Legislature(2003 - 2004)
02/27/2003 03:21 PM House O&G
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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HB 113-DISCHARGE PREVENTION & CONTINGENCY PLANS Number 0093 CHAIR KOHRING announced that the first order of business would be HOUSE BILL NO. 113, "An Act extending the renewal period for oil discharge prevention and contingency plans; and providing for an effective date." [The bill was sponsored by the House Rules Committee by request of the governor.] CHAIR KOHRING, noting that [Larry Dietrick] hadn't yet arrived to present the legislation on behalf of the administration, offered a synopsis based on Mr. Dietrick's written testimony in committee packets. Chair Kohring explained that HB 113 has the goal of improving regulatory efficiency and reducing the administrative burden [on industry] while improving spill prevention, preparedness, and protection of the environment. It lengthens to five years [the time for renewal of oil discharge prevention and contingency plans], from the current three years. He offered his understanding that the administration believes this will create more flexibility in the system; will give industry more time to put plans together; and will help industry to spend more time on oil discharge prevention, and on implementing plans already in place, before having to refile their plans. Thus a five-year renewal period will streamline the review process for the industry while maintaining Alaska's strong spill prevention and response standards. CHAIR KOHRING continued, noting that oil discharge [prevention and] contingency plans are required of all operators of oil terminals, refineries, crude oil transmission pipelines, oil exploration and production facilities, oil tank vessels, [oil] barges, nontank vessels [over 400 gross tons, and railroad tank cars]. He said there is concern that this might compromise environmental protection, but the administration's position is that that won't happen and, if anything, this will complement the current process and provide those who must submit contingency plans more time to adhere to the regulatory requirements and put the plans into place. He added the belief that this extension to five years enables the emphasis to shift from paperwork to performance. Number 0389 MARY SIROKY, Legislative Liaison, Department of Environmental Conservation (DEC), emphasized that this legislation is to allow [DEC] to ensure that oil spill protection is even better than today. Through actual drills and putting plans into place, she said, [DEC] intends to ensure that people can put their plans into place when a spill happens. She noted that Breck Tostevin from the Department of Law should be on teleconference to speak to a proposed amendment. CHAIR KOHRING indicated amendments would be addressed after testimony was taken. He informed Mr. Dietrick, who'd just arrived, that he'd explained the legislation, but requested a synopsis. Number 0530 LARRY DIETRICK, Director, Division of Spill Prevention & Response, Department of Environmental Conservation, read the first sentence of his written testimony that had been summarized by Chair Kohring, which stated, "This bill supports the Governor's goal of improving regulatory efficiency by reducing the administrative burden while improving spill prevention, preparedness and protection of the environment." He offered to answer questions. Number 0607 REPRESENTATIVE CRAWFORD noted that he'd had a discussion with Ms. Siroky indicating this would allow more drills and testing of the actual spill response. He said he didn't see that direction in the bill, however. He asked whether [DEC] would be averse to some intent language that says the savings from this "break" would be used towards more drills and actual [hands-on training]. Recalling his time in Valdez from 1974-1977, he said a tugboat was supposed to escort all oil tankers out past Bligh Reef, an oil response crew was supposed to be on call 24 hours a day, and there was supposed to be sufficient boom [for an emergency]. All those went by the wayside, however, and there was no preparedness for the oil spill in 1989. He said he didn't want that ever to happen again, and didn't see how extending this to five years would [prevent it]. He emphasized his desire to see more testing, drills, and hands-on practice for an oil spill response. He again asked whether [DEC] would be averse to such intent language. Number 0770 MR. DIETRICK replied: I believe we'd be more than willing to review it. ... That is the concept, and that is what we're trying to do, is cut down on the bureaucratic and the administrative burden of the plan reviews, and that is a substantial burden. And by doing that, we're trying to be smarter and more efficient, to achieve the governor's goals. And I think this is a smart piece of legislation in that regard, and it frees up the operators to focus also on spill prevention and the operation of their plants, which is where spill prevention happens. And so that's very good. And then the shift to verification exercises and training, yeah, we think we can get a ... better "bang for the [buck]" - better operation of the facilities. Number 0833 REPRESENTATIVE ROKEBERG asked how long it takes once a plan is drafted and submitted for review. MR. DIETRICK answered that the timeframe depends on the complexity of the facility. Prince