JUNEAU -- A push to cut oil industry taxes in Alaska has had its path through the Legislature cleared by a series of friendly committee chairs who, despite Alaska’s lax rules against conflict of interest, have strong ties to companies that stand to benefit from the billions of dollars at stake.
Senate Bill 21 would cut oil taxes an estimated $5 to $6 billion over six years, given projected prices and production levels. That would all-but guarantee several years of deficit spending.
Legislative leaders who support a tax cut on oil companies doing business in Alaska have appointed industry-friendly committee chairs and then sent the bill through those committees, resulting in ConocoPhillips vice presidents appearing before legislative committees chaired by ConocoPhillips employees.
As it turned out, ConocoPhillips employees serving as legislators agreed with the ConocoPhillips vice presidents that taxes on oil production need to be curtailed.
ConocoPhillips is the single largest oil producer in the state of Alaska.
Micciche is ConocoPhillips superintendent
First, Senate Bill 21 went to the Senate's Special Committee on TAPS Throughput. That committee was chaired during the bill's consideration by Sen. Peter Micciche, R-Soldotna. He is an employee of ConocoPhillips, working as superintendent of ConocoPhillips' Kenai LNG facility. His salary last year was between $100,000 and $200,000. Micciche has a co-chair, Sen. Mike Dunleavy, R-Wasilla, but Micciche decided to personally handle the bill debate.
Next, Senate Bill 21 went to the Senate Resources Committee, chaired by Sen. Cathy Giessel, R-Anchorage. Giessel is married to Richard S. Giessel, who manages R&M Consulting's Construction Services business. The company touts its petroleum ties on the firm’s website, starting with construction of the trans-Alaska pipeline and continuing with recent work on various gas pipeline proposals.
Cathy Giessel's financial disclosure forms show Richard Giessel was paid between $200,000 and $500,000 last year.
Third, the bill went to the Senate Finance Committee led by Sen. Kevin Meyer, R-Anchorage, during the bill hearings. Meyer works for ConocoPhillips and takes a leave of absence during the legislative session. Meyer's state financial disclosures show he made $50,000-$100,000 last year working for ConocoPhillips when the legislature wasn't in session. Meyer has a co-chair, but he, too, personally handled the bill debate.
After Senate Bill 21 passed the full Senate by a vote of 11-9, with Micciche, Giessel and Meyer voting in favor, it went to the House of Representatives.
Now in the House, Senate Bill 21 is being heard by the House Resources Committee, chaired by Rep. Eric Feige, R-Chickaloon. He's a pilot who has flown oil-industry passengers to the North Slope. He's married to Corri Feige, the Alaska manager for Linc Energy, which is developing the Umiat oil field, helped by state incentives. His financial disclosures show Corri Feige was paid between $100,000 and $200,000. Eric Fiege has a co-chair as well, but he’s personally handled the bill debate.
Conflict or perceived conflict?
In the Alaska Legislature, committee chairs have extensive authority to either hinder bills or hurry them along, including choosing whether to hear them at all.
Even when legislators work directly for industries, they're sometimes reluctant to acknowledge conflicts of interest. Despite working directly for ConocoPhillips, Meyer has been unwilling to acknowledge a conflict of interest, admitting only to a "perceived conflict of interest" from his "employment outside the Legislature."
The company Meyer didn't name is ConocoPhillips, one of those urging Alaska to lower taxes and promising additional development if taxes are lowered far enough. Meyer describes himself as a professional employee of the company but not one who works at the management-level.
The issue of who chaired the Finance Committee during oil tax negotiations has come up once before during a critical oil tax debate. When ACES was adopted in 2007, Meyer was a co-chair of the House Finance Committee. In that instance, he turned over the gavel to his co-chair.
Then-Speaker John Harris, R-Valdez, said that it would not have been appropriate for Meyer to run oil tax meetings.
"There isn't any doubt that Kevin Meyer has to step down from chairing anything," Harris said at the time.
Meyer said he considered handing over the gavel this year as well. He suggested that to his co-chair and found him unenthusiastic.
"You know much more about oil and gas than I do," Meyer said co-chair Sen. Pete Kelly, R-Fairbanks, told him. So Meyer chaired the meetings himself.
In any event, Meyer said, committee chairs aren't all that important.
"As chairman, you are basically just facilitating," he said. "Your vote in the committee is not really the vote that counts. The vote that counts is the vote on the floor."
When Senate Bill 21 came to the Senate floor last week, Meyer noted his "perceived conflict of interest" and asked to be recused from voting.
Under legislative rules, if even one senator objected, Meyer would be required to vote. There were multiple objections, and Meyer cast what might have been the deciding vote in favor of a bill that could be worth up to $2 billion to his company.
Micciche made a similar recusal request, noting that he had "an employer in the natural gas industry." With a vote as close as SB 21, which passed 11-9, losing the votes of Meyer, Micciche, or any of those with conflicts, would have caused the tax cut to fail.
Meyer denies that his job with ConocoPhillips constitutes a conflict of interest, though he acknowledged others might see it differently. And he supports the method the Legislature uses, in which both he and Micciche announced their conflicts and asked to be recused from voting. Neither Meyer or Micciche said they objected when the other sought recusal.
The alternative to voting, said Meyer, would mean that his 70,000 constituents would lose their voice on an important bill. "You'd have a population the size of Fairbanks being totally disenfranchised down in Juneau," he said.
French: Price of a citizen legislature
In a state the size of Alaska with part-time legislators, conflicts of interest are inevitable, he said. "We are citizen legislators, everyone's going to have a conflict from time to time," he said.
There is also debate over what is and is not a conflict of interest. Under legislative rules, the jobs of spouses aren't currently considered conflicts of interest.
Sen. Hollis French, D-Anchorage, voted the opposite way from Meyer and Micciche, but said there is nothing wrong with them voting on oil issues.
"As uncomfortable as it looks, it is a citizen legislature, and in a state the size of Alaska that's going to happen," he said.
As long as the conflicts are disclosed, and Micciche, Meyer and others have been scrupulous about noting even potential conflicts, French said the process is working.
But House Minority Leader Beth Kerttula, D-Juneau, said the state's ethics process needs fixing.
"When you get your paycheck from a company, that's a clear and substantial impact," she said. "I think our rules should change, and I've felt that way for a long time."
She said Meyer and Micciche are clearly following the rules, but the rules should be changed. "There's nothing (illegal) about it, but it doesn't mean they should be doing it," Kerttula said. "They need to be clear … and they need to spell out that when you have a direct conflict of interest, you recuse yourself," she said.
If Senate Bill 21 reaches the House floor, more representatives married to oil-industry employees will await it. Both Rep. Mike Hawker, R-Anchorage, and Lora Reinbold, R-Eagle River, are married to ConocoPhillips employees.
House Speaker Mike Chenault, R-Nikiski, has roots in the oil industry but his oilfield services company, Qwick Construction, is not now active. He said he may resume doing such work in the future, but he said it was too difficult to run a small business while he was serving in the Legislature.
If the bill passed both houses, it would then go to Gov. Sean Parnell to be signed or vetoed. He is a former lobbyist for ConocoPhillips.
Contact Pat Forgey at pat(at)alaskadispatch.com