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View Diary: Palin and Treble Damages (48 comments)

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  •  Your post contains NUMEROUS errors and omissions (2+ / 0-)
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    sxwarren, Endangered Alaskan Dem

    Before I start let me be clear: I hope to hell Obama wins. But as an Alaskan, and someone who knows quite a bit about AGIA, I really think that the Palin critics need to look ELSEWHERE for fodder. It's apparent that Christy:

    a) knows nothing about the gasline issue in Alaska
    b) cannot pretend to understand why AGIA was constructed the way it was.

    Let's start with the $500 million matching inducement issue.

    First, the money is available only on a matched percentage basis.

    Second, it could NEVER be sufficient to actually guarantee that a pipeline would be built. This is a $30 billion project, with a 10-year lead time. NO ONE can prudently make contractual promises that this thing will actually proceed -- not at this point. (Actually, that's a bit strong: BP/ConocoPhillips/Exxon could, but they have proven unwilling to do so. Indeed, it is PRECISELY because they have withheld their gas from a pipeline project as extortion against the State for untold BILLIONS in concessions that AGIA [and the $500 million inducement] was constructed). Here's the deal: pipeline companies cannot construct a project without ship or pay commitments from those that control the gas. How to get a pipeline company to get the project rolling, and make the Producers legally vulnerable to a duty-to-develop claim? Answer: provide risk-sharing, but also provide an asset that is exclusively enjoyed. The risk sharing is the $500 million. The asset? Any state targeted concessions to a competing project are subject to treble damages for the AGIA licensee. This keeps the state from pulling a bait and switch. Without such a provision no third-party pipeline would bid. But without a third-party pipeline trying to move the project forward, the state is completely leveraged by the North Slope Producers. The former governor "negotiated" (read "capitulated to all Producer demands") a contract that gave many, many billions in concessions to the Producers, precisely because the state had NO leverage.

    It's clear you have no knowledge of the treble damages provision of the statute. You speak of permits, or an environmental review. What a joke. The legislation speaks only to targeted royalty, tax, or other cash payments for a competing project. The statute is clear: processing permits, etc, does NOT expose the state to 3x damages.

    Now, if the Producers end up doing a project outside of AGIA, then more power to them. The legislation doesn't stop them. It's just that the state is foreclosed from providing their project targeted incentives (i.e. subsidies).

    The very thought that AGIA was put together by lobbyists is a painful joke. The companies (read Exxon/bp/Conoco) fought the legislation hard; they pulled out all the stops. Rather, AGIA was put together largely by a large team of commercially sophisticated folks -- bureaucrats and consultants who have worked this issue for many years.

    You don't understand the loan gaurantees. Here's the fact: the enabling legislation that provides for the guarantees is currently very, very broad. It certainly accomodates the possibility of debt service even if firm transportation contracts are insufficient to cover the capacity of the line. That said, no one expects that the appropriation for the gaurantees will be made without FT contracts. Do I think an appropriation will indeed be made if there are contracts? Hell yes! It's a no-brainer in terms of national energy security, global warming policy, jobs, and consumer interests.

    •  Thanks for an informed response (1+ / 0-)
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      Endangered Alaskan Dem

      It's almost unbelievable the diarist would take on a subject so complex without any initial knowledge of the circumstances and purport to be an informed source.

      It these kind of stupid attacks that will come back to haunt Dems in the coming few months.

      "Those are my principles, and if you don't like them... well, I have others." - G. Marx

      by Skeptical Bastard on Mon Sep 01, 2008 at 12:21:23 AM PDT

      [ Parent ]

    •  Don't just tell me I don't understand. (0+ / 0-)

      Supplement your post with the following at least, remembering that the purpose of the post is to shed light on Gov. Palin's decision-making, and not on ultimate oil field justice alone:

      a. a demonstration as to how the license requires gas to come into the lower 48 so as to be a part of the energy plan of the country being asked for the loan guarantees. As opposed to being one where AK is a state which benefits and the rest of it goes to Canada. For a candidate who disapproves of pork barrel, Federal loan guarantees which do nothing for the rest of us and a lot for her own state and no other, and for Canada is problematic. Pork barrel is an issue in the Federal election and there is some concern about Gov. Palin that while she objects to her own jurisdication paying for it, she has no problem with the rest of us paying for it for Alaska. And Gov. Palin has claimed that the pipeline will bring needed oil and gas to the lower 48.

      b. an explanation for why it is appropriate for a state government to assess penalties on itself if at some time in the future the state government  disagrees with the current AK administration and determines that the supposed financial incentives that trigger the penalties are appropriate.

      Bait and switch is an inappropriate answer to that, because the bait and switcher knows when it begins that it is going to change position, and there is no suggestion of that here that I can see. What is here is a legislative provision which in fact is intended principally to prevent any subsequent governmental administration from changing its  institutional mind based on circumstances which then exist, with in terrorem treble damages to be paid by the taxpayers of the state, especially  if and when it appears that a non-AGIA alternative is proceeding and Transcanada is not. I have Gov. Palin's letter dated January 9, 2008 which suggests the distinct possibility that depending on how information develops about the pipeline, such changes in tariffs and the like might be appropriate. But which would trigger the treble damages. What this appears to be is a brand new administration (bill introduced in 2007,  first term Gov. sworn in in 2007) trying its best to change the policies of its predecessors, not necessarily illegitimate, but also tying the hands of its successors by use of treble damage penalties assessed against the taxpayers.

      c. An explanation why it is appropriate and necessary for a state itself to provide half a billion dollars in seed money to create as a priority in a state with many poor people, a private business opportunity for a company, which can be a total loss if the pipeline is not built, when it is such a risk.

      Gov. Palin may be on your side of an Alaska political issue which you are sure that we down here and I in particular do not understand as you do. But she is running for VP and this pipeline has been mentioned as a signal accomplishment of hers, without any further description, in a race where oil and energy policy is an issue and her experience in dealing with complex problems as Governor is also an issue, and is accompanied by a suggestion that anyone who does not support her is doing so by reason of gender bias.  

      We here are trying to understand how she does what she does with a complex issue of the kind she may face if her slate is elected and an asteroid hits Mr. McCain.  What her party is giving us down here is 'cute' 'hockey mom' 'mooseburgers' 'rising star in the Republican party' 'ethical reformer' and like that.  

      I do strongly believe that the treble damages provision gives insight into her use of Gubernatorial power, and am not presently certain that that insight is favorable to her, because of the willingness to penalize her own state taxpayers  in this way to insure against being turned out of office by voters who disagree with her on this issue in the future or having a subsequent administration disagree with her in the same way she disagrees with her own prior administration.  Laying a bomb in the statute so nobody can change what she wanted to do. That's not good, and has certain hazards if she attains Federal political office.

      If you think I misunderstand this, then I invite you to demonstrate tht by posting  information which changes the analysis. Simply saying I don't understand and am wrong about this or that does not move the issue forward.

      •  Please see my other post, dated Tuesday (0+ / 0-)

        That answers and responds to each of your concerns, I believe. If it doesn't PLEASE use block quotes to disagree so that I can better clarify.

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