Legislature(2017 - 2018)BARNES 124
02/12/2018 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB322 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 322 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 322-OIL SPILLS/POLLUTION:PENALTIES;PREVENTION
1:04:50 PM
CO-CHAIR JOSEPHSON announced that the first order of business
would be HOUSE BILL NO. 322, "An Act relating to penalties for
discharges of oil and other pollution violations; relating to
oil discharge prevention and contingency plans for commercial
motor vehicles transporting crude oil; and providing for an
effective date."
1:05:55 PM
REPRESENTATIVE PARISH moved Amendment 1 to HB 322, labeled, 30-
LS1015\O.12, Nauman, 2/8/18, which read:
Page 2, line 27:
Delete "$20"
Insert "$40"
Page 2, line 30:
Delete "$5"
Insert "$10"
Page 3, line 1:
Delete "$2"
Insert "$4"
1:06:02 PM
REPRESENTATIVE TALERICO objected.
REPRESENTATIVE PARISH explained Amendment 1 increases the
amounts of penalties to reflect the rate of inflation.
1:06:39 PM
A roll call vote was taken. Representatives Drummond, Parish,
Josephson, and Tarr voted in favor of Amendment 1.
Representatives Talerico, Lincoln, Birch, and Johnson voted
against it. Therefore, Amendment 1 failed to be adopted by a
vote of 4-4.
1:07:47 PM
REPRESENTATIVE PARISH moved Amendment 2, labeled 30-LS1015\O.13,
Nauman, 2/8/18, which read:
Page 4, line 7:
Delete "$1,000"
Insert "$2,000"
Delete "$200,000"
Insert "$400,000"
1:07:56 PM
REPRESENTATIVE TALERICO objected. He said previous testimony on
the bill revealed the responsibility to clean up an oil spill is
held by the company and the people who caused the spill.
Furthermore, the fee structure is put in place to cover the
state's cost and he opined few transporters would choose to
spill oil. The state has provisions in place that require a
responsible party to clean up a spill and he said he did not
support the fee increases in the proposed amendment.
CO-CHAIR TARR directed attention to the bill on page 4, line 7,
that read:
assessed by the court of not less than $1,000 [$500]
nor more than $200,000
CO-CHAIR TARR expressed her understanding the penalty addressed
by Amendment 2 applies when a company has been found liable -
through civil action - to have acted irresponsibly and caused a
spill.
1:10:34 PM
KRISTIN RYAN, Director, Division of Spill Prevention and
Response, Department of Environmental Conservation, said
Representative Tarr is correct and the aforementioned penalty
would come into effect after the state has found the spiller has
harmed the environment in a manner to warrant a penalty.
REPRESENTATIVE PARISH explained Amendment 2 is also to adjust
the amount of the fines to reflect inflation. He opined civil
penalties based on compliance are appropriate because companies
are responsible for a maximum return to their investors;
however, it is the responsibility of the legislature to ensure
the public and the state's environment are protected. He spoke
in favor of keeping civil penalties from eroding [due to
inflation] so they are effective to address violations.
CO-CHAIR JOSEPHSON referred to testimony provided by Kara
Moriarty [President/CEO of the Alaska Oil and Gas Association]
during a previous hearing [on 2/9/18] and remarked:
... she noted that depending on the fiscal year, the
number of spills that belong to the oil and gas
industry are in the 24-29 percent range, but in terms
of volume, they're only in the 2 percent range. ... My
concern is that other industries are not paying [for]
their clean up, in fact, the cost is being borne by
the oil industry through the SPAR fund. ... Here's
what she said: ... DEC usually recovers full cost from
the oil and gas spills, it's not true of the other
industries.
CO-CHAIR JOSEPHSON opined given [liability] would be proven in a
court of law, and the proposed penalty is "true to really the
inflationary rate, ... it merits the committee's serious
consideration."
1:14:15 PM
A roll call vote was taken. Representatives Drummond, Parish,
Tarr, and Josephson voted in favor of Amendment 2.
Representatives Rauscher, Talerico, Lincoln, Birch, and Johnson
voted against it. Therefore, Amendment 2 failed to be adopted
by a vote of 4-5.
