Legislature(2003 - 2004)
03/19/2004 03:30 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
March 19, 2004
3:28 p.m.
TAPE(S) 04-25
MEMBERS PRESENT
Senator Scott Ogan, Chair
Senator Thomas Wagoner, Vice Chair
Senator Ralph Seekins
Senator Ben Stevens
Senator Kim Elton
MEMBERS ABSENT
Senator Fred Dyson
Senator Georgianna Lincoln
COMMITTEE CALENDAR
Confirmation Hearings:
Commercial Fisheries Entry Commission
Mr. Frank Homan
Alaska Oil and Gas Conservation Commission
Mr. John K. Norman
Royalty and Gas Development Advisory Board
Mr. Charles Cole
Mr. Ken Stout
SENATE BILL NO. 69
"An Act relating to participation in matters before the Board of
Fisheries by members of the board; and providing for an
effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 69
SHORT TITLE: BOARD OF FISHERIES CONFLICTS OF INTEREST
SPONSOR(s): SENATOR(s) WAGONER
02/14/03 (S) READ THE FIRST TIME - REFERRALS
02/14/03 (S) STA, RES
03/25/03 (S) STA AT 3:30 PM BELTZ 211
03/25/03 (S) Moved Out of Committee
03/25/03 (S) MINUTE(STA)
03/26/03 (S) STA RPT 5DP
03/26/03 (S) DP: STEVENS G, HOFFMAN, COWDERY,
03/26/03 (S) DYSON, GUESS
03/19/04 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
Mr. Frank Hohman, nominee for the Commercial Fisheries Entry
Commission
Mr. Charlie Cole and Mr. Ken Stout, nominees for the Royalty and
Gas Development Advisory Board
Mr. John Norman, nominee for the Alaska Oil and Gas Conservation
Commission
Ms. Amy Seitz
Staff to Senator Thomas Wagoner
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 69 for sponsor.
Mr. Ed Dersham
Board of Fisheries
Department of Fish & Game
PO Box 25526
Juneau, AK 99802-5226
POSITION STATEMENT: Supports SB 69.
Mr. Roland Maw, Executive Director
United Cook Inlet Drift Association (UCIDA)
Kasilof AK
POSITION STATEMENT: Supports SB 69.
Ms. Karen Dunmall
KAWERAK, Inc.
P.O. Box 948
Nome AK 99762
POSITION STATEMENT: Opposes SB 69.
ACTION NARRATIVE
TAPE 04-25, SIDE A
CHAIR SCOTT OGAN called the Senate Resources Standing Committee
meeting to order at 3:28 p.m. Present were Senators Thomas
Wagoner, Ben Stevens, Ralph Seekins and Chair Scott Ogan.
Senator Kim Elton arrived at 3:40 p.m. The first order of
business to come before the committee was the confirmation
hearings.
^CONFIRMATION HEARINGS
^COMMERCIAL FISHERIES ENTRY COMMISSION (CFEC)
MR. FRANK HOMAN, Commercial Fisheries Entry Commission (CFEC),
presented the committee with his resume'.
CHAIR OGAN asked him why he wanted to keep doing this job.
MR. HOMAN answered that he thought it was important work and he
kept people fishing.
There were general comments from the committee about what a good
commissioner he was.
CHAIR OGAN thanked him for his service to the state and
indicated there were no questions.
3:30 - 3:34 p.m. - at ease
^ROYALTY AND GAS DEVELOPMENT ADVISORY BOARD
MR. CHARLES COLE, Royalty and Gas Development Advisory Board,
was present to answer questions.
CHAIR OGAN asked him to tell the committee a little about the
board and why he wants to be on it.
MR. COLE began by saying that he was asked by Governor Murkowski
if he would serve on it. He looked at the criteria the board is
required to consider in the exercise of its powers in AS
38.060.70 and believes that he can satisfactorily and properly
consider those criteria. He has lived in Alaska for 50 years and
is generally familiar with oil and gas transactions and detailed
contractual provisions.
CHAIR OGAN said he didn't recall the Advisory Board weighing in
on much, if anything, in the last 10 years. "If we're going to
continue to fund these things, they should be little bit higher
profile or maybe they should go away.
MR. COLE agreed and related that he told the governor he
wouldn't rubber-stamp any contracts that the commissioner of DNR
proposes saying:
If you expect me to do that, you shouldn't appoint me,
because I think that I have a responsibility as a
board member to the people of this state and
specifically to the Legislature and I would not make
recommendations to the Legislature for approval of a
contract that I did not believe satisfactorily met the
criteria. That's number one.
