Legislature(1999 - 2000)
02/24/2000 10:10 AM House O&G
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
February 24, 2000
10:10 a.m.
MEMBERS PRESENT
Representative Jim Whitaker, Chairman
Representative Fred Dyson
Representative Joe Green
Representative John Harris
Representative Brian Porter
Representative Allen Kemplen
Representative Hal Smalley
MEMBERS ABSENT
Representative Gail Phillips
Representative Tom Brice
COMMITTEE CALENDAR
CS FOR SENATE JOINT RESOLUTION NO. 18(RLS)
Requesting Exxon Corporation to pay claimants for court-ordered
damages resulting from the Exxon Valdez oil spill.
- FAILED TO MOVE HCS CSSJR 18(O&G) OUT OF COMMITTEE
CONFIRMATION HEARING:
Alaska Oil and Gas Conservation Commission
Daniel Taylor Seamount, Jr. - Eagle River
- CONFIRMATION ADVANCED
PREVIOUS ACTION
BILL: SJR 18
SHORT TITLE: EXXON VALDEZ DAMAGE CLAIMS
Jrn-Date Jrn-Page Action
3/24/99 662 (S) READ THE FIRST TIME - REFERRAL(S)
4/07/99 (S) JUD AT 1:30 PM BELTZ 211
4/07/99 (S) MOVED OUT OF COMMITTEE
4/07/99 (S) MINUTE(JUD)
4/28/99 (S) RES AT 3:00 PM BUTROVICH 205
4/28/99 (S) FAILED TO MOVE OUT OF COMMITTEE
4/28/99 (S) MINUTE(RES)
5/07/99 (S) MINUTE(RES)
5/11/99 (S) RLS AT 12:00 PM FAHRENKAMP 203
5/15/99 (S) RLS AT 1:30 PM FAHRENKAMP 203
5/16/99 (S) RLS AT 4:30 PM FAHRENKAMP 203
5/16/99 (S) MINUTE(RLS)
5/19/99 662 (S) JUD, RES
4/09/99 843 (S) JUD RPT 4DP
4/09/99 843 (S) DP: TAYLOR, ELLIS, TORGERSON, DONLEY
4/09/99 843 (S) ZERO FISCAL NOTE (S.JUD)
5/10/99 1322 (S) RES RPT 3DP 1NR
5/10/99 1322 (S) NR: HALFORD; DP: MACKIE, LINCOLN,
TAYLOR
5/10/99 1322 (S) PREVIOUS ZERO FN (S.JUD)
5/16/99 1514 (S) RLS RPT CS 3 CALENDAR 1DNP 1OR
5/16/99 1515 (S) RULES TO CALENDAR 5/16/99
5/16/99 1522 (S) READ THE SECOND TIME
5/16/99 1523 (S) RLS CS ADOPTED UNAN CONSENT
5/16/99 1523 (S) HELD IN SECOND READING TO 5/17
CALENDAR
5/17/99 1585 (S) TAKEN UP IN SECOND READING
5/17/99 1586 (S) RETURN TO RULES CMTE MOTION FLD Y7
N13
5/17/99 1586 (S) ADVANCED TO THIRD READING FLD Y13 N7
5/17/99 1586 (S) THIRD READING 5/18 CALENDAR
5/18/99 1645 (S) READ THE THIRD TIME CSSJR 18(RLS)
5/18/99 1645 (S) PASSED Y14 N6
5/18/99 1646 (S) GREEN NOTICE OF RECONSIDERATION
5/19/99 1689 (S) RECON TAKEN UP - IN THIRD READING
5/19/99 1689 (S) PASSED ON RECONSIDERATION Y16 N4
5/19/99 1715 (S) TRANSMITTED TO (H)
1/10/00 1878 (H) READ THE FIRST TIME - REFERRALS
1/10/00 1879 (H) O&G, RES, JUD
1/10/00 1896 (H) CROSS SPONSOR(S): KERTTULA
2/24/00 (H) O&G AT 10:00 AM CAPITOL 17
WITNESS REGISTER
SENATOR GEORGIANNA LINCOLN
Alaska State Legislature
Capitol Building, Room 11
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of SJR 18.
