Legislature(2015 - 2016)BUTROVICH 205
02/09/2015 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings: Commercial Fisheries Entry Commission | |
| Confirmation Hearing: Alaska Oil and Gas Conservation Commission | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 9, 2015
3:29 p.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Mia Costello, Vice Chair
Senator John Coghill
Senator Peter Micciche
Senator Bert Stedman
Senator Bill Stoltze
Senator Bill Wielechowski
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARINGS:
Commercial Fisheries Entry Commission (CFEC)
Ben Brown
Verne Rupright
- CONFIRMATIONS ADVANCED
Alaska Oil and Gas Conservation Commission (AOGCC)
Michael Gallagher
- CONFIRMATION ADVANCED
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
BEN BROWN
Juneau, Alaska
POSITION STATEMENT: Re-appointee to the Alaska Commercial
Fisheries Entry Commission
VERNE RUPRIGHT
Wasilla, Alaska
POSITION STATEMENT: Nominee to the Alaska Commercial Fisheries
Entry Commission
MICHAEL GALLAGHER
Anchorage, Alaska
POSITION STATEMENT: Nominee for the Alaska Oil and Gas
Conservation Commission AOGCC
ACTION NARRATIVE
3:29:18 PM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 3:29 p.m. Present at the call to
order were Senators Costello, Stoltze, Coghill, Wielechowski,
and Chair Giessel. Senator Micciche arrived shortly after.
^Confirmation Hearings: Commercial Fisheries Entry Commission
Confirmation Hearings:
Alaska Commercial Fisheries Entry Commission (CFEC)
3:30:24 PM
CHAIR GIESSEL said that today the committee would interview
governor appointees for two commissions. The first would be the
two appointees to the Commercial Fisheries Entry Commission. She
welcomed Ben Brown, a re-appointment, to the table.
BEN BROWN, nominee, Alaska Commercial Fisheries Entry Commission
(CFEC), introduced himself.
CHAIR GIESSEL reviewed the commission from the page in Boards
and Commissions. She said appointments require legislative
confirmation and the term is four years. The board consists of
three members with a broad range of professional experience,
none of whom has a vested economic interest in an interim use
permit, an entry permit, a commercial fishing vessel or gear, or
in any fishery resource processing or marketing business. The
function of the board is to promote conservation and sustained
yield management of fishery resources and to regulate and
control entry into commercial fisheries. A quorum consists of
two commission members. It is a regulatory and quasi-judicial
agency. The salary is equal to step range 27, $108,000 per year;
members are placed in the Public Employees Retirement System
(PERS) system. The commission meets throughout the year.
MR. BROWN noted his resume´ and said it was very similar to the
one he submitted four years ago when he was initially appointed.
He is a life-long Alaskan, was born in Anchorage and raised
there except for a brief time when his parents traveled to
Honolulu for their professional needs. He went to Palmer High
School, was a legislative aide, went to law school at
Northeastern University in Boston and worked for the Honorable
Larry Weeks; he has lived in the capital city ever since. He was
an administrative law judge with the Department of Revenue
(DOR), legislative liaison with the Department of Environmental
Conservation (DEC), and in private practice prior to Governor
Parnell's decision to appoint him to the commission four years
ago.
3:33:04 PM
SENATOR STEDMAN joined the committee.
MR. BROWN remarked that it's the second time in CFEC history
that all three of the commissioners are attorneys and members of
the Alaska Bar Association. This provides a nice background for
some of the more difficult legal decisions the commission will
have to make. Being a quasi-judicial commission means they have
judicial powers in the administrative law decisions they make
regarding applications for transfers of limited entry permits.
He explained that one of the reasons the commission was created
40 years ago as an independent agency was so that there would
not be any appearance of undue pressure from the Alaska
Department of Fish and Game (ADF&G) on the decisions being made
by the three commissioners about who should receive a permit
based on that individual's fishing history, their relative
economic dependence on the fishing activity underlying the
permit application. He explained that the ADF&G's Division of
Commercial Fisheries regulates the biological side of the
fisheries and in conjunction with the Board of Fisheries,
decides what kind of gear can be used, where and when - that
affect the biological health of a whole range of very important
fish species as well as the economic returns to the fishermen
who depend on them to support their families and to be vibrant
parts of Alaska's economy.