Number two, you know, if you look at the statute, the
statute provides that a board should appoint an
executive director and contract for the services of
professionals, persons with knowledge of economics and
disciplines that may be necessary to assist the board
to adopt regulations under the act and the exercise of
its powers. And that just hasn't been done. And I
agree with you that, you know, the board should either
do that or it should be disbanded, because we're not
doing what we ought to be doing at the present time -
this board is not.
CHAIR OGAN responded that he expected to hear advice from him.
SENATOR RALPH SEEKINS jested that Mr. Cole might be too old to
have enough energy to do this job.
MR. COLE quipped back that he has been running about 20 miles
per week and has the physical energy to do it, at least.
SENATOR KIM ELTON arrived at 3:40 p.m.
SENATOR SEEKINS said he appreciated Mr. Cole's participation on
the board.
CHAIR OGAN asked for any further comments. Hearing none, he
thanked Mr. Cole for serving the state and looked forward to the
elevated engagement by the Royalty Oil and Gas Development
Advisory Board. "They've got to use it or they'll lose it."
CHAIR OGAN asked Mr. Norman his qualifications beyond being just
a public member.
^ALASKA OIL AND GAS CONSERVATION COMMISSION (AOGCC)
MR. JOHN NORMAN, Alaska Oil and Gas Conservation Commission
(AOGCC), said he first came to Alaska in 1968 with Skelly Oil
Company. Prior to that, he worked in oil and gas exploration and
a little bit of production in Texas. He was trained as a
geologist and attended law school, doing military service in
Germany. He was transferred to Alaska where Skelly had 25
percent in production in Cook Inlet prior to the Prudhoe Bay
discovery. The attorney general's office recruited him and he's
been here ever since. He has worked under Governors Hickel,
Miller and Bill Egan. He advised the Department of Natural
Resources on oil and gas matters and served as counsel to the
State Oil and Gas Conservation Committee. He was in private
practice in 1971 and has been practicing for 33 years. He has
known most of the commissioners for a number of years.
I don't mean to leave anyone out, but there are just
some exceptionally outstanding people, particularly
following statehood that rendered great service to the
state....
MR. NORMAN remembered that Tom Marshal was the first geologic
member of the commission and recommended that the state select
acreage at Prudhoe Bay. He has traveled all over Alaska and has
a good understanding of Alaska generally. When an opening on the
commission came up, a number of people encouraged him to apply
for it.
I'll be pleased to answer questions; I see this as an
opportunity to give back to the State of Alaska some
of what the state has provided me over the years by
way of an opportunity for professional development and
gaining experience and working in the natural resource
and oil and gas areas.
CHAIR OGAN said he thought the AOGCC is important, but the state
had not been doing a lot of exploration work.
There's maybe a half dozen exploration wells going on
the North Slope.... The last commissioner said they
got paid too much money. It's one of the higher paid
commissioner jobs. I'm not asking you to comment on
that, but I guess I'm under the impression that there
isn't a tremendous workload going on...and we're
hoping to change that and get some more exploration
going. What's your impression of that?
MR. NORMAN replied:
My impression is that - and I think that's a good
astute observation about the number of rigs running.
Throughout the country, there are rig reports,
drilling reports and I think given the size of our
state, I believe we should have more exploration
activity. I am pleased to see...over the past six
months or so and maybe even over the past year, the
entrée of the new operators in the state. That's
always healthy. Traditionally, it's a lot of the
smaller companies that actually discovered the oil....
Governor Murkowski is trying the make Alaska a more
receptive, friendly place for oil operators to move
into and I do know that when they come into an area,
the pace of exploration picks up and then the number
of reportable discoveries kick in....
We have applications to drill a number of new wells
.... There is a fair amount of activity, but in
comparison to our size and the potential that Alaska
has, I think we are probably not allowing Alaska to be
able to realize its full potential.
CHAIR OGAN said he heard that Alberta has about 500 oil and gas
wells being drilled. He remarked that Mr. Norman is definitely
overqualified for the public member slot and asked if he is
licensed to practice law.
MR. NORMAN replied, "I am."
CHAIR OGAN said there were some down-hole controversies running
around out in the Matanuska Valley and asked Mr. Norman what he
thought the commission's role was in terms of disseminating
public information about how the different operators conduct
their work, for instance protecting water supplies. "What's your
philosophy as far as making sure the operators operate safely?"
MR. NORMAN replied:
My philosophy on that is that Alaska should be
encouraging of development, but that it must be done
properly up here. I think, across the spectrum, if we
are to have development, it should occur properly and
I think all of us who have lived here and made Alaska
our home and have come to love Alaska and plan to be
here for many years, we want to make sure that it gets
done properly.