MATT JAMIN, Attorney
for plaintiffs in Exxon Valdez oil spill damage claims
323 Carolyn Street
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in favor of SJR 18.
PATIENCE ANDERSON FAULKNER
P.O. Box 2574
Cordova, Alaska 99574
POSITION STATEMENT: Testified in favor of SJR 18.
ROSS MULLINS, Director
Cordova District Fishermen United
P.O. Box 436
Cordova, Alaska 99574
POSITION STATEMENT: Testified in favor of SJR 18.
CHRIS BERNS
P.O. Box 26
Kodiak, Alaska, 99574
POSITION STATEMENT: Testified in favor of SJR 18.
WALLACE FIELDS
P.O. Box 1691
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in favor of SJR 18.
LARRY MALLOY, Director
Kodiak Regional Aquaculture Association
104 Center Avenue
Kodiak, Alaska 99615
POSITION STATEMENT: Testified in favor of SJR 18.
JIM SYKES, Spokesman
Alaska Public Interest Research Group
P.O. Box 101093
Anchorage, Alaska 99510
POSITION STATEMENT: Testified in favor of SJR 18.
DANIEL TAYLOR SEAMOUNT, JR. Appointee
to the Alaska Oil and Gas Conservation Commission
25116 Eagle River Road
Eagle River, Alaska 99577
POSITION STATEMENT: Testified as appointee to the AOGCC.
ACTION NARRATIVE
TAPE 00-15A, SIDE A
Number 0001
CHAIRMAN JIM WHITAKER called the House Special Committee on Oil
and Gas meeting to order at 10:10 a.m. Members present at the
call to order were Representatives Whitaker, Dyson, Green,
Harris, Porter and Smalley. Representative Kemplen arrived as
the meeting was in progress.
SJR 18-EXXON VALDEZ DAMAGE CLAIMS
Number 073
CHAIRMAN WHITAKER announced that the first order of business
would be CS FOR SENATE JOINT RESOLUTION NO. 18(RLS), requesting
Exxon Corporation to pay claimants for court-ordered damages
resulting from the Exxon Valdez oil spill. He introduced Senator
Georgianna Lincoln, prime sponsor for SJR 18.
SENATOR GEORGIANNA LINCOLN, Alaska State Legislature, began her
testimony by reminding the committee of the devastation caused by
the Exxon Valdez oil spill of March 24, 1989. Much has been done
in the 11 years since then, she said, citing new technologies,
radar monitoring, prepared-response teams, double hulls, tanker
escort vessels, and more stringent marine pilot licensing.
However, court-ordered damages remain unpaid.
SENATOR LINCOLN said SJR 18 requests that the Exxon Mobil
Corporation (Exxon) pay court-ordered damage claims resulting
from the spill. Six years ago, an Alaskan jury in federal
District Court returned a damage judgment of more than $5 billion
against Exxon. More than 40,000 claimants have waited while
Exxon has filed motions and appeals to overturn the verdict.
Thus SJR 18 is urging Exxon to pay immediately the court-ordered
compensatory damages and, if the punitive damages are affirmed by
the Ninth Circuit Court of Appeals, to pay the punitive damages
without further delay or appeal.
SENATOR LINCOLN called committee members' attention to their
packet contents, including an 11-year time line of the Exxon
Valdez litigation and the public process that has taken place.
Also enclosed was a technical amendment to SJR 18 that was needed
because Exxon Corporation recently merged with Mobil Corporation
and the corporate name was changed to Exxon Mobil Corporation. A
letter from the Legislative Affairs Agency, Legal and Research
Service Division, advises that making the name change throughout
the text of SJR 18 is a minor technical change that fits within
the parameters of Rule 35, so there is no need to suspend the
rules to correct the title to reflect the new name of the
corporation.
