Native corporation may sue city over gas revenues

nherz@adn.comJuly 29, 2013 

A Native corporation official said that Anchorage could owe the company as much as $24 million in projected revenues from the sale of methane gas, and it is considering a lawsuit to claim the money.

Eklutna Inc. CEO Curtis McQueen said Monday his corporation is entitled to half the revenue from a new system that collects the methane emanating from the Anchorage Regional Landfill, near Eagle River.

Under a long-standing settlement called the North Anchorage Land Agreement, the city is supposed to split any revenues from so-called "public interest lands" with Eklutna, McQueen said. Eklutna took its case to the Assembly in a work session in Eagle River earlier this month, where one of its lawyers gave a presentation outlining its legal case.

City Attorney Dennis Wheeler acknowledged Monday that a settlement with Eklutna could be possible.

But he and Mark Madden, manager of engineering for Solid Waste Services Department, also argued that according to the land use agreement, Eklutna is only entitled to revenues that are related to the land itself -- not from improvements like the system used to capture the methane.

"The gas doesn't come from the ground -- it comes from the trash that we put there," Madden said. "So, where do you draw that line?"

And, Madden added, even if that argument doesn't hold, Eklutna would only be entitled to net profits from the sale of the gas -- and the corporation's arguments fail to account for the money spent on building the collection system, he said.

The methane ultimately is purchased by Doyon Utilities LLC, which since last November has been using the gas to run a power plant.

The city collects the methane from the landfill with its own system, then cleans it, pressurizes it, and pipes it to four of Doyon's generators, which burn it to produce power for Joint Base Elmendorf-Richardson.

In its presentation to the Assembly, Eklutna revealed a pair of internal emails from 2009 that it contends show that city lawyers were aware that the profits from the project would have to be shared.

Wheeler said, however, that the city had provided those emails to Eklutna at the corporation's request, and that they were taken out of context -- though his office did not immediately respond to a request from the Daily News for the full strings of messages.

Madden also said that the Solid Waste Services Department had never denied its knowledge of its potential liability -- but that he had moved to get the gas project off the ground as quickly as possible so that it could start making money.

"It's better having money in the bank and deciding how to split it up, versus waiting around and getting 100 percent of nothing," he said.

McQueen, the Eklutna CEO, said that the corporation would await another Assembly work session on the dispute, then "see what kind of overture is made" by city officials.

But Assembly Chair Ernie Hall said he expected that a resolution would only come after litigation.

"Our legal department has got their interpretation; Eklutna has their interpretation," Hall said. "Since we can't come to an amicable decision on this, maybe we do have to let the courts decide."

Reach Nathaniel Herz at nherz@adn.com or 257-4311.

 

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