William Sound crude-oil tanker plans - which involve multiple owners of tankers, the Trans-Alaska Pipeline System (TAPS), and the Valdez Marine Terminal - are bigger and much more complex plans, and take longer than smaller plans for smaller oil terminal facilities around the state. There is a lot of upfront negotiation beforehand, he indicated, but once a completed application is received, there is roughly a 65-day period for public notice and review. REPRESENTATIVE ROKEBERG asked, because of the planning and review time, whether a plan now is only good for two years and some months, or whether the three years dates from [the time of] approval. MR. DIETRICK answered that depending on the complexity and which facility the plans apply to, the process may begin up to six months prior to the expiration date of a plan that is to be renewed. REPRESENTATIVE ROKEBERG said he understood DEC's testimony to be that the preference is to have everyone perfecting the ability to respond, rather than "sitting around writing plans." MR. DIETRICK concurred, suggesting that setting it back to five years would result in a significant gain [in time] and a reduction in the paperwork burden. Number 1051 MR. DIETRICK, in response to questions from Representative Rokeberg, explained that the extent of changes [to the plan] at the time of renewal really depends on the facility, the extent to which the nature of the operation has changed, and any corresponding change in response capability. If the situation is status quo, then the changes are relatively minor compared with those when somebody has added storage tanks or similar modifications. There is a requirement to update, however, which applies to new technology as well as "typical things" done at renewal time. Therefore, the update to evaluate new technologies would be an item that all operators would perform. Number 1191 REPRESENTATIVE ROKEBERG posed a hypothetical example of a port facility that has expanded its capacity, and asked whether it is required under the current plans that there be modifications for that during the course of an approved plan. MR. DIETRICK answered that there is another provision in the requirements for an amendment of a plan. If a change or modification to a plan is significant and may affect the response capability during the time when the plan is in effect, then that would be triggered and the operator would request to amend the plan within the three-year cycle. REPRESENTATIVE ROKEBERG asked whether provisions in the current process for plans approved by DEC already have flexibility to account for a substantial change in the capacity or other circumstances of a facility, or for new technological advances. MR. DIETRICK said that is correct. In response to a further question, he said one benefit of extending the renewal is that the amendment requirement now in place requires continuous changes to that plan for anything that happens which may be significant during that plan cycle. Number 1317 REPRESENTATIVE ROKEBERG asked whether it is correct, then, that if DEC is doing its job and the amendment process works properly, there should be no additional risk whatsoever "to what's contemplated under a contingency plan." MR. DIETRICK answered in the affirmative, noting that there also is a mechanism whereby the operator is required to immediately notify [DEC] of nonreadiness if, for any reason, that operator's equipment or response capability isn't up to par and in a state of readiness. He indicated the department would immediately pursue corrective action after being notified by such an operator. REPRESENTATIVE ROKEBERG asked whether DEC audits these capabilities or somehow checks on these plans periodically. MR. DIETRICK replied: Yes, but ... we think there's a better "bang for the buck" if we can increase working directly with the operators to actually verify - through exercises, training, equipment audits, and [so forth] - their capability. ... It's just a much easier communication. You can work more hands-on with the operators. You can find out where problems are that you can't through the theoretical plan-review exercise. So, yes, we would increase -- that is the intent. And, actually, I believe our goal would be to get improved performance and response capability as a result of doing [this]. Number 1429 MR. DIETRICK, in response to further questions from Representative Rokeberg, explained that for noncrude or refined products, storage in excess of 10,000 barrels is the threshold for requiring a contingency plan; for crude oil, the storage threshold is 5,000 barrels. A plan is required for an oil well as long as it involves liquid hydrocarbons, regardless of whether it is an exploratory well or a production well. REPRESENTATIVE ROKEBERG suggested a fuel oil company with more than 10,000 barrels would have to have a plan. MR. DIETRICK affirmed that. CHAIR KOHRING thanked Mr. Dietrick and opened the public testimony. Number 1521 DANA L. OLSON referred to written testimony she'd sent the committee and told members that contingency plans address the permittee, not the public. Noting that AS 46.03.040 is a requirement by the legislature for an environmental plan, she explained: It's not been done, and that's the public process. So, in other words, you are assuming that the criteria has been set for these [contingency] plans, and I really am just going to have