Number 0600
REPRESENTATIVE DYSON said he had been told that Exxon has paid
all of the compensatory damages, and that the punitive damages
are the only ones unpaid.
SENATOR LINCOLN said that is not the case; still unpaid are
compensatory damages that total about $50 million, including
interest.
Number 0663
MATT JAMIN, Attorney for plaintiffs in Exxon Valdez oil spill
damage claims, testified by teleconference from Kodiak. He
confirmed that the amount of the unpaid compensatory damages is
about $20 million (and with interest, approximately $50 million).
REPRESENTATIVE DYSON asked if it those damages remain unpaid
because Exxon challenges the validity of those claims.
MR. JAMIN said Exxon has challenged both the compensatory and
punitive damage verdicts returned by the United States District
Court, and that the challenge is now with the Ninth Circuit Court
of Appeals.
REPRESENTATIVE DYSON asked if $50 million was the total amount of
the compensatory damages or just the unpaid portion.
MR. JAMIN said it is the unpaid portion of compensatory judgments
ordered by the U.S. District Court. There is, in addition,
outstanding litigation at the state court level regarding
additional compensatory damages, and for which there will be
trials later this year.
REPRESENTATIVE DYSON asked if some of the $50 million in damages
are still undecided or contended.
MR. JAMIN said Exxon argues that the U.S. District Court jury was
wrong to find that those compensatory and punitive damages were
appropriate.
REPRESENTATIVE DYSON asked about claimants for compensatory
damages who were not directly damaged, but who felt the
reputation of Alaskan fish was denigrated [by the oil spill] and
therefore they were not paid as much for their fish. He wondered
if that group of claimants had its day in court and if that issue
had been adjudicated.
MR. JAMIN explained that the claims described were among those
that federal District Judge Holland had ruled "not cognizable,"
that is, inappropriate to bring before the court based on the
decision in a case known as Robin's Drydock, which has to do with
how close one was to the oil spilled. The issue of whether or
not those claims are legitimate is among issues now before the
U.S. Ninth Circuit Court of Appeals.
Number 0849
REPRESENTATIVE DYSON said punitive damages are intended to teach
the perpetrator not to do something again. He asked Senator
Lincoln if she thinks Exxon needs to be further impressed not to
expose Alaskan waters and wildlife and fish to this sort of thing
again.
SENATOR LINCOLN emphasized that SJR 18 is urging Exxon to
promptly pay compensatory claims already ordered by the court.
Regarding the punitive damages, once the May 3 decision is
reached, if the judges determine that those punitive damages also
should be paid, SJR 18 urges Exxon to pay them [the punitive
damages] as a good corporate citizen rather than to go through
another appeal. It is 11 years since the spill, and it is time
to put this all to rest.
REPRESENTATIVE DYSON asked whether, in the May 3 court
proceedings, the question of the appropriateness of the punitive
damages will be before the court again.
SENATOR LINCOLN explained that it was May 3 of last year, 1999,
when the court [heard the arguments about] both the punitive and
the compensatory damages.
REPRESENTATIVE DYSON asked whether the appeals court had
revisited the punitive damages and said that Exxon needs to pay
those to be further reminded to not do such a thing in the
future.
SENATOR LINCOLN clarified that on May 3, 1999, the issue of the
compensatory and punitive damages went to the Ninth Circuit Court
of Appeals; those judges have not yet given their decision.
[Senate] Joint Resolution 18 is saying that Exxon should pay the
compensatory damages immediately, and if the appeals court
upholds the punitive damages, should pay those, too, and not
appeal again.
Number 1079
CHAIRMAN WHITAKER asked whether interest is currently accruing on
the unpaid compensatory damages as well as on the punitive
damages.
