AP Report: Palin Curbed Pipeline Bids

ANCHORAGE, Alaska — Gov. Sarah Palin's signature accomplishment _ a contract to build a 1,715-mile pipeline to bring natural gas from Alaska to the Lower 48 _ emerged from a flawed bidding process that narrowed the field to a company with ties to her administration.

Beginning at the Republican National Convention in August, the McCain-Palin ticket has touted the pipeline as an example of how it would help America achieve energy independence.

"We're building a nearly $40 billion natural gas pipeline, which is North America's largest and most expensive infrastructure project ever, to flow those sources of energy into hungry markets," Palin said during the Oct. 2 vice presidential debate.

Despite Palin's boast of a smart and fair bidding process, the AP found that her team crafted terms that favored only a few independent pipeline companies and ultimately benefited the winner, TransCanada Corp.

In interviews and a review of records, the AP found:

_Instead of creating a process that would attract many potential builders, Palin slanted the terms away from an important group _ the global energy giants that own the rights to the gas.

_Despite promises and legal guidance not to talk directly with potential bidders, Palin had meetings or phone calls with nearly every major candidate, including TransCanada.

_The leader of Palin's pipeline team had been a partner at a lobbying firm where she worked on behalf of a TransCanada subsidiary. Also, that woman's former business partner was TransCanada's lead lobbyist on the pipeline deal. Plus, a former TransCanada executive served as a consultant to Palin's pipeline team.

_Under a different set of rules four years earlier, TransCanada had offered to build the pipeline without a state subsidy; under Palin, the company could receive a maximum $500 million.

Palin's team was led by Marty Rutherford, a widely respected energy specialist who entered the upper levels of state government nearly 20 years ago.

What the Palin administration didn't tell legislators was that in 2003, Rutherford left public service and worked at the Anchorage-based Jade North lobbying firm. There she did $40,200 worth of work for Foothills Pipe Lines Alaska, Inc., a subsidiary of TransCanada.

Foothills Pipe Lines Alaska Inc. paid Rutherford for expertise on topics including state legislation and funding related to gas commercialization, according to her 2003 lobbyist registration statement.

Palin has said she wasn't bothered by that past work, but Rutherford wouldn't have passed Palin's own standards: Under ethics reforms the governor pushed through, Rutherford would have had to wait a year to jump from government service to a lobbying firm.