1:15:18 PM
CO-CHAIR TARR moved Amendment 3, labeled 30-LS1015\O.16, Nauman,
2/10/18, which read:
Page 7, line 28:
Delete "$1,000"
Insert "$500"
Delete "the initial"
Insert "each"
Page 7, lines 28 - 29:
Delete ", and may not exceed $24 a gallon of oil
discharged"
Page 8, line 6:
Delete "extent"
Insert "volume, extent,"
1:15:31 PM
REPRESENTATIVE JOHNSON objected.
CO-CHAIR TARR directed attention to the bill on page 7, [lines
27-30], which read:
(b) An administrative penalty assessed under this
section may not be less than $1,000 nor more than
$10,000 for the initial violation, and may not exceed
$24 a gallon of oil discharged. When assessing a
penalty under this section, the department shall
consider
CO-CHAIR TARR explained the first change within Amendment 3 is a
reduction from $1,000 to $500 of the minimum administrative
penalty on the initial violation currently defined in the bill.
The second change deletes "the initial" and inserts "each" thus
the penalty would be assessed for each violation. She related
the Department of Environmental Conservation (DEC) advised that
a fine of $1,000 is too high for a small spill, and DEC seeks to
assess each violation rather than only the initial violation
because without the changes made by Amendment 3, there is a
conflict with the language [on page 7, line 25] in subsection
(a). Also, DEC advised the penalty that "may not exceed $24 a
gallon of oil discharged" is not necessary because the proposed
bill has a maximum penalty of $10,000 and she gave an example.
Finally, she directed attention to page 8, line 6, which read:
(5) the extent and seriousness of the discharge,
including the potential ...
CO-CHAIR TARR further explained Amendment 3 adds "volume,
extent" to replace "extent" which asserts DEC's ability to
calculate the volume of the spill. She restated the four
changes within Amendment 3.
1:20:34 PM
REPRESENTATIVE BIRCH said he was opposed to the bill due to its
inconsistency. He asked whether the $24 a gallon penalty would
be assessed against a person or persons who commit a serious
discharge, for example, the school district in Bethel that
accidentally spilled 3,000 gallons of crude oil.
MS. RYAN restated the question. She said if the bill is enacted
[DEC] would consider the criteria put forth in the bill and
determine if a penalty were warranted. The criteria to be
analyzed includes gross negligence, cause, and harm to the
environment, and if the volume level were sufficient, DEC would
have administrative penalty authority to evaluate a possible
penalty.
REPRESENTATIVE BIRCH surmised DEC would make a subjective
determination, not based on the adverse impact of a spill, or
the clean-up cost, but upon whether a regulator chooses to
assess a penalty.
MS. RYAN disagreed and advised the point of the proposed
legislation is to clarify the standards applied by DEC. The
aforementioned section of the bill is utilized for serious or
repeat violations, and the example of the school district in
Bethel was not a repeat violation. [DEC] seeks guidance from
the legislature and does not wish to make subjective decisions.
REPRESENTATIVE BIRCH opined [a serious discharge] is "always in
the eye of the beholder," and he provided an example.
CO-CHAIR JOSEPHSON recalled testimony from Ms. Ryan that in the
examples of the Hilcorp [2016 oil spill on the North Slope and
2017 natural gas release and oil leak in Cook Inlet], DEC could
have sought penalties through the court but declined to do so.
MS. RYAN advised Hilcorp experienced two releases, one of
natural gas and another of oil. A liquid volume was not
calculated in the natural gas release because DEC does not have
a process to determine the volume of a natural gas release and
thereby determine a penalty. In further response to Co-Chair
Josephson, she said the release of oil during the aforementioned
spill was three gallons and penalties were not pursued.
1:26:07 PM
CO-CHAIR JOSEPHSON questioned whether an administrative penalty
could be appealed to the Office of Administrative Hearings,
Department of Administration.
MS. RYAN said correct; as the bill is written, decisions
assessing administrative penalties would be appealed to an
administrative law judge and not through the judicial system.
In further response to Co-Chair Josephson, she confirmed any
administrative penalty levied would be subtracted from a civil
penalty assessed by the court.
REPRESENTATIVE RAUSCHER inquired as to the meaning of "penalty
against a person" in the language of the bill.
MS. RYAN deferred the question to the Department of Law.
REPRESENTATIVE RAUSCHER said his experience on the North Slope
is that very small oil discharges are reported, and he strongly
cautioned if penalties are increased, oil companies may decide
not to report spills. He opined the present system is working.