MR. BROWN said he had no vested interest in a permit, any gear
or vessel or fishery when he was appointed and still doesn't. He
has learned a tremendous amount about what the CFEC does as an
independent agency, how they have evolved over time and how they
might continue to evolve given the strained fiscal circumstances
the state faces.
He wanted to come up with whatever the right future for the
agency is, because fishing is going to remain important going
forward and he wants to make sure that a system is in place that
makes sure permits are given to those who deserve them under the
legal structures that have been set up and approved by the
Alaska Supreme Court, and that the integrity of the value of
those permits and the stability of the fisheries are as maximal
as possible.
SENATOR COSTELLO said she appreciated his service and asked what
future challenge he saw and why he would be good to have on the
commission while facing it.
MR. BROWN replied the challenges that the agency faces are in
some regards different from other agencies but one is the same:
fiscal pressure. CFEC fortunately generates significantly more
in program receipts and designated general fund revenues than it
spends on its annual operations. Those excess monies have been
allocated towards the Fisherman's Fund (worker's compensation
for fishermen) and the rest has gone to capital projects that
benefit various fisheries.
This year the Fishermen's Fund transfer will take place and a
little over $3 million is going to underwrite the operating
costs of the Division of Commercial Fisheries. This makes sense.
The permits would not have value and fishermen would not be able
to go out and use the permits for which they pay an annual
renewal fee without having the management in place.
3:38:31 PM
In order for that to work to keep going forward, the integrity
of the Limited Entry system cannot be diminished in any way and
those permits will remain as valuable assets in which people
invest. He informed them that the permits are used as collateral
by two specific state loan programs: the Commercial Fishing
Revolving Loan Fund and the Commercial Fishing and Agriculture
Bank. That is one example of why it's important to have a solid
stable structure in place overseeing the issuance of permits.
Not that many permits are currently being issued, but the
transfer of permits, either on a permanent or an emergency
basis, is something that will continue going on, because people
get old and they can't use their permits to go out and fish any
more. Sometimes they choose to sell it.
3:39:07 PM
MR. BROWN said that stability is probably somewhat beneficial at
this time. Bruce Twomley, the chairman, has been there since the
early 80s and has an invaluable and unique wealth of knowledge.
Judge Froehlich retired and his seat was filled briefly by Frank
Hohman, because of a case in which Chairman Twomley recused
himself and they didn't have a quorum. Frank Hohman is re-
retired and the committee will hear from the new appointee next.
Having two of the three commissioners with some years of
experience will be helpful as they seek to analyze staffing
levels, organizational structures, the way they operate and try
to ensure that they are providing the maximum amount of service
for the least amount of money.
3:40:39 PM
CHAIR GIESSEL said the CFEC's 2013/14 annual report indicated
that substantial progress was made in reducing the adjudication
caseload and asked him to explain the adjudication process.
MR. BROWN responded that 68 is the number of existing discrete
fisheries which have three things: a species, a geographic
location, which can be statewide or smaller, and a gear type
that has limited entry. Sixty seven of them remain limited and
one, the weathervane scallop fishery, has reverted back to open
access.
He explained that each fishery is limited when pressure has come
to bear on the fishery in a manner that is no longer sustainable
if it is open access. (Open access describes fisheries that are
not limited.) When a fishery has attracted enough interest from
the fleet that someone is concerned, they can petition the
commission, at which point the commission looks back four years
before the year in which the limitation process is going to
begin to establish a maximum number of permits in the fishery.
Once that is done by adoption of a regulation, then a somewhat
lengthy process begins (although he had not been involved in the
process of initiating limitation of a new fishery in the past
four years).
If someone alerts them that limitation might be needed in a
certain fishery, the commission will pick a date and people who
can prove they had any sort of fishing participation in the
fishery in the four years leading up to that date will be
counted. The maximum number can be no lower than the highest in
any of those four years. Then they will determine a point
structure when those interested in receiving a permit tell them
when they caught, where they caught and how much they sold it
for, and, depending on the fishery's relative economic
dependence information, the level of investment in gear and
vessels are worthy criteria to determine who ought to get a
fishing permit based on prior activity. It's based on the
premise that if you were doing it in the past, then you are
entitled to continue doing it in the future more than someone
who wasn't doing it in the past.