MR. JAMIN said the federal judgment is accruing interest at the
statutory rate of 5.9 percent; that interest rate, set by the
court at the time the judgment was entered, does not change over
the course of the appeal time.
CHAIRMAN WHITAKER asked Mr. Jamin if he had calculated what the
total amount [due] would be today.
MR. JAMIN said the amount of the judgment is now approximately
$6.3 billion.
Number 1096
REPRESENTATIVE GREEN wanted to know how the state would benefit
from the punitive damages if they are upheld.
MR. JAMIN explained that Judge Holland has approved a plan for
distribution of any subsequent compensatory or punitive damage
awards. The money would be distributed among 51 various groups
of litigants, the majority of whom are commercial fishermen from
all around the state affected by price depression in 1989-90.
Other groups that would receive portions of the money include
businesses, processors, Alaska Natives whose subsistence was
affected, cities, boroughs, aquaculture associations, land owners
and commercial fish processing employees.
REPRESENTATIVE GREEN wanted to know if that group includes people
who have not yet received any compensatory damages.
MR. JAMIN said yes, and that any individuals who had already
received compensation would have that amount deducted from the
total that Judge Holland has ruled would be their fair share.
Number 1217
REPRESENTATIVE HARRIS asked if there was someone representing
Exxon available to answer a question.
CHAIRMAN WHITAKER reported that Exxon had chosen not to be
present.
REPRESENTATIVE HARRIS then asked Mr. Jamin about the $5 billion
damage award, saying that at today's interest rates, the money
surely is earning interest above the 5.9 percent owed to
plaintiffs. He wondered how long it would takes that money to
accrue enough interest to pay the $5 billion plus the interest.
MR. JAMIN said Representative Harris had raised a point that also
had occurred to plaintiffs, that Exxon must be making
substantially more from the $5 million than the 5.9 percent they
have been ordered to pay. He surmised that the current rate of
return would be in the range 12 to 18 percent, so it is possible
that a substantial amount of the principal has been earned since
the judgment was entered.
Number 1384
REPRESENTATIVE DYSON said it had become apparent to him that he
has a conflict of interest regarding SJR 18. He said he is
included in the class action suit brought on behalf of salmon
fishers who say they suffered from price depression in 1989-90,
years when he was fishing. He asked to be excused from the vote
in the committee, but said he wished to stay and listen.
CHAIRMAN WHITAKER deemed the conflict of interest to be a valid
one and excused Representative Dyson from voting on SJR 18.
REPRESENTATIVE SMALLEY then asked about a potential conflict of
interest in his own case. He had fished in 1989, was listed
among crew members, and consequently was named on the list of
claimants. He had since asked to be deleted from the list, and
had received no further mailings about the claim, so he assumed
that he was no longer considered a claimant.
CHAIRMAN WHITAKER told him to let his conscience be his guide.
REPRESENTATIVE SMALLEY stated that he did not feel there was any
reason why he should not vote on SJR 18. He then inquired about
the origin of a document in committee packets, "Exxon Mobil
response to SJR 18."
CHAIRMAN WHITAKER said it had been received the preceding day
from Brian Dunphy, a lobbyist for Exxon Mobil Corporation.
Number 1552
PATIENCE ANDERSON FAULKNER testified by teleconference from
Cordova. She told members that she had learned much about the
sorrows of those affected by the 1989 Exxon Valdez oil spill as
she helped many people - commercial fishermen, cannery workers,
and Alaska Natives dependent on subsistence - to get in touch
with those who could protect their interests. She spoke of the
invasion of privacy associated with documenting those claims.
She said she had interviewed most of the Prince William Sound
area residents who needed help with the paperwork. Some were
overwhelmed by it, and many "were pretty frustrated." She said
they still ask her when all of this "oil spill stuff" will be
settled.
Number 1638
MS. FAULKNER expressed frustration that in 1989, Exxon was able
to purchase a Canadian oil company, but didn't have enough money
to pay the damages owed. Those who live on Prince William Sound
are now going into their twelfth [fishing] season since the
spill, and there will be no herring fishing again this year.
