A Juneau attorney is calling Gov. Bill Walker’s oil tax bond bill unconstitutional in a superior court lawsuit filed late Monday.

Attorney Joe Geldhof filed the suit on behalf of Eric Forrer, who is a former member of the University of Alaska Board of Regents.

Geldhof is asking a Superior Court judge to declare Walker’s plan unconstitutional, but he also suggests Walker could start over, beginning with a veto to his own bill.

“What the governor ought to do is veto something that is clearly unconstitutional, call the Legislature back into special session, and find the right ways and means of satisfying these debts, if that’s what he thinks that’s what is appropriate,” he said.

On Friday, lawmakers passed a bill -- House Bill 331 – to sell up to $1 billion in bonds so the state can buy back outstanding oil and gas exploration credits.

But, the question of whether this type of debt meets the state’s constitutional muster still lingers.

In April, Sen. Bill Wielechowski cited an opinion from the Legislature’s legal office challenging the bill on those grounds.

Geldhof said Walker’s plan exceeds the Constitution’s limited powers to incur debt.

In Anchorage, Walker said the bill hasn’t even hit his desk yet and added bills receive a full legal vetting. He said the Department of Law has reviewed the bill. Last week, it also issued an opinion to lawmakers before casting a deciding vote.

“We received an opinion from our Department of Law that what we are doing going forward is appropriate. I relied upon those in the past,” Walker said. “I’m very comfortable with our Department of Law’s analysis and I’m very comfortable with that.”

Last year, under House Bill 111, the Legislature revamped the credits program designed to attract investment from smaller oil companies. Oil companies can now earn credits once they start producing oil rather than during the exploratory phase.

But, the Legislature and the administration still want to clear the books of remaining credits owed to oil companies.

The tax division says there are slightly more than $800 million in outstanding credit certificates, but it’s expecting upwards of another $200 million.

Of that, $100 million is expected to be sold to the major North Slope leaseholders, who will, in turn, use those credits against their taxes.

This credit program originally was designed to attract smaller companies to explore for oil and gas throughout the state.

But recent chronically-low oil prices made it difficult to purchase these credits, and the state was running up a sizable tab.

This has forced Walker to pay the minimum under state law, but not nearly as much as the Legislature and industry sought.

Rather than repay the minimum under state law over several years, the state will buy back the credits in full, but at a discounted rate.

Now this plan could rest on a Superior Court decision.

“It’s not just Eric Forrer and Joe Geldhof,” Geldhof said. “Legislative Affairs leg legal said it’s unconstitutional. Numerous lawyers testified convincingly that this bill has significant constitutional problems. The message from Eric Forrer on behalf of all of us is we have to live within the constitution.”

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