When those point classification decisions are made, fishermen
are informed if they obtained either a permit or got one that is
not transferable (can't be sold as a transferable asset), or did
not obtain one. People who were told they don't get a permit and
don't want to take that as the final word would appeal it,
starting at the adjudication staff level to a hearing officer,
and then, ultimately, up to the commission. The three
commissioners review each and every case.
For purposes of finality, Mr. Brown explained that all the cases
are reviewed administratively. Once the administrative staff
level is exhausted, those who are still interested in having a
further dialogue are able to appeal the decision to the Superior
Court, and if they don't like what the Superior Court says, they
can remand it back to the commission that will uphold what they
did. Then the case can be appealed to the Alaska Supreme Court,
and that is the final arbiter of the commission's decisions.
MR. BROWN said the 900-case backlog has been whittled away
through diligent work by the commissioners, but some of the
cases saw a tremendous amount of time pass before getting a
hearing and sometimes a decision that was possibly aversive to
them was made. The problem with that is people don't live
forever and witnesses go away and other forms of evidence are
not as available as they would have been. So, now, because the
caseload is not huge, he has been able to review some of the
adjudication decisions, has written opinions that have been
appealed to Superior Court, and Superior Court has remanded
them. So he has been participating in the process, only without
the massive volume of cases that was done in the past.
CHAIR GIESSEL said the three commissioners are paid in excess of
$100,000 a year in salary and have 34 employees. She was
wondering about the cost.
MR. BROWN responded that their staff is now at 30. It was larger
in the late 80s when it had an executive director, too. He
explained that in addition to their administrative quasi-
judicial roles, the commissioners get to exercise all personnel
functions, but they would be having a very healthy dialogue
about ways of restructuring the commission soon.
He commented that more efficiencies can probably be achieved and
that the Division of Legislative Audit is also conducting an
audit along with the ADF&G commissioner's letter. Abolishing the
CFEC is the nuclear option, he said, that would eradicate the
commission's independence, which is one of the main reasons it
was founded as an independent agency 40 years ago. It would also
eradicate any hint of independence of decision making if the
director was directly answerable to the commissioner of ADF&G
and then to the governor.
MR. BROWN said much of the money the commission is generating is
going as much as possible to pay for other things besides CFEC
staff if that staff is not the best thing to spend that money
on.
CHAIR GIESSEL said the report had questions about the staff, the
pay scales, and those kinds of things.
3:49:00 PM
SENATOR STOLTZE asked him to describe areas of the CFEC's
actions that are allocative, either directly or indirectly.
MR. BROWN replied that the CFEC doesn't allocate. However, there
is talk about buybacks in various fisheries, but that requires
action from the Board of Fisheries. When the affected fishermen
speak to the commission, it's to help figure out a way to help
retire some of the permits in a fishery. If a fishery has been
initially created in a manner that doesn't distinguish between
one geographical area and another, it might be very hard to do a
buyback. So, that would be an example of an indirect
contribution to the allocation process.
Also, by determining which individuals get a permit and are
going to be legally able to harvest the resource might be viewed
as allocative. That process is structured to give permits to the
people who can prove they have been catching more fish. The end
effect is rewarding efficiency. They are less likely to give a
permit to a fisherman who is not very good at catching fish than
the other way around, and that creates more pressure on the
resource. They are not in the same role as the Board of
Fisheries, working with managers from the Division of Commercial
Fisheries involved in deciding when something is open and when
it isn't.
SENATOR STOLTZE said another external review signed by ADF&G
Commissioner Cotten refers to 68 fisheries and asked for some
examples.
MR. BROWN replied that each fishery is a geographic area and a
gear type and a species. Each one has a code: S03T refers to
each of those three aspects that constitutes a fishery.
SENATOR STOLTZE asked if some of those had been established by
the legislature.
MR. BROWN replied that the initial limitation of salmon
fisheries was a legislative command. As time has gone on
petitions from the fishermen initiated the dialogue or an
awareness on the part of commissioners (before his time) that
there was too much pressure on a fishery. Decisions to allocate
some species have been taken away from the Alaska Board of
Fisheries, such as halibut, by the federal government. Instead
of a limited entry system, there is an interim use permit, but
the allocation is or "quota" is determined by federal managers.
SENATOR STOLTZE said the dive fishery was muscled through the
legislature by former Representative Bill Williams and asked how
the CFEC views the role of the legislature.