CO-CHAIR JOSEPHSON stated the following points:
• current law requires companies to report oil spills, which
is unchanged by HB 322
• [Fiscal note identifier: HB322-DEC-SPAR-02-01-2018]
indicates increased cost to industry of $75,000
• 2 percent of [reported spills] are on the North Slope
• the cost of cleaning up spills exceeds SPAR's fund, so the
industry is "covering more than its share"
• Alaska residents are paying for clean up through a general
fund
1:30:58 PM
REPRESENTATIVE RAUSCHER stated he has not received the
information he requested on the size, type, and status of
spills.
CO-CHAIR JOSEPHSON pointed out the information provided in a
response document from [Ms. Ryan, Director, Spill Prevention and
Response] DEC, dated 2/7/18, which was posted on the bill action
status inquiry system (BASIS).
CO-CHAIR JOSEPHSON, in response to Representative Rauscher's
previous question, read from [AS 46.04.918] as follows:
"person" means an individual, public or private
corporation, political subdivision, government agency,
municipality, industry, partnership, association,
firm, trust, estate or any other entity.
1:32:32 PM
EMILY NAUMAN, Attorney, Legislative Legal Counsel, Legislative
Legal Services, Legislative Affairs Agency, advised the citation
for the applicable statute is AS 46.03.918 and the definition as
read by Co-Chair Josephson is correct.
1:34:38 PM
REPRESENTATIVE LINCOLN referred to an incomplete response from
DEC for background documentation to support its $75,000
estimated cost to the industry of the proposed legislation.
1:35:07 PM
CO-CHAIR JOSEPHSON returned attention to DEC's abovementioned
response document, which addressed the estimated cost on page 3.
1:36:00 PM
The committee took a brief at-ease at 1:36 p.m.
1:39:36 PM
REPRESENTATIVE JOHNSON maintained her objection to Amendment 3.
1:39:40 PM
A roll call vote was taken. Representatives Lincoln, Drummond,
Parish, Tarr, and Josephson voted in favor of Amendment 3.
Representatives Johnson, Rauscher, Talerico, and Birch voted
against it. Therefore, Amendment 3 was adopted by a vote of 5-
4.
1:40:53 PM
REPRESENTATIVE BIRCH moved Amendment [4], labeled 30-
LS1015\O.10, Nauman, 2/8/18, which read:
Page 1, lines 1 - 3:
Delete "relating to oil discharge prevention and
contingency plans for commercial motor vehicles
transporting crude oil;"
Page 9, line 4, through page 12, line 16:
Delete all material.
Renumber the following bill sections accordingly.
Page 12, line 23:
Delete "Section 20"
Insert "Section 14"
Page 12, line 24:
Delete "sec. 21"
Insert "sec. 15"
1:41:10 PM
CO-CHAIR TARR objected for discussion purposes.
REPRESENTATIVE BIRCH explained Amendment 4 is in response to
previous testimony from the Alaska Trucking Association, Inc.,
and others, that portions of HB 322 are unnecessary, burdensome,
and duplicative because there are existing federal contingency
plans related to the transportation of oil. Amendment 4 would
reduce the duplicative components that the bill would impose on
industry and which were previously revealed to DEC.
CO-CHAIR TARR agreed that industry should not be burdened with
duplicative legislation; however, DEC needs access to the
available safety information, and both of these goals can be
accomplished by a forthcoming amendment.
REPRESENTATIVE PARISH urged for an explicit agreement of
cooperation between companies transporting crude oil and DEC,
which Amendment 4 lacks.
1:44:57 PM
CO-CHAIR JOSEPHSON said a forthcoming amendment cites AS 46.04,
in which contingency plans are established in existing law for
oil terminal facilities, pipelines, and tanker vessels; however,
the state does not commonly review extant plans. He referred to
testimony [during the hearing of HB 322 on 2/9/18] from Mr.
Thompson, [executive director, Alaska Trucking Association], who
acknowledged a willingness to share the contingency plans,
although Mr. Thompson cautioned he had not consulted with the
members of the association in this regard. Co-Chair Josephson
said, "... the state doesn't know much about these response
plans, and that's the term DOT federal uses. I'm going to be
opposing the amendment."
1:47:06 PM
A roll call vote was taken. Representatives Birch, Johnson,
Rauscher, and Talerico voted in favor of Amendment 4.
Representatives Lincoln, Drummond, Parish, Tarr, and Josephson
voted against it. Therefore, Amendment 4 failed to be adopted
by a vote of 4-5.
