Bidding For Palin Pipeline Contract Flawed

Contract To Build Alaska Natural Gas Pipeline Awarded Through Process That Narrowed Field To Company Tied To Administration

(AP)  Gov. Sarah Palin's signature accomplishment - a contract to build a 1,715-mile pipeline to bring natural gas from Alaska to the Lower 48 - emerged from a flawed bidding process that narrowed the field to a company with ties to her administration, an Associated Press investigation shows.

Beginning at the Republican National Convention in August, the McCain-Palin ticket has touted the pipeline as an example of how it would help America achieve energy independence.

Despite Palin's boast of a smart and fair bidding process, the AP found that her team crafted terms that favored only a few independent pipeline companies and ultimately benefited the winner, TransCanada Corp.

And contrary to the ballyhoo, there's no guarantee the pipeline will ever be built; at a minimum, any project is years away, as TransCanada must first overcome major financial and regulatory hurdles.

In interviews and a review of records, the AP found:

Instead of creating a process that would attract many potential builders, Palin slanted the terms away from an important group - the global energy giants that own the rights to the gas.

Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada.

The leader of Palin's pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman's former business partner at the lobbying firm was TransCanada's lead private lobbyist on the pipeline deal. Plus, a former TransCanada executive served as an outside consultant to Palin's pipeline team.

Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million.

"Governor Palin held firmly to her fundamental belief that Alaska could best serve Alaskans and the nation's interests by pursuing a competitive approach to building a natural gas pipeline," said McCain-Palin spokesman Taylor Griffin. "There was an open and transparent process that subjected the decision to extensive public scrutiny and due diligence."

There were never more than a few players that could execute such a complex undertaking - at least a million tons of steel stretching across some of Earth's most hostile and remote terrain.

TransCanada estimates it will cost $26 billion; Palin's consultants estimate nearly $40 billion.

The pipeline would run from Alaska's North Slope to Alberta in Canada; secondary lines would take the gas to various points in the United States and Canada.

Building such a pipeline had been a dream for decades. The rising cost and demand for energy injected new urgency into the proposal.

When Palin was elected governor two years ago, she vowed to take on Exxon Mobil Corp., ConocoPhillips and BP, the multinational energy companies that long dominated the state's biggest industry.

Palin ousted fellow Republican Gov. Frank Murkowski, who negotiated a secret pipeline deal with the "Big Three" energy companies. That deal went nowhere.

The new governor tackled the pipeline issue with gusto, meeting with representatives from all sides and assembling her own team of experts to draw up terms.

Palin invited bidders to submit applications and offered the multimillion-dollar subsidy. Members of her team say that without the incentive, it might not have received any bids for the risky undertaking.

Palin's team was led by Marty Rutherford, a widely respected energy specialist and veteran of state government. Rutherford solidified her status when, in 2005, she joined an exodus of Department of Natural Resources staff who felt Murkowski was selling out to the oil giants.

What the Palin administration neglected to mention in its announcement of Rutherford's appointment was that in 2003, Rutherford left public service and worked for 10 months at the Anchorage-based Jade North lobbying firm. There she did $40,200 worth of work for Foothills Pipe Lines Alaska, Inc., a subsidiary of TransCanada.

Foothills Pipe Lines Alaska Inc. paid Rutherford for expertise on topics including state legislation and funding related to gas commercialization, according to her 2003 lobbyist registration statement.

Palin has said she wasn't bothered by that past work because it had occurred several years before. But Rutherford wouldn't have passed her new boss' own standards: Under ethics reforms the governor pushed through, Rutherford would have had to wait a year to jump from government service to a lobbying firm.

Rutherford also has downplayed her work for Foothills.

"I did a couple of projects for them, small projects," she told a state Senate committee examining the TransCanada bid earlier this year. While a partner, Rutherford said, she "realized that my heart was not in the private sector, it was in the public sector."

At one point, Palin's pipeline team debated Rutherford's role, but concluded there was no problem, said Revenue Department Commissioner Pat Galvin, another team member.

Patricia Bielawski, Rutherford's former partner at Jade North, spent last summer in Juneau, the state capital, serving as TransCanada's lead private lobbyist. While the Legislature debated

and ultimately approved - the TransCanada deal, Bielawski met with lawmakers and sat in on the public proceedings, several legislators said.

Bielawski told AP that Rutherford never directly lobbied the Legislature for Foothills, and that Rutherford broke no rules.

But others say it's a legitimate question.

"I'm not saying someone's getting paid off for a sweetheart contract, but it's very hard to ignore that this is your former partner and your former client standing there before you," said Republican Sen. Lyda Green, a Palin critic who in August voted against awarding TransCanada the license.

Tony Palmer, the TransCanada vice president who leads the company's Alaska gas pipeline effort, rejects the suggestion that his company benefited.

