee. But as far as anything further … would we look at attempting to pass something substantively similar which would therefore take it off the ballot? The initiative is so broad, that I don’t know what the potential — or what that would look like in terms of a bill. So that’s under consideration, it’s a matter of continuing to study the initiative and understand more fully exactly what’s in it,” she said.

Sen. Bill Wielechowski, D-Anchorage, is one of the sponsors of the initiative. He said he plans on introducing similar legislation in the Senate this year.

https://www.flickr.com/photos/specialk80731/8229830783/in/pool-northslope

The sun rises on the North Slope behind the two Parker drilling rigs. (Creative Commons photo by Kevan Dee)

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