to raise an objection. ... You have to have a factual basis first, to ... base a contingency plan on, and that's not been done. Where the technological data is not provided to the public at the lease sale ... stage or the coastal consistency, at some point it triggers a need for the public to know what the secondary effects are from this ... permitted activity. The community right-to-know laws are meaningless if you go in and you write a contingency plan and you make ... presumptions without any public process. I would have to raise an objection. I feel that there isn't an adequate public process because you're not addressing the public; you're addressing what the agency will do and what the permittee or the activity will do, and ... not what the effect on the public is. I wanted to say that the state's disaster plan is supposed to be a community-based effort, and not an agency-directed or an legislative-enacted activity. And certainly contingency plans are basically a mini- disaster plan. And I'm really going to have to object to this five years. It has no rational basis. If there is a need because there is a hazard or the public welfare is in need, it's an arbitrary decision-making thing. Disaster is public welfare, and economics don't ... fathom under national security either. So I don't know how you're going to address ... a state disaster plan when you are not addressing the public. Number 1701 TADD OWENS, Executive Director, Resource Development Council (RDC), testified that RDC is a private, nonprofit business association representing individuals and companies from Alaska's oil and gas, mining, timber, tourism, and fisheries industries; it mission is to help grow Alaska's economy through the responsible development of natural resources. Mr. Owens specified that RDC supports HB 113, which changes the renewal period for DEC-required discharge and contingency plans ("C- plans") from three to five years. Although C-plans are essential to spill response preparedness, he said the effort associated with the plan renewals is significant for both industry and the state. He told the committee: Based on our members' experiences, a three-year renewal cycle often does not result in meaningful improvements in environmental protection or regulatory compliance. Increasing the time between renewals from three to five years will bring the program's benefits in line with its costs. A five-year renewal cycle will allow the state to focus its resources on site inspections, rather than the office work associated with plan reviews. Currently, [DEC] is responsible for more than 125 C- Plans in Alaska. And we believe that allowing agency staff additional time in the field will provide them with a more thorough understanding of industry operations. A five-year renewal period will give agency staff a better opportunity to determine the effectiveness of existing plans and to observe plan implementation prior to any incident. By utilizing this information and experience, subsequent plan renewals will have better oversight, incorporate more high-value improvements, and be less vulnerable to legal challenges. Meanwhile, industry will be able to shift its resources away from the largely administrative exercise of three-year renewals to additional prevention-specific activities. Improved networking and communication between industry and [DEC] will further emphasize and enhance the quality of plan renewals. Also, a five-year renewal cycle would mirror the federal requirement, allowing industry to consolidate its review process. RDC's members believe that increasing the C-Plan renewal cycle from three to five years will result in a more thorough public process, the creation of more realistic and sophisticated plans, and establish a more efficient and predictable regulatory regime. HB 113 deserves the committee's support. Number 1886 MARILYN CROCKETT, Deputy Director, Alaska Oil and Gas Association (AOGA), testified that AOGA is a trade association whose 17 member companies account for the majority of the oil and gas activity in the state. All of AOGA's members that have activity in the state are required to have a C-Plan approved and in place. She told the committee, "Clearly, we have a significant interest in this legislation, and we encourage the committee to pass it." MS. CROCKETT reported that AOGA spent considerable time over the past 12 months looking at permitting programs and identifying those in need of updating and streamlining, and early on had adopted a guiding principle: "accomplish updates and streamlining without compromising environmental protection of safety standards." She said HB 113 fits perfectly within this principle. MS. CROCKETT indicated the five-year cycle proposed in the bill is the cycle used by the federal government, the West Coast states, and "other oil-producing states that we've studied." She reported that the cost of renewal alone can average $60,000 to $100,000, depending on the type of facility; that doesn't include legal challenges, which can increase figures up to half a million dollars. In addition, the renewal process is time- intensive. She reported that experience has shown that for some plans, even with submittals 180 days in advance of the expiration date, approvals can still average 360 days, "essentially meaning that once a renewal is complete, work must begin on the next renewal." Number 1982 