She stated, "Where the people are going to have money to make
their boat payments, to just survive, I don't know." Since the
spill, 500 of the claimants have died, she noted, leaving "a
paperwork nightmare" for the survivors. She would like to see
the claims settled and paid, she added, and to move on into a
brighter future.
Number 1704
REPRESENTATIVE GREEN asked Ms. Faulkner if there would be no
herring fishing this year because of the oil spill.
MS. FAULKNER said this year's herring fishery had been closed by
the Alaska Department of Fish and Game (ADF&G). She said the
last time she was able to get herring roe on kelp was probably in
1993, and it was not edible.
Number 1810
REPRESENTATIVE HARRIS recalled that the herring fishery was
closed in 1989 because of the oil spill. In subsequent years, it
had been closed because the return was very poor. The ADF&G
reopened the fishery once a few years ago, but the juvenile fish
coming back were too small, so the department closed the fishery
again.
REPRESENTATIVE HARRIS asked Ms. Faulkner to explain some of the
problems fishermen and others are having because of compensatory
damages that have not been paid.
MS. FAULKNER said that more than half of the fleet of commercial
fishing boats is gone because the fishermen could not make their
boat payments. The remaining boats are not well maintained for
lack of money. She described fishermen trying to figure out how
to repair their own marine electronics and how to make other
repairs normally entrusted to technical experts. She said they
were compromising their safety trying to maintain the boats well
enough to make a living with them.
MS. FAULKNER said many commercial fishing permits have left the
area because they are either not worth anything or because that
was one of several assets that had to be sold off so that people
could have money to survive. "Everything in our boat harbor is
mortgaged," she added, noting that people have been forced to go
through their assets and decide what to keep in order to survive.
REPRESENTATIVE HARRIS asked if those were examples of the
compensatory claims still being disputed.
MS. FAULKNER replied yes, specifying the value of boats, the
value of permits, and the prices received for fish.
Number 1941
ROSS MULLINS, Director, Cordova District Fishermen United,
testified by teleconference from Cordova. He said he had been a
leader of the Prince William Sound fishermen's fight against
locating the oil pipeline terminus at Valdez. He said fishermen
had feared that oil shipment by supertankers through Prince
William Sound would damage the fishery. The fishermen favored an
overland pipeline through Canada to markets in the United States.
Mr. Mullins said they lobbied hard to try to get baseline surveys
done for Prince William Sound resources and the marine ecosystem,
as part of the required environmental impact statement. He
stated, "We argued that without adequate baseline studies, any
future changes or damages to the resources caused by inevitable
oil spills could not be properly measured and assessed. We found
few sympathetic ears." He said one of Alaska's U.S. senators had
assured them that "not one drop of oil will touch the waters of
Prince William Sound."
MR. MULLINS said the Exxon Valdez Oil Spill Trustee Council
should buy up the distressed fishermen's boats and permits and
"put the poor beggars out of their misery." The Prince William
Sound salmon resources have been severely damaged. The facts are
undeniable. The current fisheries collapse is indisputable.
MR. MULLINS said the only difference between the adjacent fishing
areas - where runs are abundant and robust - and Prince William
Sound is that it was the epicenter of the spill. Last year,
information developed by National Marine Fisheries Service
scientists at the Auke Bay Laboratory had reported that the low
levels of oil still remaining in Prince William Sound were having
ongoing genetic impacts on salmon in the oiled stream habitats.
MR. MULLINS commented on the question of how the state would
benefit from dollars distributed to the plaintiffs, saying he
thought the infusion of that much (more than $5 billion) cash
into the state's economy would trigger a significant economic
boom. There are more than 40,000 plaintiffs, roughly 7 percent of
the population of Alaska. Taking into account the multiplier
factor, the damage payments could have a long-term, beneficial
impact on the finances of the state and its populace.