"We have gained clearly no advantage from anything that Ms. Rutherford did for Foothills some five years ago on a very much unrelated topic," he said.

Rutherford did not respond to interview requests. But McCain-Palin spokesman Griffin said Rutherford "had no decision-making role or authority," and contended that such matters were handled by others on the Palin pipeline team.

TransCanada also had a connection to the team hired by the Palin administration to analyze the bid. Patrick Anderson, a former TransCanada executive, served as an outside consultant.

In January 2007, Palin spoke the first of at least two times to Vice President Dick Cheney, the Bush administration's point person on energy issues, according to calendars obtained by the AP. Cheney's staff pressed the Palin administration to draw in the energy companies, said current and former state officials involved in those discussions.

As the governor's approach unfolded in the spring of 2007, Palin said she saw problems if the firms that own the gas also owned the pipeline. They could manipulate the market or charge prohibitive fees to smaller exploration firms, discouraging competition.

Several important requirements in the legislation were unpalatable to the big oil companies. In the talks under Murkowski, the firms asked that the rates for the gas production tax and royalties be fixed for 45 years; Palin refused to consider setting rates for that long.

Under her process, pipeline firms had an advantage because they simply pass along taxes paid by oil and gas producers.

Oil company officials warned lawmakers they wouldn't participate under those terms. Still, in a near unanimous vote, the Legislature passed the Alaska Gasline Inducement Act in May 2007, as generally written by Palin's pipeline team.

Once the state issued its request for proposals on July 2, 2007, the level of communication between the government and potential bidders was supposed to decrease drastically. State lawyers advised public officials to keep their distance, and bidders were told to submit questions on a public Web site.

But Palin had conversations with executives at most of the major potential bidders during that period, according to her calendars, which indicate that the pipeline was the subject of the discussions, or that the conversations occurred immediately after a briefing with Palin's pipeline team.

TransCanada's Palmer described communication with state officials as nonexistent.

According to the governor's official schedule, however, Palin called TransCanada President and CEO Hal Kvisle on Aug. 8, 2007. Palmer said the call was to clarify the bidding process.

Griffin said that in keeping with legal guidance, Palin never spoke in any of the meetings about the competitive bidding process.

By the Nov. 30 submission deadline, there were five applications. But the state disqualified four for failing to satisfy the bill's requirements.

That left TransCanada.

The Canadian giant had been pursuing an Alaska pipeline since at least 2004, when the company negotiated a deal with Rutherford that the state ended up shelving. While the details remain confidential, six people familiar with the terms told the AP that TransCanada was willing to do the work then without the large state subsidy.

In testimony this July before the state Senate, Rutherford described the 2004 deal as presenting different trade-offs.

Others who reviewed the deal think much of the $500 million will be wasted money.

"Most definitely TransCanada got a sweetheart deal this time," said Republican Sen. Bert Stedman, who voted against the TransCanada license. "Where else could you get a $500 million reimbursement when you don't even have the financing to build the pipeline?"

[nellybelly52]

In the world of government politics, it is hard not to walk through the mud and not get dirty. This deal may not be virginal white, but compared to the previous deal, is clean, and a positive deal for Alaska and America.

Palin maybe a novice of politics, but has made more advances of clean up the system than many other long term, change is coming spew politicians, who have talked but never taken action. These are the pigs that wallo in mud, and continue to lay tax and debt burdens on the American people. Name one politician who has not come out politics richer than when they started. Palin has amassed wealth, but that has come from "hard work" of her husband''s fishing and working the oil field. She had not "emporers clothes" to wear for campaigning, and did need stuff. The other suitors for the political office, being much savior at getting "free" top line clothes have not been effected by the MSM. If we were to see where Obama-Biden get their clothes and their spouses, we would see that they receive much as "promotional". Just like the Hollywood types get for the award shows.

Palin and the Republicans at least went out and purchased their clothes and pumped more money into the economy that will create jobs, just like the pipeline will.

But if it is fairy dust and unicorns that you want, and sweet bedtime stories, America can rest assured that it is being put to sleep by the sweet sounds of Obama and the Democrats. I hope the nightmare you awake to isn''t to scary.

[misha128-2009]

Posted by whosaid1 at 05:20 PM

Not if it is actual work related expenses and not per-diem over actual expenses and they did not live at home while doing the work.

--------

On Topic this appears to be yet another example of the inability of the Republicans to execute a proper bidding process and administration for government contracts.

[eroosevelt08]

It is better to earn money and pay taxes on it than not to earn any and have nothing. I would rather live in the United States and pay taxes here than any other country on Earth.

[whosaid1]

I wonder how much money Palin has made for the reporters of the liberal media.....they''ve had to travel everywhere to report on stupid, unimportant things....per-diem, per-diem, per-diem....big bucks!!!...they definately will pay additional taxes this year......

