AD Main Menu

Backbone Alaska: Elections revive old campaign against oil industry influence

Amanda CoyneThe New York Times

Alaskans who have been around awhile will recognize Backbone, the group formed in 1999 when then-Alaska Gov. Tony Knowles was negotiating the state's interests in the merger between oil companies Arco and BP. Some thought Knowles too generous with BP. They thought that the two-term Democratic governor lacked backbone. And thus Backbone was born.

Backbone lobbied heavily for federal regulators to intercede in the merger. And they did: The Federal Trade Commission ultimately rejected terms that Knowles had negotiated on behalf of Alaskans. 

Led by such statesmen as former Govs. Wally Hickel and Jay Hammond, state constitution framer Vic Fischer and former Senate Presidents Chancy Croft and Rick Halford, among many other business and labor leaders, Backbone also rallied Alaskans. The group ran full-page newspaper ads. Members worked the phones and wrote letters. Backbone had clout and public prestige -- and used it liberally.

Ultimately, FTC regulators required BP to sell its Arco Alaska assets to ConocoPhillips, leaving BP with about a 30 percent stake on the North Slope.

Backbone celebrated. The concessions were good for Alaska as an "owner state," the group said.

Fast forward 13 years: Some believe the oil companies, emboldened by an industry-friendly governor, are again out to soak Alaska. Money is already flowing toward oil patch-friendly candidates in this fall's state legislative elections, outcomes of which will determine the fate of Gov. Sean Parnell's proposed (and thus far resisted) oil production tax cuts, valued at up to $2 billion per year in state revenues.

Alaskans and their lawmakers are divided over the proposed tax reforms, which supporters portray as necessary to boost dwindling oil production and which opponents believe cost the state too much with too few production guarantees in return. 

Crusading against oil industry influence 

And so it is that Backbone has returned, still focused on oil and still making hay of what members see as a state kowtowing to Big Oil. Hickel and Hammond have both passed, but Backbone still has some hefty names behind it: Malcolm Roberts, David Gottstein and Mike Kenny, among others.

It's been more than a year and a half since Parnell first proposed the oil tax regime changes, and all that's stood in the way of success for the governor is a group of skeptical senators. The Alaska Senate is governed by a band of six Republicans and 10 Democrats that together constitute the Bipartisan Majority Working Group. Members who are in the current bipartisan coalition proved a crucial ally to then-Gov. Sarah Palin, who changed the way Alaska taxes oil companies. And the coalition has been hesitant -- sometimes hostile -- to Parnell's attempts to roll back the Palin-era reforms.

Certain members of the coalition have been under attack from the oil industry and industry-aligned groups.

Backbone's back to defend the coalition.

Bipartisan majority senators under attack

Last week, Parnell confirmed that he's going to campaign against Senate Bipartisan Majority members who've defied him on the tax cut.

"I'm much more interested in having people who want to serve together on behalf of Alaskans and grow our economy through less spending, less taxes and kind of that liberty mentality," he told the Associated Press.

(That's in contrast to Parnell's more conciliatory tone, just two months ago. In May, as Parnell signed into law Alaska's $12 billion state budget -- the largest in history -- he said he appreciated lawmakers "willingness to join in limiting spending.")

Bipartisan majority senators are also under attack by Republicans and pro-industry groups. The Alaska Industry Support Alliance gave the coalition a failing grade for work that it did during the last legislative last session. "While nominally a bipartisan coalition, in practice it is dominated by a core group of left-leaning, anti-business senators," the Alliance wrote.

A group of Republicans voted on a resolution last month that the party not give campaign contributions to any state senators who had joined bipartisan majority coalition. Many candidates running for the Legislature have vowed that, if elected, they will not join the coalition.

"Here's what's at stake," Backbone member David Gottstein said. "The oil companies overly influence the governor's mansion and the House of Representatives. The Senate coalition is the last defense against the oil companies overtaking the Senate. If they accomplish that, if they can take over the Senate, the game's over. [Alaska] goes from being an owner state to an owned state."

Malcolm Roberts, who worked for Hickel for years, echoed Gottstein’s statement. "Others are targeting (the coalition) to take them out. People running for office in Alaska are saying 'I will not be bipartisan.' That's not Alaskan," he said.

Roberts pointed out Alaska's long history of bipartisan coalitions putting state interests before party. "Ted Stevens was part of one. Lisa Murkowski was part of one. Even Sean Parnell was part of one. We think that tradition should be continued," he said.

Backbone is not organized as a political group. It doesn't intend to fundraise, Roberts said. Nor does it intend to give directly to campaigns.

How much influence can the group muster in an election widely expected to draw serious money from oil industry-aligned interests? It's a question potentially worth up to $2 billion a year to Alaska.

How much is oil involved?

Mark Hellenthal, a longtime Anchorage-based pollster and political consultant, is working for some of the Senate candidates running against the Bipartisan Majority coalition. Hellenthal said that so he hasn't seen oil industry-aligned contributions pouring into the elections, as many have predicted.

"The perception that oil will get involved is simply false. Oil hasn't been a factor in state legislative races since Veco got busted," he said, referring to the once politically influential and now-defunct oilfield support services company run by Bill Allen. Allen was convicted of bribing Alaska lawmakers over pressuring them to vote for a 2006 oil tax favorable to industry.

Hellenthal however, did make mention of a recent fundraiser at Anchorage's Petroleum Club for Bob Bell, a conservative former city assemblyman who supports cutting oil taxes. Bell is running against former prosecutor and Chugach Electric director Liz Vasquez in a hot Republican primary contest to challenge Hollis French, prominent member of the Senate Bipartisan Majority coalition.

The Petroleum Club fundraiser, hosted by BP Alaska President John Minge, raised a whopping $36,000 for Bell, "the highest I've seen in 20 years," Hellenthal said. He chalked those big dollars up more to Bell’s history in Alaska, particularly in the state’s nonprofit world, than to oil interests.

But make no mistake: oil is involved. Another fundraiser in June, hosted by BP's Minge and ConocoPhillips Alaska Vice President Bob Heinrich, raised campaign money for Rep. Bob Roses, a conservative who supports the tax cut and who's running for Senate this fall. Roses hopes to unseat East Anchorage Democratic Sen. Bill Wielechowski.

Wielechowski and French have been among the most vocal senators against the oil tax cut.

"There's going to be a lot of money spent on people who have a vested interest in the election," Wielechowski said. "It's nice to see old-time Alaskans stepping in."

Backbone will have its coming out party Thursday, July 26, at the Hotel Captain Cook.  

Correction: The original story said that Knowles approved terms of the merger which would have effectively given BP a 72 percent ownership stake in the trans-Alaska pipeline and control of more than 70 percent of Alaska’s North Slope oil production. That’s incorrect. The deal worked out under Knowles would have required BP to sell some North Slope leases, sell part of Arco's production and trans-Alaska oil pipeline ownership, and let other companies run two oil fields. The FTC later settled terms for the merger that were stricter than those spelled out in the agreement the Knowles administration made with BP. 

Clarification: The original story said that the bipartisan coalition voted for then Gov. Palin’s oil tax reform. In fact, members who are now part of the coalition who voted for the tax. 

Contact Amanda Coyne at Amanda(at)alaskadispatch.com