Legislature(2003 - 2004)
03/03/2003 01:05 PM House RES
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* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
March 3, 2003
1:05 p.m.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Hugh Fate, Co-Chair
Representative Beverly Masek, Vice Chair
Representative Cheryll Heinze
Representative Bob Lynn
Representative David Guttenberg
MEMBERS ABSENT
Representative Carl Gatto
Representative Kelly Wolf
Representative Beth Kerttula
COMMITTEE CALENDAR
CONFIRMATION HEARINGS
Alaska Oil and Gas Conservation Commission
Sara Palin - Wasilla
Randy Ruedrich - Anchorage
- CONFIRMATION(S) ADVANCED
Commissioner, Alaska Department of Fish and Game
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
No previous action to record
WITNESS REGISTER
SARA PALIN, Appointee
to the Alaska Oil and Gas Conservation Commission
Wasilla, Alaska
POSITION STATEMENT: Testified as an appointee to the Alaska Oil
and Gas Conservation Commission; provided background information
and answered questions.
RANDY RUEDRICH, Appointee
to the Alaska Oil and Gas Conservation Commission
Anchorage, Alaska
POSITION STATEMENT: Testified as an appointee to the Alaska Oil
and Gas Conservation Commission; provided background information
and answered questions.
ACTION NARRATIVE
TAPE 03-9, SIDE A
Number 0001
CO-CHAIR HUGH FATE called the House Resources Standing Committee
meeting to order at 1:05 p.m. Representatives Fate, Chenault,
Heinze, Masek, and Guttenberg were present during the call to
order. Representative Lynn arrived as the meeting was in
progress.
CONFIRMATION HEARING
Alaska Oil and Gas Conservation Commission
CO-CHAIR FATE announced the only order of business would be the
confirmation hearings on the appointments of Sarah Palin and
Randy Ruedrich to the Alaska Oil and Gas Conservation
Commission.
Number 0159
The committee took an at-ease from 1:06 p.m. to 1:10 p.m.
Number 0255
SARAH PALIN, Appointee to the Alaska Oil and Gas Conservation
Commission (AOGCC), testified. Ms. Palin said the pipeline is
half full, which translates into questionable funding for the
Alaska State Troopers, education, road maintenance, and other
state essentials. She said she appreciated being [appointed] to
a public seat to help maximize the recovery of Alaska's
resources for all Alaskan's. She said AOGCC's task is to
maximize recovery and to eliminate waste, and her role at AOGCC
will be to play a part of that. She talked about using the
administrative skills that she gleaned as the [former] mayor of
Wasilla and as president of the Alaska Conference of Mayors, and
she said she believed she would be able to help in the AOGCC.
Number 0422
REPRESENTATIVE MASEK asked Ms. Palin what qualified her for this
position.
Number 0439
MS. PALIN indicated that the position requires being a member of
the public and does not require a technical background.
Therefore, she suggested, she is qualified for the position, and
she referred to her resume for an explanation of her employment
history. She said as a lifelong Alaskan, she is very interested
and concerned about the oil and gas industry and all of the
resources in Alaska. She said she thought the combination of
her qualifications, her interest, and her concerns would allow
her to serve and assist the commission.
Number 0528
REPRESENTATIVE HEINZE said Ms. Palin was a "shining star" in the
[mayoral] election and that the people of Alaska have come to
trust her. She indicated she was in support of Ms. Palin's
appointment to AOGCC.
Number 0583
REPRESENTATIVE GUTTENBERG suggested that the public position is
very important, and he asked Ms. Palin what her perspective was
of the role of AOGCC.
MS. PALIN suggested that perhaps AOGCC has been underutilized in
terms of outreach and cooperative efforts with other agencies,
departments, and commissions, which she said are needed to
maximize recovery of the state's resources. She said she
envisions her role as being instrumental in ensuring that AOGCC
is utilized appropriately and is able to work with the public in
educational matters and with other necessary agencies. She
talked about a resolution which was passed by the permanent fund
board of trustees that related to oil and gas issues. She noted
that the [commission] is still discussing the resolution and the
direction it will take, and she explained that the resolution
asked AOGCC to be prepared to take action to increase production
from state leases. She said this means that AOGCC is going to
have to do some outreach and be utilized in terms of reaching
out to other areas, bodies, and public members to work together
to ensure that the permanent fund resolution is addressed
appropriately.