[idahosilk]

Cronyism again? And some say Palin has nothing in common with Bush... D''oh!

[Taitman3]

"There were never more than a few players that could execute such a complex undertaking "

Isn''t this what was said about Haliburton???

[targaray-2009]

Burn The Whole House Down!!!

Hey, Sarah P: Take them all (Bush, McCain, Cheney, Rove, Liddy, Libby, Rumsfield, Rudy, etc.) down with ya.

Look at the evidence, these good ole boys were never your friends, they always planned for you to be the SCAPEGOAT.

[north1949]

First was her bridge to no where...now it''s her pipeline to no where. Transcanada doesn''t even have all the approvals, environmental or otherwise, to
go ahead with this project...and, according to an article in the G &M, can keep the $500,000,000.
whether they build the pipeline or not. SWEET!!

[frankie2fing]

HSinCO one can only hope.

[hsinco-2009]

I have said from the beginning that the Palins should go back to Alaska and tend to the troubled family they have.
I have also stated that this run for the VP will be the worst decision the Palins ever made. Gonna lose the Govenorship. and probably the IRS will be putting a lien on their property as they have lied on their taxes (Todd) and may go to jail.

I look forward to the resolution of all of these issues.

[frankie2fing]

Oh youse guys! Ya make it sound like I tried to give it to them, yeah. Ya know, I am a Maverick, so I do mavericky things. Oh yeah, this is good for Alaska, and, ya know, those of ya that live, like, down there. Just because this company already bid it without subsidies, does not, ya know, make it good for Alask, uh, the Country. Yeah! I structured this just like Todd wanted it so it would benefit, umm, Alaska. That is what Governors do. I can not wait to get to Washington, because, ya know, I will be in charge of the Senate and, like, I will get in there and mix it up, and get lots of good legislation down. We will make the whole Country pro-American, ya know, not just the ones that vote for us....

[omnibus66]

Interesting story, but there is certainly nothing new or unusual here.

100% Republican S.O.P. Look it up, it''s on page 69 in Karl Rove''s new book ''I Can''t Believe I''m Not In Prison''.

[simonette2]

Is anyone surprised about this?

[anya136]

The more I read about Sarah Palin the more I realise what a fraud she is.

It would be awful to have her in power committing these sorts of unscrupulous actions on the national stage.

Alaskans should also kick her out. They deserve better.

[whodotcom]

Palin, Greg Stillson, can you tell them apart

[smurfcrusher]

"Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada."

********** How else would she be able to custom tailor the conditions of the bid to suit the target company? Give a girl a break...

"The leader of Palin''s pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman''s former business partner at the lobbying firm was TransCanada''s lead private lobbyist on the pipeline deal. Plus, a former TransCanada executive served as an outside consultant to Palin''s pipeline team."

********** But Palin says as long as she personally doesn''t benefit financially, it''s OK to violate Ethics Law.
Maaaaybe we should look closer to ensure Palin doesn''t have another massive lakefront home miraculously spring up, without the required permits and accountability.

"Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million."

There''s a maverick for ''ya *wink* Well, if she can''t get elected and provide massive tax breaks for Big Oil, this is the next best thing!

[gdmoore2]

This Alaskan will not be supporting McCain-Palin.

This story by the AP, however, is hack journalism, and has the history of the Alaska Gasline Inducement Act (AGIA) and the Transcanada bid all wrong. In truth, the petroleum producers - ConocoPhillips and British Petroleum - have dominated Alaska politics for years through corrupt political practices. By going out to open bid for the natural gas pipeline, Alaska forced the petroleum producers to bid on a level playing field with natural gas transporters. ConocoPhillips and British Petroleum did not bid because they wanted to dictate the terms of the pipeline and the terms of taxation to Alaskans - the same old corruption scheme. In the end, Transcanada submitted a compliant bid to an open public process, and cleanly won the contract. The problem is, this is the first time Alaska has done business this way , through an open public process, and it was unfamiliar and awkward first time. Though it hurts my lips to say it, due to all the other *** Palin has totally wrong, Palin got this one right. What a cheap shot from the Associated Press.

[inventagod2]

McSame
McShame

[brianbwb-2009]

Bush has cast his vote for the candidate he felt would best follow his agenda, so by that it is clear that if you want more Bush, vote McSame.

[lucasnico]

sf91b2s, I agree with your sentiments 100%. Last 8 years have been terrible. Bush has done a number on us. But with this economy I''''ll still take my chances on the party that is supposed to be more conservative (fiscally).
Posted by holdfam1 at 12:30 AM : Oct 26, 2008

and what party would be the fiscally responsible party? The one that got us into an irresponsible war AND currently has this country over $800 Billion in debt on an economy bailout alone.....now throw in the $$ spent on the war.....if you plan on voting republican, then you are an absolute fool!!