MR. BROWN replied that he had not been around at the time when
the CFEC invited the legislature to step in and do anything. But
the commission had asked the legislature to extend an existing
program (the weathervane scallop fishery), which was
unsuccessful. He advised that it would be very difficult for the
legislature to become a "super Board of Fisheries" and make the
vast majority of allocative decisions, because it would take all
their time. It would make it difficult to operate as a
legislature and undermine the work the Board of Fisheries does.
He didn't know when the legislature should step in and make
those decisions, but as infrequently as possible in hopes that
there is an allocative process through the BOF that is working.
If it's not working, that may invite coming in and making those
decisions.
SENATOR STOLTZE said he was surprised to hear about an
established commercial Hooligan fishery authorization under
limited entry on the Susitna River. It's a family personal use
type fishery until the first guy shows up with a pretty big
operation.
3:56:16 PM
MR. BROWN said all three commissioners care very much about what
is happening all over Alaska. His observation that the existence
of a commercial fishery, even if it isn't open from year to
year, can still have an effect on other users. Another good
example far away from Mat-Su is on the Kuskokwim River that
still has some theoretical Chinook commercial fisheries and the
near total lack of Chinook harvest opportunities for subsistence
users up river.
The Kuskokwim Subsistence Salmon Panel is meeting now and trying
to come up with ways to solve this problem, but even the
existence of a commercial fishery at some point previous in time
changes the nature of the fishery. Once people have used
commercial gear and had a commercial mind-set going, it kind of
amps everything up. That must be taken into account in any
fishing policy. It does matter.
SENATOR MICCICHE asked if he had participated in limiting any
fisheries.
MR. BROWN answered no, but the commission is in the process of
closing out the adjudication in some fisheries.
SENATOR MICCICHE asked if he had support from the commercial
industry.
3:59:05 PM
MR. BROWN replied that he was very grateful for the support of
the United Fishermen of Alaska (UFA) when he was initially
appointed. But since his reappointment was announced last
Wednesday he had not had a chance to meet with UFA and hoped
they would support him again.
SENATOR MICCICHE said he had done a good job in the last four
years and asked his experience before being appointed to the
CFEC.
MR. BROWN replied that he met the qualifications and had a
diverse array of legal experience. He was a legislative aide for
many years before going to law school and clerked for a Superior
Court judge. He was an administrative law judge for Department
of Revenue (DOR) appeal hearings that were all Child Support
Services Enforcement (CSSED) appeals. Many of the people
involved made money from fishing and he had to look at some of
that information in trying to determine whether or not child
support amounts calculated by CSSED staff were appropriate. He
was also legislative liaison for a state department. When he
first worked as a lawyer, he did mostly personal injury tort
casework, but the next firm did significant amount of work
representing applicants, although none in the cases he has
looked at.
MR. BROWN said in the course of working there for three years he
worked with other attorneys and was aware of how private
advocates can really increase the likelihood that one will be
successful in applying for a permit or appealing the denial of a
permit. That made him appreciate the need to look at
unrepresented applicants or those who were unrepresented earlier
in the application process as fairly as possible before they
were represented by council.
MR. BROWN said he hoped all of that history constitutes a
diverse array of life and legal experience as an Alaskan
attorney and that he had also learned a lot in the last four
years serving on the commission.
SENATOR MICCICHE said some of the fisheries that are commercial
fisheries today, as populations and demands change, may not
remain commercial fisheries in the future and some commercial
fisheries are likely to occur that people don't know about yet
today and asked the commission's role in future fisheries.
4:03:12 PM
MR. BROWN explained that the Limited Entry Act was written just
looking forward and didn't envision the need to revisit the
limitations. Going forward, pressure on existing fisheries,
changes in ecological and climate conditions and more people in
need of more economic opportunities will likely create a
petition that will suggest limiting entry to a fishery. In
addition to that, they will perhaps be called upon to decide if
a single fishery needs to be subdivided.
Having a commercial fishery on the books that hasn't been open
in so long that no one has had to pay a renewal fee in 10 years
could likely be unwise. The commission could play a little more
pro-active role in making sure that the structure doesn't make
any it worse for anyone else or harder for the BOF to make those
allocation decisions.