Number 2240
MR. MULLINS said the compensatory damages awarded by the jury
came to slightly more than $300 million. In 1994, when the jury
was considering the amount, it was based on a model of price
diminishment. Now, ten years later, there is evidence that the
spill had more far-reaching effects. For example, there is
strong evidence that the environmental stress created by the oil
spill has contributed to disease outbreaks that have kept herring
in Prince William Sound from reaching a recruitment biomass
adequate to allow fishing. The compensatory damages, as
determined by the jury, were significantly less than have
actually occurred. If the plaintiffs request a new trial, there
now is scientific data to support a higher damage award.
TAPE 00-15A, SIDE B
Number 2357
CHRIS BERNS testified by teleconference from Kodiak. He said
Judge Holland, who presided over the U.S. District Court case,
had been named by the [Anchorage] Daily News last year as one of
Alaska's leading citizens since statehood. Judge Holland was
very thorough in the trial. The jury that awarded the $5 million
punitive damages was made up of Alaska residents. About 30,000
Alaskans received benefits from this settlement.
MR. BERNS said he finds it hard to believe that SJR 18 would have
resistance in passing out of the legislature, based on the public
process that it went through, the scrutiny it received, and the
benefits that Alaska will receive if this settlement is paid out,
both financially and emotionally, as the people in Cordova have
stressed. He concluded, "Exxon has not responded as a good
corporate citizen of the state. A lot of people in Alaska have
been damaged, and I would urge the passing of this resolution
out."
Number 2242
WALLACE FIELDS testified via teleconference from Kodiak. He
informed members that he grew up in Kodiak, commercial fishing
and salmon fishing in the summer at his family's setnet site, and
he had participating in all of the herring fisheries in the Gulf
of Alaska and Bristol Bay. He spent 120 days in 1989 cleaning up
beaches around the setnet site and two villages. He encouraged
the committee to support SJR 18.
MR. FIELDS said that since 1989, he has witnessed changes for the
worse in affected coastal communities. Many of his peers and
others with whom he worked have left. The whole fishing
community has been restructured as a result of the Exxon oil
spill. The people have not received compensation. He asked the
committee to put whatever pressure it can on Exxon to settle this
so that area residents can go on with their lives. He concluded:
My father will be 84 years old this year. He was one
of the permit holders who was damaged, ... and I would
sure like for him to be able to see the end of this
while he is still living. I would just like to
encourage you to do whatever you can to get this
settled and bring those dollars back into this
community where they belong, to help fishermen survive
the loss of permit values and boat values, and all
those things that have already been mentioned.
Number 2151
LARRY MALLOY, Director, Kodiak Regional Aquaculture Association,
testified on behalf of that association. A Kodiak resident for
nearly 34 years, he said the aquaculture association - made up of
approximately 618 commercial salmon permit holders in the Kodiak
area - is a major entity responsible for salmon enhancement work
there. The association funds a cooperative agreement with the
ADF&G to accomplish important salmon enhancement projects
throughout the area. As a claimant aquaculture association, it
is in strong support of SJR 18. Mr. Malloy stated:
We feel, that as is accurately stated in the sponsor
statement, that there needs to be closure to the Exxon
Valdez oil spill, and also, as this resolution urges,
that the court-ordered compensatory damages be awarded
and that if court-affirmed, the punitive damages be
paid.
Number 2086
REPRESENTATIVE DYSON asked Mr. Malloy if he could document any
ongoing damage to the fish stocks.
MR. MALLOY said that before the oil spill, their hatchery pink
production was dominant in odd-numbered years, and had a higher
cost/benefit ratio for fishermen because of that dominance.
Following the oil spill, however, that dominance shifted. Also,
the association has noted that wild chum production from nearby
mainland management areas remains depressed. He said the
association is continuing to monitor and follow certain things
that might have some relation to that event [the spill].