MS. CROCKETT emphasized what purpose a C-Plan serves: it is a blueprint describing how an operator will respond to an event. The proof of its effectiveness isn't how often it is renewed, but whether the response identified in the plan can be delivered as promised. Demonstration of this effectiveness is accomplished through drills, she said, suggesting this area is where the biggest benefit of extending the renewal cycle will be seen, by shifting the focus from administrative processing to field performance. The extension also will provide additional time for agency staff to increase their familiarity and understanding of a particular operation for which they are responsible. MS. CROCKETT, calling these C-Plans "evergreen" documents, said they are continually reviewed by the operators to ensure that the information is kept up to date, and that the plan continues to reflect the current operation and state of readiness. She noted that DEC regulations require that updates and amendments be submitted to the department. Number 2033 MS. CROCKETT referred to the amendment mentioned by Ms. Siroky [to be discussed by Breck Tostevin of the Department of Law]. That amendment [later adopted as Amendment 1], read as follows [original punctuation provided]: Page 1, following line 10: Insert a new bill section to read: **Sec. 2 The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION. Notwithstanding any contrary provision of AS 46.04, including the review procedures in AS 46.04.030, and the regulations adopted under AS 46.04, the expiration date of an oil discharge prevention and contingency plan approved by the Department of Environmental Conservation before the effective date of this Act shall be extended for two years, or for a shorter period if a shorter period is requested by the holder of the approved plan, if (1) the plan is still in effect on the day before the effective date of this Act; and (2) the Department of Environmental Conservation has not given a notice of violation of AS 46.04.030 to the holder of the plan that has not been corrected to the satisfaction of the Department of Environmental Conservation. Renumber remaining sections accordingly. MS. CROCKETT specified that AOGA supports the amendment. She noted that with her were people she considered experts in this field who could answer technical questions. Number 2129 DOUGLAS MERTZ, Prince William Sound Regional Citizens' Advisory Council (RCAC), testified in opposition to HB 113 as drafted. Noting that his organization is a coalition of mostly municipal and borough governments and other entities formed after the Exxon Valdez [oil spill], he said it is actively involved in tracking the entire process of oil transportation from Valdez, through Prince William Sound and throughout that area. Intimately involved in the C-Plan creation and approval process on an ongoing basis, the RCAC has concluded that it must oppose this bill as currently drafted because it will, in fact, weaken Alaska's oil spill prevention and response capabilities, Mr. Mertz reported. MR. MERTZ discussed the three ways his organization believes this will happen. First, extending the timeframe inhibits the timeliness of the agency's ability to incorporate into C-Plans those lessons learned from on-the-ground, in-the-field drills and other exercises, which are an incredibly important part of learning and preparation for oil spills. Second, it reduces the frequency of updating the "best available technology" (BAT) analyses, a highly important part of the entire oil spill process. Under the C-Plan requirements, plan holders are required to employ BAT in their oil spill preparedness, prevention, and response capacities. Extending the time period for these renewals will basically defer - and almost double - the time period during which the BAT analyses must be undertaken and implemented. And third, it reduces the agency's and plan holder's familiarization with the plan, which could result in complacency. From the Exxon Valdez and other major spills, he cautioned, [it has been learned that] what very often precedes such a spill is a period of complacency. Number 2270 MR. MERTZ countered testimony that an extension to five years would align Alaska's requirements with federal requirements. He pointed out that because Alaska's requirements now are stricter than the federal ones, the federal requirements "tend to be a much less extensive plan update to the Alaska requirements." Furthermore, the federal regulations have an additional requirement for an annual review and update. There is no such requirement in Alaskan law, and this bill wouldn't add one. He suggested: If you really want to align what happens on the state level with what happens on the federal level, then that same annual review and update should be incorporated; in fact, you could lift the language from the federal regulations and incorporate them into state law directly, to truly make it in alignment. MR. MERTZ noted that the RCAC's testimony was provided by fax to each member the previously day, and said he wouldn't read it this day. He again pointed out that his organization, which follows these issues carefully, is increasingly uncomfortable with the idea of extending this plan without this kind of additional safeguard and additional requirements that ensure an ongoing, mandatory duty to update plans annually or on some more frequent