SENATOR WIELECHOWSKI said he voted for Mr. Brown four years ago
and shared the chair's concerns about the size of the CFEC
organization now. According to the ADF&G review, it has 28 full
time employees and 4 part time employees, for a total of 32
PCNs. Probably that number was merited in the past, but
Commissioner Cotten's February 4 memo had a "pretty scathing
review" of the commission. Permit applications and transfers
peaked in 1988 at 105 permit applications and 42 permit
transfers. In 2013, there were 3 applications and only 13 permit
transfers. In 2012, they had 3 permit applications and 9 permit
transfers; in 2011 there were 5 permit applications and 24
permit transfers. So, the workload seems to be decreasing
significantly. In each of the last two years the commissioners
had adjudicated only three permit applications and the area of
concern is the adjudications backlog.
4:07:06 PM
SENATOR WIELECHOWSKI highlighted two short paragraphs from
Commissioner Cotten's February 4 memo:
However, now nine years later the reasons for these 15
year delays are no longer valid. The commissioners now
issue only a handful of permit applications each year.
The commission normally strives to complete
administrative review of emergency and permanent
transfers in the same calendar year when the transfer
takes place. However, recently the commission allowed
a backlog of reviews to accumulate and did not
complete the final review of cases from 2012 and 2013
until late in calendar year 2014. This seriously
reduced level of production came at a time when the
commission and their immediate support staff consisted
of up to 5 attorneys, an operations manager, an
administrative clerk and two executive secretaries,
one temporary.
Equally important is that the commission's diminished
performance occurs when the agency is only minimally
involved in other tasks. The commission has neither
limited a commercial fishery in 10 years nor developed
any optimum numbers of permits for limited fisheries,
another important statutory duty.
SENATOR WIELECHOWSKI said the memo offered some potential
alternatives, one of which was keeping the status quo, but
another was significantly altering the structure of the
commission and integrating a lot of its functions into ADF&G. He
didn't know the right answer, but it appears that changes need
to be made.
MR. BROWN said he had read the review that was initiated under a
previous administration with the prior commissioner of ADF&G. It
was referred to as an internal review. The commission did not
think that it would have a chance to see some of the conclusions
drawn by the investigator, Mr. Lawson, and respond to them to
make sure they didn't contain factual inaccuracies before it was
released. The report was published on the ADF&G website last
Wednesday without prior notice to him. That was an unfortunate
surprise and he didn't think Commissioner Cotten had done it
deliberately.
He said they are preparing a written response, which he hoped
would be put on the department's website. Some of the assertions
were probably misleading people to the wrong conclusion. Once
the wheat is separated from the chaff, there will be a smaller
universe of efficiencies to discuss. Certainly, the
adjudications backlog is a valid point to raise, but after an
initial interview with the investigator he didn't have any
follow up. Mr. Brown said he was involved in the weathervane
scallop fishery and doing other activities at that time. The
cases that remain are the thorniest and hardest in which an
adverse decision could have a ripple effect possibly leading to
undoing prior limitations, creating a vast new workload - the
last thing anybody wants!
In summary, Mr. Brown said, they will come up with a response to
the specific contents of that report and additionally, are
continuing to work with the legislative auditors who will have a
preliminary audit. Under statute the commission has to be given
an opportunity to respond. When all this is done, there will be
a wealth of information about how best to go forward. He firmly
believed that there needs to be some independence in the
decision capacity, but maybe somewhat less staff involved in
that process.
4:12:29 PM
SENATOR MICCICHE asked if he saw capacity for improvement in
cost reduction going forward.
MR. BROWN answered yes; once they get a clearer picture of the
closing down process of the not fully adjudicated fisheries.
That might create opportunities for a new staffing model to
handle a new limitation process. But he cautioned that it should
be a slow and rational approach, because it could lead to
adverse outcomes that lead to costly litigation that goes on and
on. Some key reversals could upset the entire apple cart.
CHAIR GIESSEL thanked Mr. Brown and welcomed Mr. Rupright,
another CFEC appointee.
4:14:12 PM
VERNE RUPRIGHT, nominee to the CFEC, Wasilla, Alaska, said he
was born in Massachusetts and went to school there. He came to
Alaska in 1972 as a young GI and passed through to serve in the
Viet Nam War. While in Alaska, he worked on the TAPS and for the
Department of Military and Veterans Affairs. He became a
commissioned officer in 1978 and worked full-time until 1981
when he went back to the University of Alaska Anchorage (UAA)
and finished his Bachelor of Arts Degree in Criminal Justice.