Number 0768
REPRESENTATIVE GUTTENBERG noted that Ms. Palin's husband works
for the [oil] industry, and he asked her how she felt about the
potential of a conflict of interest.
MS. PALIN indicated that her husband is employed by [BP
Exploration (Alaska), Inc.] as a production operator. She said
her husband has nothing to do with management or policy setting
and doesn't request drilling permits. Ms. Palin said her
husband's role in the industry is not anything that AOGCC would
be dealing with. She said she had talked with several
[officials], including the governor and his chief of staff,
about the potential for a conflict, and she indicated she has
tried to ensure that people are aware that her husband is an
employee of the industry, so it is never a question. She
indicated that a current AOGCC commissioner, Dan Seamount, has a
potential conflict because his wife is employed as a manager for
a company in the industry. Ms. Palin said Mr. Seamount was
confirmed to [AOGCC] and hadn't had an issue with conflicts.
She suggested that Mr. Seamount's situation has set a precedent
that [having a spouse who works in the industry] should be okay.
She said this dictates that people with potential conflicts must
prove themselves to be fair and objective in dealing with [the
industry].
REPRESENTATIVE GUTTENBERG said he appreciated Ms. Palin's
efforts to meet a higher standard, and he suggested that all
[Alaskan's] have a vested interest in the health of the oil and
gas industry in the state.
CO-CHAIR FATE asked Ms. Palin if she has had time to study
[AOGCC's] mission and responsibilities.
MS. PALIN said she had been studying the mission and she
wondered if the legislature would request AOGCC to "shift gears"
or expand its mission to help meet more of the legislature's
goals.
CO-CHAIR FATE asked Ms. Palin if she had a clear understanding
of her responsibilities on the commission.
MS. PALIN indicated her understanding of her responsibilities is
becoming clearer, and she suggested that some staff who have
experience are still "maneuvering through." She said it is
known that the appropriate agencies are working together for the
greater good of maximizing the recovery of the state's
resources. Ms. Palin suggested that several departments such as
the Department of Natural Resources (DNR), the Department of
Revenue, and the Department of Environmental Conservation (DEC)
are involved. She suggested that AOGCC's mission statement is
open to interpretation and that she and others would have to
maneuver through it to ensure [they all have the same
understanding].
Number 1102
CO-CHAIR FATE suggested the Federal Energy Regulatory Commission
(FERC) would be [involved with a future gas pipeline in Alaska]
and that there would be times when AOGCC and FERC [disagree].
He asked Ms. Palin if she thought her involvement as a
commissioner of AOGCC would be necessary in that situation.
MS. PALIN said AOGCC's job is to protect the public interest in
the exploration and development of the state's oil and gas
resources, and to maximize the ultimate recovery while
protecting property rights, the environment, and the health and
safety of [the public]. She indicated AOGCC would be involved
because [of its obligation] to protect the public interest.
CO-CHAIR FATE said the Regulatory Commission of Alaska (RCA) and
FERC will be setting tariffs that are based on production, and
he suggested that production is what the AOGCC would be involved
in. He suggested that production and the eventual terms that
are set for the tariff could be of some interest to AOGCC.
MS. PALIN said she could foresee the AOGCC playing an advisory
role at the very least, and working with [FERC] in those "value
issues" on recovery.
Number 1316
REPRESENTATIVE LYNN told Ms. Palin that he thought that she
would be an excellent public member of the commission because of
her background and her long-demonstrated ability to listen to
concerns and communicate concerns to a broad range of Alaskans.
He expressed strong support for Ms. Palin's appointment to
AOGCC.
Number 1375
RANDY RUEDRICH, Appointee to the Alaska Oil and Gas Conservation
Commission, testified. Mr. Ruedrich said he has an interest in
this commission, since much of the governor's concept of
"turning Alaska around" relates to increasing oil and gas
production. He said he felt it was terribly important for
someone who has a long, positive knowledge of oil and gas
activities to be on the commission. Mr. Ruedrich said his
career goes back to the early 1970s when he was involved in
determining the actual permafrost loads on casings. He mention
putting the whole concept of resource recovery in jeopardy. He
said the field rules are still related to that work that was
done and published in 1975. He said he got intrigued by Alaska
and came north to work on the Slope full-time as a drilling
engineer and drilling foreman.