basis than five years. Number 2359 REPRESENTATIVE ROKEBERG offered his understanding from Mr. Dietrick's testimony that already in existence are the amendment process and provisions for notification of nonreadiness with regard to C-Plans in Alaska. He asked whether those processes aren't working correctly, and whether they aren't equivalent to annual review. MR. MERTZ responded: They're not the equivalent. Those are ... tools which can be used in the extraordinary circumstances of true inability to respond to fulfill the plan, or some extraordinary event [that] makes actuality diverge from what's in the plan. But that's different from what the federal regulations require, ... an actual, ongoing update incorporating best available technology ... as a regular matter - in other words, ... a constantly evolving process that ... continually causes ... an improvement in the ability of the plan holder to perform. What [Mr. Dietrick] ... was talking about really can be invoked only in extraordinary circumstances. And right now the agency doesn't have the ability to say to a plan holder that "you must do these incremental, almost continuous improvements in your ability to perform." Number 2434 CHAIR KOHRING asked whether anyone else wished to testify. He then closed public testimony. Number 2453 REPRESENTATIVE ROKEBERG asked Mr. Dietrick to respond to the testimony of Ms. Olson about the public process and the idea that C-Plans are supposed to be a community-based effort. MR. DIETRICK answered: The public review process is provided for, for contingency plans. It's a 30-day public review process with a request for additional information. And we ... do those. So ... that's a fairly standard public notice review period that the department uses for most of its major permits and authorizations. So that's the one that's in place for contingency plans, and that's what we use to provide for the public notice. Number 2504 REPRESENTATIVE ROKEBERG asked Mr. Dietrick to respond to Mr. Mertz's three main points [also set out in the RCAC's letter dated February 26]. He offered his own assessment that having a plan longer leads to more familiarity, rather than complacency. MR. DIETRICK replied: First of all, ... I think the good news about the bill is, I think everybody has the same goal. The Prince William Sound Regional Citizens' Advisory Council has been given an oversight role under the Oil Pollution Act of 1990 to make sure we all do a good job. And we work with them all the time. They've got good expertise and experience, and we ... seriously consider their input on all oil spill prevention and response matters, ... as we do their comments today ... on this bill. So we treat those very seriously, and ... they are a very key player here in ensuring the integrity of the system. We sometimes disagree on the approach and ... how to get to those goals. ... We believe that actual field testing is a better way to move forward and test the capability of these systems than these ... three-year renewals. And that's why we believe the extension to five-year [renewals] is a substantial improvement. With regard to the lessons learned and the delaying the lessons learned, we do not wait even till three years now to incorporate lessons learned from drills into a plan. We do roll those into a plan now, if they are significant, by amendment. So extending it to five years is neither here nor there, because if it is significant, the idea is, we use the amendment process to include them now. And for major plans, even in the Prince William Sound area, we have monthly meetings - they call them the "response planning group" - to review lessons learned, sort through them, determine which ones are significant; they're even tracked in a system called "Passport" (ph). We ... would like to improve on that, but ... there very clearly is a mechanism in place to ... roll those lessons learned in without any delay. Number 2659 MR. DIETRICK addressed the RCAC's concern about review of the best available technology as follows: With regard ... to the second point in their letter, the best available technology reviews, those are performed at the time of renewal, and ... the intent behind those is to keep these plans current with changes in technology. Now, the technology-review cycle for oil spill response equipment is ... long. ... There have not been many breakthroughs. A five- year cycle for a technology review, I believe, is an appropriate cycle. As a matter of fact, our regulations require that we conduct a "best available technology" conference on a five-year basis right now. This would simply line that up. The best available technology analyses that are performed in these plans [are] a theoretical exercise. And we believe it's more important - than to review those - to actually go out and test those premises more frequently to see if they work, to see if the technology that was analyzed and arrived at in the plan is actually the ... best available technology when you implement it. So increasing our ability to do that in the field will, I believe, drive faster advances in technology improvements, because ... we will have the ability ... to test those, reject the ones that don't work, and then seek improvements ... and get better ones ... that will work. Number 2733 MR. DIETRICK responded to the RCAC's concern about complacency as follows: I think the third