He worked as a corrections officer and institutional probation
and parole officer for the Department of Corrections for a
number of years, but he'd always had a lifetime dream to become
an attorney. So, he went back into the Army, and then attended
Clayton University School of Law from 1989-1992. He worked for a
law firm for six years and did a three-month stint as an
investigator for the Human Rights Commission. He elected to open
up his own law practice in Wasilla until 2008 and then ran for
the Office of Mayor of Wasilla and did six years as mayor and
manager. In October 2014, he took a hiatus and then went to work
for a group of medical practices as in-house counsel and helped
them organize as they expanded. He submitted a letter of intent
to the Office of the Governor, because he likes serving in
government and there is a lot of need for some good management
in it. He was called upon to take this position and accepted.
4:17:22 PM
SENATOR MICCICHE asked if the United Fishermen of Alaska
endorses him.
MR. RUPRIGHT answered that he had not received their endorsement
to the best of his knowledge.
SENATOR MICCICHE said it sounds like he has experience similar
to Mr. Brown's and asked how his life's experience tie in with
the work of the commission.
MR. RUPRIGHT replied that he didn't have any interest in
commercial fishing and doesn't hold a permit. He related his
1980s mariculture experience in Kachemak Bay trying to develop a
clam fishery. As a teenager he was raised between the fishing
ports of Gloucester and Medford on the East Coast. So, he is
very familiar with lobster fishing.
In Alaska he has known a lot of commercial fishermen and knows
that protecting this resource is very important. A renewable
resource such as the fisheries in Cook Inlet was at critical
mass in 1969/70 and could have ceased to exist if something
wasn't done to ensure that it survived and remained economically
viable. It is an over $1 billion/year industry employing 74,000
people directly and all the collateral people, fuel, gear, and
such.
From the law perspective Mr. Rupright said he did contract law,
personal injury work, administrative law and a lot of criminal
litigation. He has argued before the State Court of Appeals, the
Supreme Court, Federal District Court, 9th Circuit Court and one
case before the United States Supreme Court in 2002.
He said it took nine years to get that one case to the Supreme
Court, so he is very familiar with the need for reasoned
decisions. The commission is at the point that it should be able
to come up with quicker more reasoned decisions as
administrative law judges (ALJ) and move cases forward without
triggering something from the State Supreme Court remanding it
back and reopening an old fishery along with all of its permits.
That is not cost effective and it's just not smart.
SENATOR MICCICHE said they were mayors together and he had known
Mr. Rupright for a long time. He asked if he had looked at the
CFEC operations and recognized some opportunities for
improvement.
MR. RUPRIGHT replied that he had read the Lawson report a couple
of times, but was careful in looking at how it was shaded.
Having lived through the collapse of Alaska's economy in the
1980s, he didn't want to see Alaska go back there. Consolidating
and streamlining the commission will take some time to do
properly so that they don't make a costly error for the State of
Alaska.
4:23:40 PM
SENATOR MICCICHE said that changes are painful to a lot of
people on every side and asked how he felt he was equipped to
face a statewide theatre in executing some of those changes.
MR. RUPRIGHT responded that those in elected office get used to
the slings and arrows of not making everybody happy. In
negotiating compromises, everyone pushes away from the table a
little hungry, but the job gets done.
SENATOR STOLTZE remarked that the general authority in the
natural resource section of the constitution says the
legislature shall provide for the utilization, development and
conservation of all natural resources belonging to the state,
including land and waters for the maximum benefit of the people.
It has no reference to the Board of Fisheries. He asked what led
Mr. Rupright from Wasilla to this particular appointment.
MR. RUPRIGHT answered that he put in his letter of intent to the
current administration thinking that his background in law,
military and corrections would be useful to the state. He
received a call asking him to take this position and he
accepted. Fisheries is a major issue in Cook Inlet.
As for the authority of the legislature, he is familiar with the
State Constitution and Article 8, sections 15, 16 and 17 that
drive sustainability and the rights of the people. He has become
familiar with Title 16, Chapter 43.
SENATOR STOLTZE asked who his constituency is when he sits on
the CFEC.
MR. RUPRIGHT answered the CFEC is about the commercial
fisheries. So, the first constituent he has to look at is the
sustainability and viability of the fisheries in the state. So,
the constituents are rather broad, everybody likes to eat fish
and seafood.