MR. RUEDRICH explained that his career led him to other places
to do the same thing, but it always led him back to Alaska. He
said it ultimately led him to coming back in 1994, to work for
Doyon, Limited, on the contractor side after 25 years in the
operator side of the business, and more recently to working for
small lease holders that have the ambition to do things in
Alaska. He said he had been looking at trying to maximize
production, and at the entire gambit from the Cook Inlet to the
North Slope, to ensure that there is as much of a healthy
economy derived from "this side of the equation" as possible.
Mr. Ruedrich said he thought it was one of the most useful
things he could do for Alaska, and felt it was the right thing
to do. He said he was very pleased when Governor Murkowski
appointed him to the commission.
Number 1538
REPRESENTATIVE HEINZE told the committee that she knew Mr.
Ruedrich personally and held him in high regard. She asked Mr.
Ruedrich for his response to an [Anchorage Daily News] editorial
[regarding his involvement in the political process].
MR. RUEDRICH said he had already, because of changes in federal
law, taken steps to not be involved as the functional chairman
for state activities for the Republican Party. He said the
"central committee" has already defined that as the role of Ms.
Paulette Simpson, and that his involvement in the political
process in strictly relative to the federal side of the
Republican Party. He said there are virtually no "relational
activities" between being on the commission and those types of
activities. Mr. Ruedrich said he felt that there was no
conflict or issue at hand, since all of the state activities
will be under the able direction and control of Ms. Simpson, who
is vice-chair of the party and chairman for state operations.
Number 1640
REPRESENTATIVE GUTTENBERG noted Mr. Ruedrich's comment about not
being interested in [AOGCC] until recently. However, he said,
Mr. Ruedrich's resume suggests he'd been involved in this field
all of his life. He applauded Mr. Ruedrich for his continuing
responsibility and expanded roles, and he said [AOGCC] seems
like a good place for somebody with his expertise.
Representative Guttenberg talked about the role of the party
chair and about the reorganization of state and national roles.
He said parties have a responsibility to "do quite a bit of
reorganizing as they want, also." He remarked, "I can't see how
you can separate them out."
MR. RUEDRICH said current federal law makes doing the separation
very straightforward. He explained that under the Bipartisan
Campaign Reform Act of 2002, to be involved in both federal
activities and nonfederal activities - in other words, state
activities - could be found to be a federal felony. He said the
federal sentencing guidelines have been defined at this time as
a one-to four-year prison term. He said the [Bipartisan
Campaign Reform Act] makes it very apparent that defining
rigorous separation of authority is necessary, and under that
law, no single entity can be both on the federal and the state
side at the same time. He suggested that it is only natural
that there is a division of authority to adhere to the new
federal law, and he said it's with that in mind that in January,
the Republican Party took those steps to be in compliance before
new activities were engaged in, after the most recent election
cycle. He said the rationale is bound by federal law to the
level of criminal misconduct if one goes beyond it, so it is
very straightforward and will be followed very carefully. He
remarked, "The state side, essentially, it drops out as a
positive by-product of my disassociation that they're in."
REPRESENTATIVE GUTTENBERG said he assumed Mr. Ruedrich would not
be attending any party functions.
MR. RUEDRICH said he did not attend the House Majority event
that was held in Juneau. He said the state convention this
coming year will essentially be a federal convention and will be
carried as a federal activity to elect delegates to go to the
national convention. He said different events will have
different connotations, and for that reason would be defined,
and he would not be participating either as host, sponsor, or
participant in House or Senate activities in this state for
those [events]. He said he would potentially be participating
in things that are related to the federal side of political
operations, which are, by law, differentiated.
REPRESENTATIVE GUTTENBERG expressed concern about the public's
perception.
MR. RUEDRICH said to his knowledge, there has not been anyone
from the petroleum industry who has appeared as a speaker at a
Republican Party event in more than five years, and he doesn't
recall ever having had such happen. He said it is not something
that would be terminated; it's something that's never even
happened.
REPRESENTATIVE GUTTENBERG said there is a strong perception that
there would be a conflict and he thought the Anchorage Daily
News editorial illustrated that. He said he is concerned.
Number 1948
MR. RUEDRICH assured Representative Guttenberg that his duties
will be to this job as a state employee, to maximize production
and revenue, as is appropriate, under the statutes granted to
[AOGCC] by the legislature. He said it would be his intent to
have no involvement in those endeavors that are related to
electing [officials] to state office, since those are, by
federal law, clearly separated. Mr. Ruedrich said he has a
limited desire to raise the potential for grounds for an
investigation, much less for a conviction, so he would be very
diligent at not giving the perception of any involvement in the
House and Senate activities for the 2004 election cycle.
