Israeli Government Mulls Knesset Vote, Court Fight to Save Stability Clause in Gas Deal

Officials say they are not interested in legislation, see openings to convince court.

Offshore Leviathan natural gas drilling site.
Albatross

Prime Minister Benjamin Netanyahu’s government was debating on Monday how to deal with a High Court of Justice hint that a key part of the gas framework not be approved by the court unless the Knesset approves it as law.

The recommendation is not part of any formal decision the court has made, but it came as a surprise to the government. It had expected the court to approve the controversial framework, which sets out the final regulatory terms under which Israel’s energy industry will operate.

Broadly speaking, the government could try to persuade the court to reconsider its recommendation, or to go to the Knesset and try to win its approval.

Netanyahu flew to Berlin on Monday with several members of his cabinet, including National Infrastructure, Energy and Water Minister Yuval Steinitz, so there was no top-level discussion about the court’s recommendation. But Steinitz and several other officials said they were not interested in pursuing the legislative option.

At issue is the framework’s stability clause, which grants the natural gas cartel immunity from regulatory changes for at least another 10 years.

“We’re currently focusing on the stability clause — and wondering whether the provisions of the deal on this issue are possible without primary legislation,” Justice Elyakim Rubinstein, head of the bench hearing several petitions against the deal, said at the end of Sunday’s hearing. “The question is whether, to remove any doubts and prevent a risk that must be taken into account, you shouldn’t go with primary legislation.”

Energy shares fell on the Tel Aviv Stock Exchange in response to the news, with the Oil and Gas index down 0.9% at 859.49.

Netanyahu has argued — going as far to appear in the court himself this week — that the clause is a critical part of the framework, acting as an insurance policy that energy companies won’t face any further regulatory changes as they have over the last several years as the government has revised its natural resources policies repeatedly, which has delayed development of the giant Leviathan field.

The government would face an uphill fight in the Knesset. Its slim Knesset majority of 61 seats will fall to 59 in the case of any legislation on the gas cartel because two coalition lawmakers — Haim Katz (Likud) and Yoav Galant (Kulanu) — have recused themselves from voting on the issue due to conflicts of interest.

Eitan Cabel, the Zionist Union chairman of the Knesset Economic Affairs Committee and an opponent of the gas framework, said Monday he would seek to move any legislation on the stability clause to his committee. The opposition has a majority on the committee, unless Avigdor Lieberman’s Yisrael Beiteinu party opts to vote with the government.

“The discussion on the new law, if it is submitted by the government, would be businesslike and not divided simply between coalition and opposition,” Cabel promised.

His committee last year debated another controversial part of the framework, namely that it required Netanyahu, as economy minster, to sign a waiver exempting it from antitrust scrutiny on national security grounds. “During the deliberations in the committee, and afterward in the recommendations we sent to the prime minster and economy minister, we called for first legislating the stability clause,” Cabel said.

Sources said Monday it seemed more likely the government would try to convince the High Court that legislating the stability clause would be wrong. State attorney Aner Hellman signaled as much on Sunday, when he suggested the Knesset could not legally vote to deny itself the right to vote on the issue in the future as the stability clause requires.

The current version of the clause simply states that the government will not take any initiative in the Knesset that goes against the framework terms and will oppose any private legislation.

The government may also be counting on the fact that there are signs the High Court is divided on the demanding the stability clause be legislated. Justice Uzi Vogelman said Sunday that the judges are “still not united” on the matter. That could mean that one or two justices on the panel are not convinced about the need for legislation and could be persuaded to oppose it.