SENATOR STOLTZE said that Mr. Rupright acquitted himself very
well and he will vote for him.
4:30:53 PM
CHAIR GIESSEL opened public comment; finding none, she closed
public testimony.
^Confirmation Hearing: Alaska Oil and Gas Conservation
Commission
Confirmation Hearing: Alaska Oil and Gas Conservation Commission
4:33:24 PM
CHAIR GIESSEL said the Alaska Oil and Gas Conservation
Commission (AOGCC) is in the Department of Administration and
requires legislative confirmation. The term of office is six
years and there are three members appointed by the governor. One
member shall be a petroleum engineer, who holds a certificate of
registration as an engineer with a degree in petroleum
engineering. That seat is filled currently. The second member is
a geologist who holds a certificate as a professional geologist
and has a degree in geology. That seat is also filled. The open
seat is described as one member who shall have training or
experience that gives a person a fundamental understanding of
the oil and gas industry in the state.
The function of the AOGCC is to regulate oil and gas drilling,
development and production, reservoir depletion and metering
operations, to prohibit physical waste of hydrocarbons, protect
correlative rights of mineral interest owners and assure maximum
ultimate recovery of hydrocarbon resources, to administer
Alaska's class 2 underground injection control program and
determine well categories under the Federal Natural Gas Policy
Act of 1978. The salary for this position is $137,000 a year -
the chair makes slightly more at $142,000 a year (the chair is
already designated) - and becomes a member of the Public
Employees Retirement System (PERS).
She welcomed Mr. Gallagher to elaborate on his resume´.
MICHAEL GALLAGHER, nominee for the Alaska Oil and Gas
Conservation Commission AOGCC, said the reason he is interested
in this position is to give back to the state. He knows the
importance of this commission and felt that he could contribute
his knowledge and experience in the industry. If confirmed, he
looked forward to continuing to protect the public's interest in
exploration and development of Alaska's valuable oil, gas,
geothermal resources through the application of practices
designed to ensure greater ultimate recovery and the protection
of health, safety, fresh ground water and the rights of all
owners to recover their share of the resource. He read a
statement relating how Alaska had given much to him and his
family and how this is a chance to give back to the state.
MR. GALLAGHER said he has over 38 years of experience in the oil
and gas, civil and vertical construction industries. He has
spent over 19 years with the Laborers International Union of
North America, Local 341, as a business agent, vice president,
president and business manager. He had negotiated bargaining
agreements with other employers and managed the day-to-day
business operation of the local union. One of the duties was
being trustee of a $560 million pension plan and $14 million
health and welfare plan. In that position he was involved in
many judicial hearings. The Board of Trustees was responsible
for conducting appeal hearings for the trust. While hearing the
appeals they were to look at the facts and evidence that was
presented to them and make a decision based on the facts and
evidence, and according to the plan document.
4:36:57 PM
SENATOR MICCICHE asked if he had specific training or experience
in any of the AOGCC areas of petroleum geology, engineering,
drilling and well operations and oil and gas law.
MR. GALLAGHER answered no for petroleum geology and engineering,
but as a trustee of a pension plan and through other means he
has had experience in the judicial process on issues relating to
appeals of people that have problems.
SENATOR MICCICHE asked if he had any "down-hole experience."
MR. GALLAGHER answered no.
4:38:36 PM
SENATOR MICCICHE said this is a very important position. The
state revenue and the conservation of the state's oil and gas
resources largely depends on the work of this commission and
asked how he would specifically tie his life experience to that
of the job description of an AOGCC commissioner.
MR. GALLAGHER answered over the last 35-40 years he was involved
in way or another with development in Alaska, including oil and
gas. He knows how important it is and he is a very pro-
development person. He has represented people in the oil and gas
industry and felt that after retiring several years ago he
wanted to help with more development to make sure that it is
done right and safely. He has two wonderful kids and hopefully
someday he will have grandkids that he hoped would be able to
work in the industry, too.
4:40:26 PM
SENATOR MICCICHE asked if he had been on a drilling rig during a
subsurface safety value test and if he understood the technology
around those tests.
MR. GALLAGHER answered no he hadn't, but he has plans to visit a
drill rig next week on the Kenai.
