Alaska’s Oil Fund Still Gushes Billions Long After Acrimonious Court Battle

Ten years ago, only two things stood between Alaskans and checks for hundreds of dollars, their share of the state’s oil riches: Ron and Patricia Zobel.

The Zobels, two young lawyers then new to Alaska, had filed suit against the distribution. They stopped it before a single check could be mailed.

They did not win any popularity contests.

One West Coast newspaper called them “Alaska’s most-hated couple.” They were reviled in editorials and in a flood of letters to the editor. They were threatened, insulted and even had trouble getting a table in some restaurants.

“The reaction to my lawsuit was unprecedented. I didn’t expect the firestorm of negative reaction that occurred,” said Ron Zobel.

“Golly, they were in the dog house practically universally,” said Robert Atwood, former owner and publisher of the Anchorage Times. “I never saw people so ostracized by a society as they were.”

At issue was the Permanent Fund, a state savings account that would pay Alaskans yearly dividends from the oil wealth drawn from the North Slope. The original plan was to distribute $50 to each Alaska adult for each year he or she had lived in the state.

The Zobels thought that was unfair, and in 1980 they sued, claiming the plan discriminated against newcomers. Their lawsuit went to the U.S. Supreme Court, which ruled in their favor in June, 1982.

A replacement plan to pay out equal shares to all Alaskans, including children, soon took effect. But many Alaskans didn’t give a hoot for the finer points of the Zobels’ constitutional argument. They wanted their money.

“I thought it was horrible. He was messin’ into something he shouldn’t have been messin’ into,” said retired high school teacher George Childs, 68.

Childs said he needed the money then and still needs it now.

“It was important to me. Originally, I would have gotten a lot more,” said Childs, an Alaska resident since 1959.

Childs got check No. 6 in 1982--for $1,000, the highest amount ever paid under the program. Jeanne Farleigh, also a teacher, received check No. 2 that year, and she respected the Zobels for forcing the delay.

“It took a person with real guts to do that,” she said.

She was, however, in the minority. Things got so heated that the Juneau Empire, in an editorial Nov. 7, 1980, titled “Enough Is Enough,” called on Alaskans to ease up on the couple.

“The threats of personal and property damage, the public ridicule, the demeaning manner in which some commentators and others have mounted personal attacks on these two people has shown an ugly side of Alaskans most of us never knew existed,” it said.

Former Gov. Jay Hammond, who proposed the Permanent Fund dividend program and who calls the Supreme Court’s Zobel ruling “one of my greatest disappointments,” said recently that he is reconciled to it.

“The Zobel action may have in some respects strengthened it in this regard: It gave everybody the same share initially,” he said.

He said that has made Alaskans defend the fund against possible raids by legislators and bureaucrats who would rather spend the money.

Hammond and others say they still fear the dividend acts as a magnet that attracts immigrants--and negative attention--from the lower 48 states.

“It’s an albatross hanging around the neck of Alaska,” Atwood said. “We’re considered filthy rich because we give away money.”

Others, like Farleigh, don’t buy it. “The thousand dollars sounds like a lot more to people outside than it does to people spending the money up here,” Farleigh said. Once new arrivals discover the real cost of living in Alaska, the thousand dollars is not much of an incentive to live there, she said.

“I don’t think you stay here unless you like it,” she said.

It is clear, though, that the fund is popular.

The Permanent Fund has grown from about $3 billion in 1982 to $12 billion this year. The Permanent Fund Dividend Division of the Alaska Department of Revenue has distributed $3,491,412,140 to Alaskans since 1982.

Half a million people--virtually the entire state’s population--apply for dividend checks each year. The size of the checks varies each year depending on how many applications are anticipated and how well the fund’s investments perform. This year’s checks were for $931.34. each.

As for the Zobels, Patricia remains in private practice in Anchorage. Her husband was in private practice when he filed the suit, but now works for the Alaska attorney general’s office.

The notoriety of the lawsuit changed his life and career, he said. “I doubt if anything in my life will ever be like the reaction to that lawsuit.

“A lot of clients still associated my name with controversy, and they just don’t want to buy into that,” he said. “It certainly has placed some limits on my career.”

Still, he says his challenge to the Permanent Fund dividend program not only made him infamous; it has made him a better Alaskan.

“It has increased my loyalty to the state,” he says. “I was very determined to show people I was not just a fly-by-night person here to cause trouble and then bug out.”