REPRESENTATIVE GUTTENBERG said Mr. Ruedrich kept referring to
the House and Senate campaign committees.
MR. RUEDRICH said the governor's campaign will not be until
2006, and the same rules would apply.
REPRESENTATIVE GUTTENBERG said the Republican Party of Alaska
was able to receive both federal and state donations.
MR. RUEDRICH said clearly the Republican Party of Alaska will
have to have very distinct - as it always has had - but now
separated events, rather than singular events for fundraising.
He said there would be federal fundraising and nonfederal
fundraising activities.
Number 2065
REPRESENTATIVE LYNN told Mr. Ruedrich that his resume reflects
an exceptional list of qualifications for this position. He
said considering the role that oil and gas is going to play in
the future of Alaska, he couldn't imagine appointing anybody
else to this position. He said he was in support of Mr.
Ruedrich's appointment to AOGCC.
CO-CHAIR FATE turned attention to Mr. Ruedrich's professional
qualifications, and he asked if the applicable engineering
percentage represents the amount of time he had spent in
specific engineering endeavors.
MR. RUEDRICH remarked:
What I tried to do there is, instead of looking at the
total time served and saying it's kind of an
engineering job [and] therefore ... the entire time
would be applicable, I looked at what the job was.
... For example, the research engineer role from '72
to '75 was totally involved in the subsurface
engineering work for Prudhoe wells, so it's 100
percent applicable.
The time spent later, in the early '80s, for example,
the two-year period, about half of that time was spent
in such tasks as managing people and related
operational issues that were not truly engineering
So, that's about a 50 percent activity, or half the
time would count toward applicable time to be a down-
hole engineer or surface process engineer, the two
items that are the principal attributes identified in
this position as it is defined in statute or in
regulation.
The time I spent in the North Sea, ... the job title
was operations manager; a huge portion of that time
was spent investigating a highly complicated technical
venture in terms of a failure of well-control
equipment and participating in a formal inquiry, which
took almost two full years of the time I was in the UK
[United Kingdom], and so while I had a generalized job
title, a lot of this was just a very high level of
technical engineering work.
Number 2228
Subsequent to that and in parallel with that when I
was not engaged in that project, there were
productions operations activities, as well as drilling
activities, that had pure engineering content, as well
as what I would call management oversight. ... What
I've tried to do is characterize in each of those
facets of my past the percentage of the time that was
... [related to] engineering, rather than supervising
human resource issues and budgets and so forth.
To try to come up with a proper characterization of
what one does in about a ... 33-year professional
lifetime, ... since I graduated from school with a
doctorate in engineering -- and I characterize that as
having about 20 years that are directly applicable to
the skills that are defined in this particular role of
subsurface work as a functioning petroleum engineer.
... In 1983 ... [and 1984], I was the ... chairman of
the local society petroleum [of] engineers chapter,
and in ... 1980, I was the vice chairman of the San
Joaquin Valley, Bakersfield, California, chapter of
the society of petroleum engineers. So, as a chemical
engineer by degree, I have basically worked my entire
career, by definition, as a petroleum engineer working
in subsurface and pipeline related work.
CO-CHAIR FATE asked Mr. Ruedrich how he thought he would use his
background of experience in the position of commissioner.
Number 2337
MR. RUEDRICH said his hope is that [AOGCC] can be flexible and
creative enough, both as a regulatory body and as a technical
entity, to ensure that new technology comes into play in an
orderly manner in the Alaskan oilfields, and [that AOGCC] has
the opportunity to provide reliable "public-sector technical
input" to whatever major projects might be seen for gas offtake
from the North Slope, whether those are gas-to-liquids or
pipelines. He suggested that the future production of that
resource is important to the state. Mr. Ruedrich suggested that
[AOGCC] is an excellent "spokesman" for the public of Alaska in
ensuring that is reinforced by the state government by people
who have long-term continuing positions as commissioners at
AOGCC.
Number 2397
CO-CHAIR FATE asked Mr. Ruedrich if he believed being the head
of a major political party would have an effect on his
performance as a commissioner.
MR. RUEDRICH, in response, said absolutely not.
Number 2441
REPRESENTATIVE LYNN made a motion to move the nominations of
Sarah Palin and Randy Ruedrich to the Alaska Oil and Gas
Conservation Commission forward to the full bodies for
consideration. There being no objection, the confirmations of
Sarah Palin and Randy Ruedrich were advanced from the House
Resources Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 2:03 p.m.
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