As far as the Alaska Oil and Gas Conservation
Commission is concerned, the philosophy that I would
bring to it is that we are an independent, regulatory
agency and I intend personally, if confirmed, to
embark on public speaking and to try to get the public
awareness raised as to the role of this commission
and, thereby, maybe ease some of their concerns. The
surveys and studies we have done do not agree with
some of the anxiety that we've heard expressed by the
public in connection with, for example, the production
of what's referred to as shallow gas and coalbed
methane. But, on the other hand, I certainly cannot
fault the public. One thing I believe this commission
can do is get out in front and through public
information and regulatory actions assure the public
that their water will be 100 percent protected with no
exceptions - that we will not allow production in any
aquifer if there is any possibility that it might
interfere with - and I use the word interfere, because
I'm not even talking about contamination - I'm just
talking about degrading or drawing down on the water
supply. I think that's one good function that this
commission can fulfill. We don't have the mandate that
the Division of Oil and Gas has, which is to raise
revenue for the State of Alaska. That certainly is an
extremely important function that they carry out, but
I think it also makes the Division of Oil and Gas
somewhat suspect, not necessarily fairly, because I
think, it's a fine organization and staff, but I can
understand it if I was a member of the public. The
Alaska Oil and Gas Conservation Commission, I believe,
can come to the public and we don't have any other
agenda than to make sure that we regulate and one of
our functions in protection of drinking water,
protection of water use for agricultural purposes, in
fact, just plain protection of fresh water. We've
regulated that for many years. It's nothing new to us.
I do see that we need to step forward and become more
visible particularly in the Valley, on the Kenai
Peninsula and in other areas.
I do see shallow gas production having potentially
wonderful benefits for the State of Alaska,
particularly for Bush villages. If shallow gas could
be encountered there and the public can be assured
that it can be developed in a very safe way without
any degradation, then I think that it can eliminate a
lot of dependence that, particularly our rural
communities, have had on diesel fuel. I have in mind
right now that there is this shallow gas exploration
proceeding up north of Red Dog mine, as an example. In
that region, if that's successful, that could open up
other opportunities for that entire region. I know
it's being looked at down in the Holitna Basin and
within the area of the Chulista Native Corporation
region. I do think that in order to reach the
potential of that resource, as well as any resource,
it's fundamental that the public must accept it and
sign on to it. And to do that, they have to have the
confidence that there's an independent regulatory
agency that's looking out for their interests - not
looking out for the oil industry or the gas industry
or anything else.... That's the philosophy I've always
had as a public servant. I look at it that our primary
clients are the citizens of the State of Alaska and
they're depending on us to look at this....
CHAIR OGAN thanked him for his comments and added, "Make sure
that the operators do it right and... make sure that they just
do the best management practices and protect the water...."
Hearing no further questions, he asked Mr. Ken Stout to testify.
^ROYALTY AND GAS DEVELOPMENT ADVISORY BOARD
MR. KEN STOUT, Royalty and Gas Development Advisory Board, said
he has a business background and has lived in Alaska for 32
years.
I was surprised to see how little this board has been
functioning.... I thought the comments of Charlie were
quite astute. The board has been basically a rubber
stamp for quite some time. What I have discovered is
that at one time it was a very, very active board with
heavy responsibility. It had a full-time executive
director and was well-funded. But the executive
director found one of the contracts that the DNR had
entered into to be a real questionable one and he came
to Juneau and testified against it and consequently,
the board was defunded and he no longer had a job and
from that point on, it didn't really do much, if
anything, except to be a rubber stamp.
I put together a letter and sent it to Charlie and we
put our heads together. Basically, I made some
recommendations.... We need to have someone in
authority appoint a temporary chair for our
organizational meeting and form the elected chair and
establish some priorities for our board. Since no
budget now exists, we need to establish some kind of a
funding source, probably other than the Department of
Natural Resources to allow us to have secretarial
services, which is required at a minimum and while we
don't need an executive director, at all.... We should
probably have a meeting, at least, yearly and submit a
formal report to the governor and to the Department of
Natural Resources.
I see this board as an overseer board to provide an
independent review of what the department staff is
doing and to provide a public forum to discuss
proposed public contracts before finalization.
MR. STOUT said that both he and Charlie Cole are dedicated to
making this a functioning board that can serve the purpose it
was originally designed to do.
CHAIR OGAN asked if he was a real estate broker.
MR. STOUT replied that he was one for several years, but hadn't
been for the last four or five years. "Basically, I thought I
was going to retire, but you get tired of that, also, I find.
So, I'm interested to be back and involved in a few things."
CHAIR OGAN said that the names would be forwarded to the joint
body.
