Appointments raise questions

JUNEAU — Gov. Sean Parnell has appointed two former oil industry employees to the board that sets the tax value of the trans-Alaska pipeline system, raising concerns about fairness from the Fairbanks North Star Borough.

Municipalities won a huge victory last month, when the Alaska Supreme Court found the pipeline for 2006 should have been valued at nearly $10 billion, not the $850 million claimed by pipeline owners.

Parnell has appointed Bernard Washington and Dennis Mandell, both of whom have years of experience working for North Slope oil companies, the Fairbanks Daily News-Miner reports.

Marty McGee, the former chair of the State Assessment Review Board who was terminated last month, said he believes Parnell “is trying to stack the board to be the champions of or accept the arguments of the oil industry.” The board last year set the pipeline’s value at $11.9 billion when the industry argued for $2.3 billion.

“My opinion is the Supreme Court decision affirms the foundation of the decisions we were making; it isn’t favorable to the oil industry’s position,” McGee said. “I don’t think it can be undone entirely, but it’ll cause greater expense and it’ll be more difficult for the boroughs to have their case heard.”

Parnell spokeswoman Sharon Leighow said Washington and Mandell will bring a “fresh perspective” to the board and are highly qualified. She said Parnell is “committed to appointing board members with a diverse range of perspectives. Considering there are no term limits for board members, he believes it’s important to give others the chance to serve.”

The appointments are subject to legislative confirmation.

Borough attorney Rene Broker said the borough is worried about getting a fair hearing on how the pipeline should be taxed — “in front of someone who hasn’t already made up their minds about their view of the world and how the pipeline should be taxed in Alaska.”

The recent court case brought the borough about $9 million.

Broker said last year’s board decision showed major progress on the board’s part and more accurately reflected the information discovered in the lawsuit. While municipalities can dispute the board’s decision in court, Broker said it can take years and be expensive.

“The problem is they pay taxes on what the State Assessment Review Board decides, and then you get the pleasure of spending literally millions of dollars and years litigating with 25 attorneys hired by the industry,” she said. “It’s not insignificant.”

She said her main concern is that the pipeline’s valuation is not tinted by philosophies built up through years of work. Broker said she’s spent years saying the pipeline is worth billions, while Mandell and Washington have argued for a lower amount.

“I would never apply to be on it because I’ve spent a career saying it’s worth $11 billion,” she said. “I don’t think I can be fair. I don’t think they can be fair, either.”

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