point, then, was the complacency. And, indeed, that is a significant phenomenon that we all need to be aware of. It's the one that, a decade ago, was pointed to quite frequently. And I think no one wants to slip back into that mode. This change, however, again, I think is a smart change because it gets us away from the theoretical reviews and gets us [to] the point where we can actually test the capabilities of the response system and actually, then, through testing, identify which ones are real and which ones aren't, and then seek the improvements that way. So I think it's a much more productive way of 1) interacting with the companies, 2) finding out what does work, and 3) that is really, in our opinion, an increased interaction with the operators, which to me does just the opposite - it reduces the complacency. Number 2835 REPRESENTATIVE ROKEBERG asked whether both the plan applicant and [DEC] have the ability to move to amend [a plan]. MR. DIETRICK replied that he believes the statutes are quite strong. He paraphrased from AS 46.04.030, which read in part: (f) Upon request of a plan holder or on the department's own initiative, the department, after notice and opportunity for hearing, may modify its approval of a contingency plan if the department determines that a change has occurred in the operation of a facility or vessel necessitating an amended or supplemented plan, or the operator's discharge experience demonstrates a necessity for modification. The department, after notice and opportunity for hearing, may revoke its approval of a contingency plan if the department determines that (1) approval was obtained by fraud or misrepresentation; (2) the operator does not have access to the quality or quantity of resources identified in the plan; (3) a term or condition of approval or modification has been violated; or (4) the person is not in compliance with the contingency plan and the deficiency materially affects the plan holder's response capability. REPRESENTATIVE ROKEBERG requested that Mr. Dietrick provide a copy for the committee's files and for the bill packet [to be given to the next committee of referral]. MR. DIETRICK said he would gladly provide those parts of the statute and the nonreadiness [provisions]. Number 2878 CHAIR KOHRING moved to adopt Amendment 1 [text provided previously]. The committee took an at-ease at 4:07 p.m. and was called back to order within a minute. Number 2911 BRECK TOSTEVIN, Assistant Attorney General, Environmental Section, Civil Division (Anchorage), Department of Law, explained that Amendment 1 adds a transition provision that requires DEC to administratively extend the expiration date of an oil discharge prevention and contingency plan that was approved before the effective date of this Act. That extension would be for two years, or for a shorter period if a shorter period were requested by the holder of an approved plan. He said a shorter period would be to allow a plan holder to synchronize with a federal plan review or if a shorter period were needed for some other reason. MR. TOSTEVIN said there would be two limitations on the authority for extending the plan renewal date. First, the plan would have to be in effect on the day before the effective date of the Act. And second, if the department had issued a notice of violation to the C-Plan holder concerning the C-Plan, that would have to be corrected to the department's satisfaction before the extension of the plan expiration date. MR. TOSTEVIN explained that the intent behind the transition provision is to extend the expiration date of existing plans without requiring a new administrative review or renewal procedures, or requiring DEC to adopt unnecessary regulations. This transition provision would allow immediate benefits to the industry and the department, he suggested, as discussed earlier by Mr. Dietrick. He offered to answer any legal questions. TAPE 03-11, SIDE B Number 2976 CHAIR KOHRING renewed his motion to adopt Amendment 1. There being no objection, it was so ordered. The committee took an at-ease from 4:11 p.m. to 4:13 p.m. Number 2950 REPRESENTATIVE CRAWFORD moved to adopt [Conceptual] Amendment 2. CHAIR KOHRING objected for discussion purposes. REPRESENTATIVE CRAWFORD explained that he wanted to adopt intent language taken from Mr. Dietrick's written testimony, as follows: Streamlining the process would allow the applicant to focus on the actual testing of oil spill prevention and response preparedness through [in-the-field] inspections, drills, and exercises, which is our most effective means of ensuring spill prevention, response readiness, and protection of the environment. Number 2896 REPRESENTATIVE ROKEBERG also objected for discussion purposes, pointing out the need to have this be a conceptual amendment. REPRESENTATIVE ROKEBERG withdrew his objection. CHAIR KOHRING renewed his objection for discussion purposes and asked Mr. Dietrick to provide his thoughts on the amendment. Number 2850 MR. DIETRICK offered his belief that DEC would concur with the language. CHAIR KOHRING withdrew his objection. He then announced that Conceptual Amendment 2 was adopted. Number 2830 REPRESENTATIVE ROKEBERG moved to report HB 113, as amended, out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 113(O&G) was reported from the House Special Committee on Oil and Gas.
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