4:02 - 4:02.5 - at ease
SB 69-BOARD OF FISHERIES CONFLICTS OF INTEREST
CHAIR SCOTT OGAN announced SB 69 to be up for consideration.
MS. AMY SEITZ, staff to Senator Thomas Wagoner, sponsor,
explained that currently, if a member is found to have a
conflict with an issue and doesn't get to participate in the
discussion or vote, SB 69 changes the procedure to match that of
the Legislature. A member would declare what their conflict is
and why and still be able to participate and vote. The reason
they do this is because the member who has the conflict is also
often the member who has the most knowledge and experience on
that issue.
SENATOR THOMAS WAGONER said the administration fully supports
this bill as does Alan Austerman, Fisheries Policy Advisor for
the governor.
SENATOR RALPH SEEKINS said, "I always believe in the old theory
of no conflict no interest, but I'm wondering why we would not
extend this same policy to the Board of Game?"
MS. SEITZ responded that she asked the Board of Game that
question and the members responded that they didn't want it.
SENATOR SEEKINS said he was curious about why the statute is
there in the first place.
CHAIR OGAN attempted an explanation that perhaps most of the
issues the Board of Game deals with occur during the sport
hunting season and the only people to have a commercial interest
would be guides or outfitters.
SENATOR SEEKINS supposed in a guide's case, it might take away a
significant portion of their ability to make a living. He was
trying to figure out why it would be good for one board and not
the other.
MS. SEITZ added that the Board of Game only conflicts out one
person per year.
SENATOR SEEKINS countered, "In this case, we won't conflict out
anybody on the Board of Fish."
CHAIR OGAN asked Ms. Seitz how many times per year a member of
the Board of Fish is conflicted out.
MS. SEITZ replied that she didn't have a number, but Mr. Dersham
might.
MR. ED DERSHAM, Chair, Board of Fisheries, replied about 10
times per year.
CHAIR OGAN said his concern is that if people are not required
to conflict themselves out, they're going to end up being on the
short end of the stick.
SENATOR SEEKINS said he didn't agree that a person should be
conflicted out of a vote because they have an interest in what
they are looking at. He had never seen an instance arise where
they didn't tell the person to go ahead and vote anyhow. He also
was uncomfortable with holding someone else to a higher standard
than he is bound to as a member of the Legislature.
CHAIR OGAN agreed. He reminded the committee that Senator
Lincoln had the biggest Senate district in the state and he
wanted to contact her on this issue. He also wanted more time to
consider whether or not the Board of Game should be included.
MR. ROLAND MAW, Executive Director, United Cook Inlet Drift
Association, supported SB 69. He said his bill is needed because
many good fishermen with college degrees in resource-related
fields are being excluded from participating on the Board of
Fisheries process. Also, with all the rationalization and
consolidation going on in the industry, it is hard to maintain
conflict boundaries.
MS. KAREN DUNMALL, KAWERAK, Inc., a non-profit travel consortium
in Norton Sound, opposed SB 69. The Board of Fisheries website
says it is charged with making allocative decisions based on
biological and socioeconomic information provide by ADF&G,
public comment and guidance from the Alaska Department of Public
Safety and the Department of Law.
TAPE 04-25, SIDE B
4:18 p.m.
MS. DUNMALL was, secondly, concerned that some proposals before
the board could result in severe economic consequences to
various groups of people including the board members. In most of
those cases, it would be difficult to impossible to represent
all users. Her last point was that the interests of subsistence
users are underrepresented on the Board of Fisheries as compared
to commercial interests. If persons with a conflict of interest
were allowed to vote on proposals, the public process would
disintegrate and the gap between commercial and subsistence
users would widen.
MR. DERSHAM said the board has discussed this bill, but is not
taking an official position although several members spoke
favorably of it. No board member spoke against it.
SENATOR ELTON applauded the sponsor for checking with the Board
of Game to see if it wanted to be under the umbrella. The only
reason he would not make a motion to move the bill is because
the sponsor has said he is willing to wait until Senator Lincoln
could comment on it. "I hope we can do it expeditiously on
Monday, because this is a real issue. It is a real problem....
It is very difficult to get people to serve...."
CHAIR OGAN pointed out that a person is still subject to AS
39.52.120 - misuse of official position. He agreed with Senator
Elton's comments pointing out that the Senate Resources
Committee has four commercial fishermen, a subsistence fisherman
and two fillet and release fishermen on it.
SENATOR WAGONER said he would meet with Senator Lincoln on
Monday and move the bill on Wednesday. Senator Seekins would
check with the Board of Game in the meantime.
There being no further business to come before the committee,
CHAIR OGAN adjourned the meeting at 4:30 p.m.
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