REPRESENTATIVE DYSON said he had heard something about petroleum-
caused damage to herring larvae. He asked if there had been
anything similar documented for salmon.
MR. MALLOY said the Exxon Valdez Oil Spill Trustee Council has a
series of studies that document the damage to both salmon and
herring.
Number 2008
JIM SYKES, Spokesman, Alaska Public Interest Research Group, told
the committee he was testifying on behalf of about 3,000 Alaskans
in the public interest, and in support of the resolution. He
wished to associate his remarks with those of the previous
speakers and say that the victims have not been paid and Prince
William Sound has not recovered. He said it is worth noting that
Exxon has not built any double-hulled tankers since the Exxon
Valdez oil spill, which is the greatest safety measure that could
be taken - "over the escorts and the improved vessel tracking" -
for the safe transport of oil. In that same time period, he
noted, the Continental Oil Company (CONOCO) has "double-hulled"
its entire fleet of both inland waterway tankers and ocean-going
tankers. He said he believes this resolution is extremely
appropriate.
Number 1906
CHAIRMAN WHITAKER asked whether anyone else wished to testify;
there was no response. He brought attention to the amendment
discussed previously.
REPRESENTATIVE SMALLEY made a motion to adopt the technical
amendment to CSSJR 18(RLS). There being no objection, the
amendment was adopted.
REPRESENTATIVE HARRIS made a motion to move CSSJR 18(RLS), as
amended, out of committee with individual recommendations.
REPRESENTATIVE GREEN and REPRESENTATIVE PORTER objected.
Upon a roll call vote, Representatives Harris, Kemplen and
Smalley voted in favor of moving CSSJR 18(RLS), as amended, out
of committee; Representatives Green and Porter voted against it;
and Representatives Whitaker and Dyson abstained.
(Representatives Phillips and Brice were absent.) Therefore,
there was a vote of 3-2 in favor of moving the resolution from
committee.
[On tape, it was announced that HCS CSSJR 18(O&G) had moved out
of the House Special Committee on Oil and Gas. However, during a
subsequent five-minute at-ease, it was determined that under Rule
24A of the Uniform Rules, the 3-2 vote was insufficient to move
the resolution out of committee. Therefore, HCS CSSJR 18(O&G)
failed to move out of committee.]
CONFIRMATION HEARING: Alaska Oil and Gas Conservation Commission
CHAIRMAN WHITAKER announced that the committee would consider a
nominee for the Alaska Oil and Gas Conservation Commission
(AOGCC). Committee members would not vote for the nominee but
would pass the nomination out of committee for full consideration
of the House and Senate. [A resume was provided by the
appointee.]
Number 1796
DANIEL TAYLOR SEAMOUNT, Appointee to the Alaska Oil and Gas
Conservation Commission, came forward to testify, saying he had
most recently worked for Unocal in Anchorage as an exploration
and development geologist. He has worked almost entirely
subsurface, and has experience on the North Slope. His
background includes 20 years' experience in the oil industry and
work with regulatory entities in five states. He said he loves
Alaska, and has turned down opportunities to earn more money
elsewhere because he wants to remain in the state and to make a
contribution to it.
Number 1694
CHAIRMAN WHITAKER read an excerpt from the history of the AOGCC,
emphasizing the phrase, "as an independent, quasi-judicial agency
within the executive branch of the state." He asked Mr. Seamount
what that meant to him.
MR. SEAMOUNT said it means he may have to adjudicate conflicts
among all mineral interest owners, including the state and Native
groups, and to do so in an unbiased and fair way.
CHAIRMAN WHITAKER read a portion of the statute concerning the
relationship of the AOGCC to the Department of Natural Resources
(DNR), saying that agency would have no different standing before
the commission than would any other proprietary interests. He
said it was his interpretation that the AOGCC had an independent
obligation and jurisdiction over the DNR. He asked Mr. Seamount
whether he agreed that the AOGCC was intended to have
jurisdiction over the DNR.
