Tuesday, June 13, 2006

More Lawyer Speak: How long is a long time.......

Senator Hollis French is at "it" again..........

In today's ADN, he is playing lawyer with words again.


With the release of the proposed gas line contract, it is time to re-examine the issue of whether we can, consistent with our state constitution, provide the long-term tax certainty requested by the producers. The short answer is "no."

Some believe that we should simply wait for a court to rule on this question. The danger in not confronting this crucial constitutional issue lies in the cost of delay. We must not take a course that is likely to lead to failure. Embarking on a gas line project that depends on a ruling in favor of tax certainty from our state supreme court is not wise. The overwhelming weight of constitutional history, past and present legal opinion, and established case law points to a ruling from our supreme court that hews to this general legislative truth: One Legislature cannot bind the next.

In Conoco Phillips vs. State of Alaska it is found that the State of Alaska allowed for a reduction in royalties for a period of ten years.

12. REDUCTION OF ROYALTY RATES FOR DISCOVERY. If Lessee shall drill on said land and make the first discovery of oil or gas in commercial quantities in any geologic structure, the royalty rate under this lease shall, instead of the rates prescribed in Paragraph 11, be five per cent for a period of ten years following the date of such discovery, and thereafter the royalty rates shall be those prescribed in Paragraph 11. If this lease is committed to a unit agreement approved or prescribed by Lessor as provided in the regulations, the five per cent royalty rate shall not apply to all, but only, the production allocated to this lease under such agreement.

For ten years, the State of Alaska set up a tax reduction in a contract. That is ten legislative sessions, five terms for some Representatives and over one term for a State Senator.

So where does he get his facts from. History has shown exemptions are made and long term tax structures are set up and they cross and bind "other" Legislators to contractual agreements.

The founding fathers realized this when they spoke of exemptions to bring new industry to Alaska.

In yesterday's editorial, the Anchorage Times hit on the idea and this moring I had the chance to hear Rick Rydell talk about French's column. Both the Times and Rydell are right.

And French is wrong. The Alaska Supreme Court will look to history when it looks at the tax structure and will most likely state how long is long time.

10 years, 15 years, 20 years, 30 years?

All hold one Legislature to another.

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