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Stevens, Son Press Project

In late 2005, Sen. Ted Stevens (R) joined other members of the Alaska delegation in pressing state officials to reserve $2 million in earmarked federal money for a pipeline project being conducted by a gas company that employed Stevens’ son, Ben.

Stevens, Rep. Don Young (R) and Sen. Lisa Murkowski (R) wrote a letter to the Alaska Department of Transportation on Nov. 9, 2005, to “more clearly explain the Congressional intent” of a $2 million earmark in the 2005 highway bill, known as SAFETEA-LU. The letter clarified that the money was intended for the project Ben Stevens’ company was working on, and the company was named in the letter.

Ted Stevens’ office said this week that the letter merely reflected the importance of bringing natural gas to South-Central Alaska, and the elder Stevens’ involvement in the issue had nothing to do with the younger Stevens’ employment.

The provision that had been inserted into the bill by the Alaska delegation reserved the money for a “study on the feasibility of constructing a natural gas pipeline from the North Star Borough to South Central Alaska along the existing transportation corridors.” The provision refers to a long-running discussion about how to get a portion of the state’s abundant North Slope natural gas reserves to the chronically under-supplied gas consumers in the population centers around Anchorage.

But according to state officials, there are two possible pipeline routes that fit the description as it was worded in the earmark: one, a north-south route from Fairbanks that follows the “Parks Highway” to Anchorage and would pass through a small piece of Denali National Park, and a second that would swing east through Glennallen before cutting back west to Palmer, just outside Anchorage.

“That earmark came to us as an orphan,” said Mike Chambers, spokesman for the Alaska Department of Transportation and Public Facilities. “When an earmark comes in, and if it is general enough, several people will stand up and claim it ... sort of like a custody battle.”

The letter from Stevens, Young and Murkowski made it clear which side should win custody. The Members pointed out that the 2005 omnibus appropriations bill set aside an additional $2 million “to allow ENSTAR Natural Gas and ASRC Energy Service to move forward on a feasibility study along the Parks Highway for the construction of a spur line from Fairbanks to Anchorage.” They added: “The intent of the two million dollars in SAFETEA-LU is to continue the Parks Highway Spur study begun under the DOE project.”

ENSTAR Natural Gas is a subsidiary of SEMCO Energy, a Michigan-based energy company. Ben Stevens has served on the board of SEMCO since 2004 and was paid $77,810 for his service in 2006, according to the company’s most recent filings with the Securities and Exchange Commission.

Ted Stevens clearly was not the only advocate for the Parks Highway pipeline earmark. The delegation letter was written in the first person, suggesting that questions be directed to “my staff on the Transportation and Infrastructure Committee,” which is the committee that Young chaired at the time.

The $2 million earmark was not included in the House version of the SAFETEA-LU bill and was added in the Senate, where Stevens chaired the Commerce, Science and Transportation Committee, which had jurisdiction. But Murkowski also claims credit for the earmark. “If we can’t get more gas [in the Anchorage area], people are going to freeze in the dark,” said Chuck Kleeschulte, a legislative assistant on energy issues in Murkowski’s office. Kleeschulte referred to the project as a “delegation earmark” and said, “We gladly accept responsibility for this earmark.”

The Alaska Legislature also passed a resolution expressing support for constructing a natural gas pipeline from Fairbanks to South-Central Alaska, with then-state Sen. Ben Stevens voting in favor.

Aaron Saunders, spokesman for Ted Stevens, wrote in an e-mail to Roll Call that “The provision in the SAFETEA-LU bill to provide money to the state to continue to study possible spur lines was a priority for the entire Alaska Congressional Delegation. These funds would ensure that [the] ongoing study would be completed. It is the Delegation’s understanding that the state will award a contract to finish the study based on its procurement process,” meaning it is not guaranteed that ENSTAR will receive the money.

Saunders added that the delegation’s support of the pipeline “is based on the project’s merits and its importance to all of their constituents who live in South Central Alaska. ... At no time did Ben Stevens’ role as one of 10 members of SEMCO’s Board of Directors play any part in the Delegation’s decision to support this study.”

Stephen Slivinski, director of budget studies at the Cato Institute, said there is nothing wrong with the Alaska delegation setting aside money for the state to review alternative routes for a gas pipeline. But, he said, “If you are coming from the premise that the state should be the ones determining the best use of a lump of money ... the state should be free to interpret that. The follow-up correspondence is the odd part, which says ‘No, no, you are to spend it this way.’”

Slivinski said Congressional letters to state agencies are a kind of a backdoor earmark. “If you wanted to be more honest about this, you could have done it in the law,” instead of going to the state to make the distinction.

Mike Thompson, the state pipeline coordinator in the Alaska Department of Natural Resources, said the $2 million from the highway bill earmark has never been distributed. The state is waiting for the Energy Department to release a broader feasibility study that compares both routes before it releases a request for bids to conduct the study on the Parks Highway route. The DOE study has been completed — NORSTAR, another unit of SEMCO, was one of the contractors that the department hired to draft it — but it has not yet been released.

Harold Heinze, CEO of the Alaska Natural Gas Development Authority — the state-chartered corporation that has been advocating the Glennallen-to-Palmer pipeline route — said the Parks Highway route does not seem to make as much economic sense, but the Members of Congress may not have known that when they wrote their letter in late 2005. “In that timeline, [the letter] is absolutely correct,” Heinze said, since the state did need to consider both routes. “I might differ with it tremendously today,” he added, because he believes the superiority of the Glennallen pipeline seems clear.

Heinze encouraged the Energy Department to include in its analysis the challenges the Parks Highway line would have getting approval from Congress to cross into the Denali National Park, and he provided a copy of an e-mail reply he received indicating that the department “did ask the report’s authors to ‘beef up’ the section dealing with this issue.”

ENSTAR spokesman Curtis Thayer said the pipeline issue “was started before Ben Stevens was on the board. ... Ben had nothing ever to do with any of this.” Thayer said that by his recollection, Ben Stevens had been to the ENSTAR Alaska offices only once since joining the SEMCO board in 2004.

Thayer pointed out that the state has been looking for more natural gas for the population centers around Anchorage for years, and ENSTAR, as the primary natural gas company in the state, probably will be involved no matter where such a pipeline is built.

“We have an interest in building such a line — but it will take a lot of partners,” Thayer said.

Ben Stevens could not be reached for comment on this story, and several calls to his attorney were unreturned.

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