1:47:59 PM
REPRESENTATIVE PARISH moved Amendment 5 labeled 30-LS1015\O.17,
Nauman, 2/12/18, which read:
Page 1, line 2:
Delete "discharge prevention and contingency"
Insert "spill response"
Page 9, line 4, through page 12, line 16:
Delete all material and insert:
"* Sec. 13. AS 46.04 is amended by adding a new
section to read:
Sec. 46.04.057. Oil spill response plans for
commercial motor vehicles. (a) If a person is required
to submit an oil spill response plan under federal
law, the person may not operate a commercial motor
vehicle transporting crude oil on a highway or road
maintained by the state unless the person has
submitted to the department, and the department has
received, the oil spill response plan required under
federal law.
(b) Failure of a holder of a response plan
submitted to the department under this section to
comply with the plan or to have access to the quality
or quantity of resources identified in the plan or to
respond with those resources within the shortest
possible time in the event of a spill is a violation
of this chapter for purposes of AS 46.03.760(a),
46.03.765, 46.03.790, and any other applicable law. If
the holder of a response plan submitted to the
department under this section fails to respond to and
conduct cleanup operations of an unpermitted discharge
of crude oil with the quality and quantity of
resources identified in the plan and in a manner
required under the plan, the holder is strictly
liable, jointly and severally, for the civil penalty
assessed under AS 46.03.758, 46.03.759, or 46.03.760
against any other person for that discharge.
(c) In this section, "commercial motor vehicle"
has the meaning given in AS 19.10.399."
Page 12, line 23:
Delete "Section 20"
Insert "Section 15"
Page 12, line 24:
Delete "sec. 21"
Insert "sec. 16"
1:48:13 PM
REPRESENTATIVE BIRCH objected to Amendment 5, noting his concern
about the duplicative nature of Alaska's regulatory environment.
He expressed his understanding there are existing federal
requirements for contingency plans which may be duplicated.
CO-CHAIR TARR directed attention to Amendment 5, on page 1,
lines 11-13, which read in part:
... the person has submitted to the department, and
the department has received, the oil spill response
plans ...
CO-CHAIR TARR said although [DEC] should have an approval
mechanism due to its expertise, industry testimony showed
concern that an additional approval process by DEC would be
burdensome; however, Amendment 5 directs industry to provide
copies of existing plans for DEC to have on file, which would be
adequate in an incident, but not burdensome.
REPRESENTATIVE PARISH said Amendment 5 has a narrow focus:
applies only to commercial motor vehicles transporting crude oil
on a highway or a road maintained by the state; requires
companies to submit copies of existing oil spill response plans
- which industry acknowledged could be provided - to DEC;
reduces work by DEC employees. In addition, the amendment
stipulates that contingency plans should be followed, and he
pointed out the plans are not reviewed, which is not adequate
oversight.
REPRESENTATIVE BIRCH, due to the clarification Amendment 5 does
not create a hurdle for industry, withdrew his objection.
1:54:01 PM
REPRESENTATIVE TALERICO objected to Amendment 5. He directed
attention to Amendment 5 on page 1, lines 18-20, which read in
part:
... If the holder of a response plan submitted to the
department under this section fails to respond to and
conduct cleanup operations of an unpermitted discharge
of crude oil with the quality ...
REPRESENTATIVE TALERICO urged for clarification of the
cumbersome language that implies someone would get a permit for
the discharge of crude oil. Representative Talerico then
removed his objection. There being no further objection,
Amendment 5 was adopted.
CO-CHAIR JOSEPHSON returned attention to the bill, as amended.
REPRESENTATIVE TALERICO said Alaska currently has a successful
[oil spill prevention and reporting] process and industry
reports any spills that take place. He cautioned against adding
to industry's burden and expense related to the clean up of
spills; in fact, every drop of product is valuable and thus is
accounted for. He said he did not support the bill.
REPRESENTATIVE BIRCH objected to the bill's introduction as a
committee bill and to the muddled nature of the bill, such as
references to economic savings, a competitive advantage gained
by noncompliance with standards, the lack of details, and
further confusing and contradictory concerns. He said the bill
is "a solution in search of a problem" and noted crude oil
spills are less than 2 percent of the total spills and are
declining due to good management by companies. He cautioned
adding layers of regulatory components to business adds to cost
and reduces Alaska's competitiveness in attracting resource
development. Further, there will be unintended consequences to
costs that can be collected by DEC.
