The company that built the Alaska pipeline has been accused of impeding an investigation of its costs and management operations and of improperly censoring records in a case that will determine how much it will pay in taxes to the state.
Documents filed last week with the Alaska Pipeline Commission charged that the Alyeska Pipeline Service Co. delayed turning over construction cost records and audits, interfered in attorney's interviews with contractors' employees and deleted several pieces of information line by line.
The charges, filed by attorneys and investigators of the pipeline commission, are the opening shots in along and complex action to determine how much it cost to build the pipeline. Hundreds of millions of dollars in potential royalties and taxes for Alaska are at stake.
A commission member, Robert Breeze, said the censored portion of records turned over by Alyeska apparently contain information on huge cost overruns in pipeline construction costs.
"They don't want us to know these details," Breeze contended in an interview. "We believe that the deleted information is critical in determining the amount of cost overruns. They wouldn't delete this without some reason for doing so."
Alyeska declined to reply to the censorhsip charges, saying it would not comment on issues that are or may be in litigation. But in papers filed in Anchorage, it denied delaying the investigation and said it had "expeditiously" turned over many documents.
Alyeska is owned by the eight companies drilling for oil on Alaska's north slope. Early this summer, they intend to start pumping up to 600,000 barrels of oil a day to a huge depot in sourthern Alaska.
A peculiar twist is that it is to the oil companies' advantage to have a high construction cost certified by commissions that set tariff rates. The higher the cost, the higher the tariff they would pay to the pipeline company, which they own, for pumping the gas. The higher the tariff, the lower the wellhead value of the oil on the north slope. And the lower the well head value, the less severance taxes and royalties the oil companies would pay to the stae.
The Alaska Pipeline Commission, established in 1972, shares intrastate rate-setting authority over the pipeline with the Interstate Commerce Commission.
Since last November, the Alaskan commission has been investigating Alyeska to determine whether the costs it claims are fair and reasonable. Hearings are scheduled to begin next month. A team of lawyers, headed by Terry Lenzner of Washington, has been retained to conduct the investigation.
The commission could exclude as legistimate construction costs any charges it finds were derived from fraud, mismanagement or poor management policies. Any such costs would reduce the tariff rate and end up providing more royalties and taxes for the state. Alaska will get a 12 1/2 per cent royalty and up to 8 per cent severance tax on each barrel of oil taken from the North Slope wells.
The charges of interference with the investigation were filed last week by Lenzner and an investigator in memoranda given to the commission, which subsequently voted to go to court to seek enforcement of a subpoena requiring that Alyeska produce certain documents.
They charged that Alyeska interfered with interviews of contractors' employees whose testimony was sought on management practices.
In one case, documents relating to a contract with Bechtel, a prime contractor, were turned over to the staff 81 days after being promised for delivery.
In another case, Alyeska gave the staff an entire microfiche index of its record-keeping system that the staff spent two futile months trying to operate. Finally, Alyeska produced the coding manual needed to operate the index, the memoranda said.
Lenzner told the commission that by mid-February an informal, voluntary process of obtaining information from Alyeska was not working. The company failed to produce material as quickly as promised and belatedly raised objections to providing other material, he said.
After a subpoena was issued, he added, Alyeska denied investigators access to a room where material previously turned over to them was stored and canceled previously scheduled interviews with employees.
In a statement filed with the commission, Alyeska said it had made every effort and often has gone to burden some and expensive extremes to accommodate the requests of the commission.
"Thousands of pages of documents have been produced for inspection and review by the commission's staff," it said. "The pace of document production has been extraordinarily expeditious."