SENATOR MICCICHE noted that he had a lot of pipeline
construction and maintenance experience, but the AOGCC doesn't
have a role in any of those.
MR. GALLAGHER affirmed that statement.
SENATOR WIELECHOWSKI asked how many staff work for the AOGCC.
MR. GALLAGHER answered about 29 total staff: 2 geologist, 6
engineers, 7 field inspectors, several IT people, several data
management people and administrative staff. While he had been
there only a short time and had jury duty for some of it and a
board meeting, he could tell the AOGCC staff is very efficient.
SENATOR WIELECHOWSKI said Mr. Gallagher is an at-large member of
the commission and asked if he felt he could get adequate advice
or answers to his questions.
MR. GALLAGHER replied that he felt very confident that the
commission had the technical expertise and he could understand
and read blueprints very well. He has reviewed and understands
development plans and feels comfortable reviewing those,
although he has some to learn on the down-hole process. He has
always had challenges in his life and has always been very
successful in working into very good positions.
4:44:44 PM
CHAIR GIESSEL asked if he has a college degree.
MR. GALLAGHER answered no.
CHAIR GIESSEL said he signed the commission's decision on
January 26 related to a ConocoPhillips matter and asked him to
explain how he arrived at that decision and his level of comfort
in signing that decision.
MR. GALLAGHER answered that he would have to look at the
specific decision she was referring to, but when he first
started, he met with the other two commissioners who said they
just wanted to "throw him into" reviewing the permits, and he
has reviewed quite a few since then. He read the permit and
asked questions of the appropriate technical staff. He always
asks the engineers if they saw any issues.
CHAIR GIESSEL said a significant amount of confidential
information comes before the AOGCC and asked his thoughts on
signing confidentiality agreements.
MR. GALLAGHER replied that statutes and regulations provide for
confidentiality and he supported that.
CHAIR GIESSEL asked if he would have any reluctance to sign a
confidentiality agreement.
MR. GALLAGHER answered no.
SENATOR MICCICHE said he asks questions that are sort of the
norm for who they typically put on the boards for the level of
expertise required to do the job well. In this case the norm has
been people with decades of direct oil and gas down-hole,
custody transfer, safety valve testing experience, and he was a
bit concerned in this case with Mr. Gallagher's lack of
experience in those areas. The AOGCC is an understaffed and
extremely busy organization; they make sure that Alaska's oil
and gas reserves are produced as efficiently and safely as
possible and even though he may be the quickest learner on the
planet, he wasn't sure that it was the right role for training.
MR. GALLAGHER responded that he had been in this industry for
quite a few years and definitely qualifies under the statute. He
has used the technical staff already and felt "very confident"
that he is qualified for the position.
4:50:16 PM
SENATOR WIELECHOWSKI reminded the committee that former Governor
Sarah Palin was appointed to the AOGCC and made chair, and she
didn't have any down-hole experience.
CHAIR GIESSEL also pointed out that the descriptor for this seat
was changed in 2007 to include training or experience that gives
an applicant a fundamental understanding of the oil and gas
industry in the state. The purpose of that change was to
actually appoint people with that fundamental understanding
rather than simply an interest in the industry.
CHAIR GIESSEL opened public comment; finding none, she closed
it.
CHAIR GIESSEL concluded saying in accordance with AS 39.05.080,
the Resources Committee reviewed the following and recommends
the appointments be forwarded to a joint session for
consideration: Verne Rupright and Ben Brown for the Commercial
Fisheries Entry Commission (CFEC) and Michael Gallagher to the
Alaska Oil and Gas Conservation Commission (AOGCC). This does
not reflect an intent by any of the members to vote for or
against the confirmation of the individuals during any further
sessions.
4:52:32 PM
Finding no further business to come before the committee Chair
Giessel adjourned the Senate Resources Committee meeting at 4:53
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES-Ben Brown's résumé-02-09-2015.pdf |
SRES 2/9/2015 3:30:00 PM |
|
| SRES- Resume-Verne Rupright-02-09-2015.pdf |
SRES 2/9/2015 3:30:00 PM |
|
| SRES-Resume-Michael- Gallagher-02-09-2015.pdf |
SRES 2/9/2015 3:30:00 PM |
|
| SRES-ADF&G Report on CFEC-02-09-2015.pdf |
SRES 2/9/2015 3:30:00 PM |