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Governor's appointments to oil tax review panel lack critics of cuts

  • Author: Richard Mauer
  • Updated: September 28, 2016
  • Published July 24, 2014

Gov. Sean Parnell on Thursday named the public members of a board created to review the state's oil and gas tax regime, and all have ties to industry, including two who used to work for Veco, the defunct oil-field contractor at the center of the 2006 corruption scandal tied to oil taxes.

The 11-member Oil and Gas Competitiveness Review Board was created by Senate Bill 21 as a way to measure whether the bill's tax cuts and other state laws and regulations are improving oil-field activity and production.

The review board is required to report to the Legislature about the levels of investment by industry in Alaska. Its first report is due in January and the final report in 2021. The board is also required to examine workforce training and prepare a history of oil and gas investment in Alaska that could be used for future comparisons.

Sen. Lesil McGuire, R-Anchorage, inserted the board provision into Senate Bill 21 as a way to measure the effectiveness of its controversial tax changes. Some senators who voted for the tax-reduction measure, like Click Bishop, a moderate Fairbanks Republican, said he would reverse his position if, after several years, the law didn't result in more oil production as promised.

Voters will have a chance to kill Senate Bill 21 sooner than that. In three weeks, a referendum to repeal the measure will appear on the statewide primary ballot. A "Yes" vote would return the state tax regime to ACES — Alaska Clear and Equitable Share — while a "No" vote would keep Senate Bill 21, renamed the More Alaska Production Act.

The law appoints four state officials to the review board — the commissioners of natural resources, revenue and environmental conservation, and the chair of the Alaska Oil and Gas Conservation Commission. The governor appoints the remaining seven: two from nominees suggested by oil industry groups, three with professional skills used by industry, and two public members "who do not represent the oil and gas industry."

Parnell chose no outspoken critics of Senate Bill 21 for his appointments. For the two seats reserved for industry groups, he picked Kara Moriarty, president of the Alaska Oil and Gas Association, and Tom Hendrix, vice president for oil and gas of Carlile Transportation Systems and former president of the Alaska Support Industry Alliance. The geologist seat went to Curt Freeman, president of a minerals exploration company in Fairbanks. The petroleum engineer position went to Peter Stokes, a board member of the Support Industry Alliance and an engineer for a petroleum consulting firm. The financial analyst is Tom Maloney, area manager for CH2M Hill, the company that bought Veco in 2007. Maloney was Veco's vice president for business development.

The two public members are both union employees whose members depend on industry work: Rodney Brown, business manager in Fairbanks of Plumbers and Pipefitters Local 375 and a former welding foreman for Norcon Inc., a Veco construction subsidiary; and Joey Merrick II, business manager of Laborers Local 341, an advisory committee member for Alyeska Pipeline Service Co., and a member of the Support Industry Alliance and Resource Development Council.

McGuire said Thursday the board was modeled after a similar one in Alberta, appointed after that Canadian province rescinded a windfall profits tax. If Senate Bill 21 isn't working, it will be up to the board to alert the Legislature, McGuire said.

"That was Click's message and that was mine as well," she said. "If we did get it wrong and we turned the needle too far the other way and we're not seeing the kind of investment that has been promised, then the Legislature has every reason to turn it around and that board is going to be the frontline place to do that."

McGuire said she wasn't concerned by the lack of critics on the board.

"My hope is that the group will take on a life of its own and move away from the fact that they were appointed by this governor," she said.

Sharon Leighow, Parnell's spokeswoman, said the board will take a "complete view" of its task.

"The governor is confident this group of Alaskans with expertise in transportation, engineering, construction and Alaska hire will bring a fair and objective perspective to the board," Leighow said in an email message.

But one of the tax cut's staunchest critics, Sen. Bill Wielechowski, D-Anchorage, said the board's lack of diversity gives little hope that it will be objective.

"We knew this panel was clearly going to be stacked with people who supported low tax rates," Wielechowski said. "We shouldn't be turning this important job over to a panel that's dominated by the oil industry. Of course the oil industry is going to come back and say, 'Tax breaks, tax breaks are the answer.' That's what they've always said."

Maloney wasn't implicated in the Veco corruption scandal, in which Veco chairman Bill Allen and another vice president, Rick Smith, were found to have bribed legislators. Allen and Smith also admitted giving improper gifts to Sen. Ted Stevens and Rep. Don Young.

But Maloney was important enough to the company that he was one of 13 top officials listed in the sales agreement to CH2M Hill as holding severance agreements that transferred to the new owners. He was also listed as a potential witness in the Washington, D.C., trial of Stevens, though he wasn't called.

In an interview, Maloney said he looked forward to developing facts in the tax debate and to working to increase oil-field production.

While Parnell's press statement announcing the appointments listed prior employment for many of the board members, there was no mention that Maloney had been a Veco vice president.

"As you know, these are just snapshots of their bios," Leighow wrote.

Maloney said he wasn't part of Veco's corrupt culture.

"There's about 3,000 employees at Veco; there were two people that had problems," he said. "I've never had to talk to anybody at the FBI or anybody else."

Maloney said he wasn't a big campaign contributor, and he wasn't illegally repaid by the company for his donations, as were other Veco officials. Campaign reports show he gave $2,700 between 1998 and 2000, including $700 to then state Sen. Ben Stevens, Ted's son, who was on Veco's payroll while working as a legislator.

Maloney's name also surfaced in the Anchorage Police Department investigation of Allen for having sex with minors. In 2009, one of Allen's secretaries, Dolores Walker, told APD detectives that Maloney once asked her if she knew whether Allen was having sex with the teenage daughter of one of his ex-girlfriends.

"I said, 'Tom, you're crazy.' I said Bill would never do that," Walker told the detectives. But she also noted that Allen would visit the girl at her high school in the Lower 48, and when he did, he and the girl stayed together in a luxury hotel suite.

Maloney said he didn't recall saying anything to Walker about the girl.

"I know nothing about that," he said. "I have no idea of any of those types of things that I've seen or read in the paper. I have no idea they were occurring."

Allen pleaded guilty to bribery, extortion and tax violations and was sentenced to three years in prison in 2009. He was never charged with having sex with minors. He was released from prison in 2011 and moved to New Mexico, where his son lives.

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