MR. SEAMOUNT said that wasn't the way he understood it. The only
case in which he would think it had jurisdiction over the agency
would be in a dispute between two mineral interests.
Number 1482
REPRESENTATIVE DYSON rephrased the question.
MR. SEAMOUNT said he believes that one of the AOGCC's primary
missions is to make sure as much of the oil is recovered as
possible. He asked if what they meant was that there might be a
case in which DNR wanted something that wasn't in that interest.
In that case, he said, the AOGCC would have to take a stand and
point out the problem.
REPRESENTATIVE DYSON said he would hope Mr. Seamount would tell
them to cease and desist.
MR. SEAMOUNT said he would do as much as was within his
authority.
REPRESENTATIVE PORTER cited the mission of the AOGCC, "to protect
the public interest in exploration and development of oil and gas
resources, assuring conservation practices and maximum ultimate
recovery while protecting the health, safety, the environment and
property rights." He asked: If any of those ingredients of the
mission came in conflict with a state department, would you make
an independent judgment or defer to the agency?
MR. SEAMOUNT said he definitely would make an independent
judgment.
CHAIRMAN WHITAKER said he hoped Mr. Seamount understood that it
was his obligation to do that, and that all are well served by
having an independent, quasi-judicial agency.
Number 1301
REPRESENTATIVE DYSON asked Mr. Seamount if he had any ongoing
interests in oil producers that might constitute a conflict of
interest.
MR. SEAMOUNT said he owns stock in Unocal and his wife works for
Forcenergy Corporation as a computer manager (not in a position
to influence policy and decisions).
Number 1266
REPRESENTATIVE GREEN asked Mr. Seamount: If he were in a
situation where there was state land, federal land and Native
land, and he might be in a position where he had to force
unitization to maximize recovery from the field to prevent waste,
where would he stand if Unocal were one of the operators?
MR. SEAMOUNT declared that he would be completely unbiased in
such a situation, and that he had no allegiances to Unocal or to
any other company. He said in such a situation, he would sell
his Unocal stock and possibly recuse himself.
REPRESENTATIVE GREEN said it was his charge to make the decision
and not to recuse himself, and that Mr. Seamount's answer caused
him concern. He added, "You have to take a position on this; you
are the only subsurface expert that would be on the commission."
MR. SEAMOUNT explained that he planned to sell his Unocal stock,
but had not yet done so because the price has been so low. He
said he would not object to selling it tomorrow.
CHAIRMAN WHITAKER said it was not the specific stock but the
broader acceptance of the responsibility that was prompting
committee members' questions. He reminded Mr. Seamount that a
substantial percentage of the state's income comes from the
industry that he is going to be responsible for overseeing.
"This committee and the legislature as a whole needs to know that
you understand your responsibility and that you have the courage
to fulfill it," he added.
MR. SEAMOUNT affirmed that he understands the responsibility,
knows how important the position is, and has no qualms at all
about using the position to ensure that the goals of the AOGCC
are met.
Number 0991
CHAIRMAN WHITAKER asked Mr. Seamount, once appointed and
approved, to whom would he answer.
MR. SEAMOUNT said he would be totally fair and impartial, not
answerable to any constituency that has interest in oil and gas.
CHAIRMAN WHITAKER asked Mr. Seamount if he answers to the
governor, the commissioner of the DEC, or the chair of the AOGCC.
MR. SEAMOUNT said no.
CHAIRMAN WHITAKER confirmed that was the right answer: as a
commission member, Mr. Seamount answers to the people of Alaska.
Number 0862
REPRESENTATIVE PORTER made a motion to move the nomination
forward to the full body for consideration of appointment. There
being no objection, it was so ordered.
CHAIRMAN WHITAKER congratulated Mr. Seamount
REPRESENTATIVE DYSON remarked upon Mr. Seamount's extensive
knowledge of underground resources and the associated technology.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at 11:43
a.m.
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