1:59:56 PM
REPRESENTATIVE JOHNSON said she would vote against the bill for
the following reasons: industry testimony related to increases
in oil taxes; her objection to the introduction of the bill as a
committee bill at a time when industry representatives were
present; the bill adds to the uncertainty of ongoing changes to
industry regulations; the bill is not an independent "rewrite of
spills and clean up"; her objection to the random procedure; in
the interest of showing stability for the industry.
CO-CHAIR JOSEPHSON described the committee bill process as a
procedure allowed by Alaska law, and utilized in the House less
in the 30th Alaska State Legislature than in the two previous
legislatures. Further, the introduction of the bill was fully
transparent to industry and the scheduling of hearings is not
orchestrated, but is affected by many factors, and he gave an
example. He agreed with Representative Birch there is evidence
the oil and gas industry has a good record, but recalled
previous testimony by the Alaska Oil and Gas Association that
other industries are not as compliant.
REPRESENTATIVE LINCOLN said he shared some concerns about the
bill and supported the improvements made by committee
amendments.
2:05:23 PM
REPRESENTATIVE DRUMMOND restated the reason for HB 322 is the
lack of [spill] regulation of commercial trucks transporting
crude oil, compared to spill regulation of oil drilling
facilities and oil tankers; in fact, the bill addresses a new
section of industry. Further, Amendment 5 "contributed
considerably to the clarity of this bill."
REPRESENTATIVE RAUSCHER cautioned the intent of the bill is to
recover costs for the state; however, the bill puts limitations
on companies that are addressing problems very well and are
already concerned about the environment. He questioned whether
the bill would increase revenue or act as a deterrent.
CO-CHAIR TARR recalled DEC reported even though there are
currently fewer spills, and spills of lower volumes, the
assessment of fines and penalties enacted in 1977 or 1989 will
not recoup DEC's costs accrued when an operator is unable to pay
clean-up costs. She provided examples of prices affected by
inflation and noted a penalty of $20 per gallon of oil entering
an anadromous stream would be insufficient to recoup the costs
to clean up a spill if the state assumes responsibility in its
role as the "final entity." Further, the legislature has
directed DEC to recover its costs and needs the resources to do
so.
REPRESENTATIVE PARISH said penalties should not be allowed to
erode to one-quarter of their value without concern by the
legislature. He urged for the state to move beyond trust as
related to contingency plans, and provided information on the
adverse effects of very small amounts of crude oil and refined
fuels on salmon.
2:11:34 PM
CO-CHAIR TARR moved to report HB 322, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
2:11:48 PM
REPRESENTATIVE TALERICO objected.
A roll call vote was taken. Representatives Drummond, Parish,
Lincoln, Tarr, and Josephson voted in favor of HB 322, as
amended. Representatives Birch, Johnson, Rauscher, and Talerico
voted against it. Therefore, CSHB 322 was reported out of the
House Resources Standing Committee by a vote of 5-4.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 322 Sponsor Statement.docx |
HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 HRES PwrPt for Feb 2.pdf |
HRES 2/2/2018 1:00:00 PM HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 Sectional Analysis.pdf |
HRES 2/2/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 DEC Spill Penalties Overview 2.2.18.pdf |
HRES 2/2/2018 1:00:00 PM HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| 1 2.7.2018 - DEC Response to H RES re HB322.pdf |
HRES 2/7/2018 6:30:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| 2 OHSRRF 4th Qtr 2017.pdf |
HRES 2/7/2018 6:30:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 - AOGA Testimony - Final - 2.7.2018.pdf |
HRES 2/7/2018 6:30:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| AK Trucking Assn testimony.pdf |
HRES 2/7/2018 6:30:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| AK Trucking Assn, 49 CFR Part 130.pdf |
HRES 2/7/2018 6:30:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HRES ANVCA Contaminated Lands Presentation 2.12.18.pdf |
HRES 2/12/2018 1:00:00 PM |
Contaminated Lands |
| Am. 1, Parish, Section 2.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |
| Am. 2, Parish, Section 6.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |
| Am.3, Tarr, Section 12.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |
| Am. 4, Birch, Sections 13-18.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |
| Am 5, Parish, Sections 13-18.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 - AOGA Written Testimony - Feb. 9, 2018.pdf |
HRES 2/12/2018 1:00:00 PM |
HB 322 |