Hammond didn't want oil drilling in Kachemak Bay, but he wanted the issue

On Wednesday May 25 Homer will celebrate the 40th anniversary of the state's repurchase of the oil and gas leases that once threatened Kachemak Bay. Charles Wohlforth's recent commentary about saving Kachemak Bay (ADN May 16) was characteristically well-written and highly informative. But it omitted an interesting backstory about exploiting environmental issues for political gain.

[ICYMI: How an oil industry fiasco saved Kachemak Bay 40 years ago.]

In 1972 Gov. Bill Egan's administration decided to put Kachemak Bay up for sale to the oil companies. Opponents mobilized immediately, months before the date set for the sale. But they did not file a lawsuit to challenge the sale until a year after the state held the lease sale, accepted $25 million from the winning bidders and issued the leases to the oil companies. Time passed, and in 1976 the Alaska Supreme Court ruled that the state had conducted the lease sale in violation of the law. But the trial court refused to prohibit exploration drilling, and the Supreme Court refused to cancel the leases. The well-meaning opponents of the lease sale had waited too long to sue; and the majority of the court decided it would not be fair to the oil companies who bought the leases to cancel them based on a tardy lawsuit. As two justices of the Supreme Court noted in dissenting to the majority's decision, by waiting too long to sue the fishermen "won the battle but lost the war."

Why did the fishermen wait so long to sue?

The proposed lease sale might have been derailed in 1973 by prompt and aggressive arm-twisting by the Kenai legislators, or by a timely lawsuit. But Gov. Egan was facing re-election in 1974; and in the controversy over the proposed Kachemak Bay lease sale the Kenai legislators saw a big opportunity for their friend and fellow Republican legislator Jay Hammond, who was planning to run against Egan. If the proposed lease sale were to be nipped in the bud, the controversy about it would not be a factor in the election. So the Kenai legislators advised their constituents to defer any legal challenge to the sale and sit tight.

While the lawsuit was pending and the details of the dispute were fresh in everyone's mind a journalist named Mark Panitch, who was a Washington correspondent for the Anchorage Daily News in those days, did an investigation and published a report on the dispute in Science Magazine on July 18, 1975. Panitch dug into court records where he found the sworn testimony of Bob Palmer.

Palmer, a former state senator who was one of Hammond's inner circle in the earliest days of Hammond's gubernatorial campaign, became Hammond's chief of staff when Hammond succeeded Egan as governor. Clem Tillion, featured in Wohlforth's article, was Palmer's colleague in the Legislature and also in the inner circle of the Hammond campaign. As Panitch summarized it in his Science Magazine article, Palmer's testimony and other evidence in the case established that the fishermen were "counseled to delay their lawsuit, apparently to keep the question alive for a campaign issue." Palmer assured them that if Jay Hammond were elected he would clean up the mess. The Alaska Supreme Court said that the fishermen received repeated assurances from "state officials" that "underplayed the importance of the lease sale" and gave them a false sense of security that there was no urgency about suing.

The fishermen opposed to the lease sale let the sale to go forward in December of 1973 unchallenged and waited another year before suing — thereby assuring that it would become a huge issue in the gubernatorial campaign. Fishermen and conservation voters were galvanized by their anger about the Kachemak lease sale. Hammond beat Egan in the election in November of 1974 by just 287 votes.

After the 1976 Supreme Court decision the lawsuit went back to the trial court. By then, the Legislature had imposed a moratorium on drilling on the challenged leases; and the following year it authorized the Hammond administration to buy the leases back from the oil companies that purchased them in the 1973 lease sale. In due course the leases were eliminated by this means and Kachemak Bay was spared. The state spent $28.4 million dollars to buy back leases that the companies had purchased for $25 million. That amounts to a payment to the oil companies of $3.4 million dollars that would not have happened if the opponents of the lease sale had acted promptly to oppose it rather than taking the advice of their trusted political advisers to defer litigation.

In his 1975 Science Magazine article Panitch comments plausibly that the Hammond campaign itself doomed the fishermen's cause by discouraging timely litigation in order to ensure that the controversy would stay alive to be exploited in the political campaign. Success was not accomplished until 1977, after years of legal expenses (the fishermen alone reportedly spent more than $90,000), an oil spill in the Bay from the George Ferris drill rig, and the $3.4 million-dollar buy-back premium paid by the state. Not to mention several years of personal anguish for the affected fishermen and their families. All this due to a strategic choice made by candidate Hammond and his political advisers in order to advance Hammond's chance of beating Egan in the 1974 election.

In summary, protection of Kachemak Bay was subordinated by politicians to achieve a strategic advantage in the following year's election. Historians will debate whether Jay Hammond would have achieved his razor-thin victory in the 1974 governor's race if the Kenai legislators had not given the Kachemak Bay lease sale opponents the bad advice to hold off on their legal challenge of the lease sale. Those were some pretty expensive votes.

We should all be grateful that Kachemak Bay was spared and that Jay Hammond was chosen to serve as our governor during a critical period in the history of this young state. But we should not lose sight of how it happened.

Jim Reeves is an Anchorage attorney who was involved in the Kachemak Bay litigation of the 1970s.

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