Legislature(2017 - 2018)BARNES 124

02/09/2018 01:00 PM RESOURCES

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* first hearing in first committee of referral
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Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
-- Testimony <Invited/Public> --
         HB 322-OIL SPILLS/POLLUTION:PENALTIES;PREVENTION                                                                   
1:06:44 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."                                                                                                                
1:08:04 PM                                                                                                                    
AVES THOMPSON,  Executive Director, Alaska  Trucking Association,                                                               
Inc., paraphrased from the  following written testimony [original                                                               
punctuation provided]:                                                                                                          
     Thank you.   Co-Chairs and members of  the committee, I                                                                    
     am  Aves Thompson,  Executive  Director  of the  Alaska                                                                    
     Trucking Association.   The Alaska Trucking Association                                                                    
     is   a  state   wide   organization  representing   the                                                                    
     interests  of  our  nearly 200  member  companies  from                                                                    
     Barrow to Ketchikan.  Freight  movement is an essential                                                                    
     element of our  economy and impacts all of  us each and                                                                    
     every day.                                                                                                                 
     Relative  to  contingency  plans in  Section  13-18  in                                                                    
     HB322, 49 CFR part  130, already prescribes contingency                                                                    
     plans for the  motor transport of oil.   I'll read some                                                                    
     highlights  from Part  130 regarding  contingency plans                                                                    
     for oil bulk transport.                                                                                                    
     Contingency Plans for Oil bulk transport:                                                                                  
     49  CFR 130.  Oil spill  prevention and  response plans                                                                    
     Prescribes   prevention,   containment   and   response                                                                    
     planning    requirements   of    the   Department    of                                                                    
     Transportation applicable  to transportation of  oil by                                                                    
     motor vehicles and rolling stock.                                                                                          
     49 CFR  130.2 Scope (a)  The requirements of  this part                                                                    
     apply  to  ---  1.  Any   liquid  petroleum  oil  in  a                                                                    
     packaging having  a capacity of 3,500  gallons or more;                                                                    
     and 2. Any  liquid petroleum or non-petroleum  oil in a                                                                    
      quantity greater than 42,000 gallons per packaging.                                                                       
     49 CFR  130.3 General Requirements No  person may offer                                                                    
     or accept  for transportation or transport  oil subject                                                                    
     to this  part unless  that person--- (a)  Complies with                                                                    
     this  part;  and    (b)  Has  been  instructed  on  the                                                                    
     applicable requirements of this part                                                                                       
     49  CFR  130.31  Response  Plans   (a)  No  person  may                                                                    
     transport oil  subject to this part  unless that person                                                                    
     has a current  basic written plan that:    goes on with                                                                    
     a list of requirements                                                                                                     
     The  Alaska Trucking  Association  believes that  since                                                                    
     the   federal   requirements    already   prescribe   a                                                                    
     contingency  plan for  oil transporters  of both  crude                                                                    
     and refined  product, sections 13-18  in HB322  are not                                                                    
     Secondly,   to   dispel   the   notion   that   drivers                                                                    
     transporting  oil are  irresponsible,  please note  the                                                                    
     following  training  and   retraining  requirements  to                                                                    
     drive  such a  rig.   These  men and  women are  highly                                                                    
     trained professionals  who are committed to  safety not                                                                    
     only for  themselves but for  other motorists  as well.                                                                    
     Our drivers  have families who  live, work and  play in                                                                    
     Alaska and want their outdoor  experience to be free of                                                                    
     contaminated soil  or streams.   They are  as concerned                                                                    
     about  their environment  as you  are.   Without  truck                                                                    
     drivers driving trucks, Alaska would stop?                                                                                 
     Hazardous Materials Driver Requirements                                                                                    
     First, the driver will have  to pass the test for their                                                                    
     hazardous materials endorsement (49  CFR 383).  The HME                                                                    
     is required  for all loads  of placarded  hazmat, which                                                                    
     includes all bulk transport of  petroleum products.  To                                                                    
     obtain an HME,  a CDL holder must:  a) demonstrate that                                                                    
     they  can safely  and  competently transport  hazardous                                                                    
     materials  and   are  aware  of  the   specific  safety                                                                    
     requirements for  doing so and  b) pass  a fingerprint-                                                                    
     based    background   check    administered   by    the                                                                    
     Transportation Security Administration  that checks the                                                                    
     driver    against:   ?    Immigration   databases,    ?                                                                    
     Identification database,  ? The FBI's NCIC  database of                                                                    
     all  known  criminals  and   arrestees  in  the  United                                                                    
     States, and ? The Terrorist Watch List                                                                                     
     If  the  driver fails  any  of  these checks  (criminal                                                                    
     disqualifying  factors available  at 49  CFR 1572.103),                                                                    
     the endorsement is not issued.                                                                                             
     Of course, because the driver  is also operating a tank                                                                    
     trailer,  a tank  endorsement  will  also be  required.                                                                    
     The   tank   endorsement   requires   the   driver   to                                                                    
     demonstrate  that they  know how  to  safely operate  a                                                                    
     tank vehicle.   Tank  vehicles differ  from traditional                                                                    
     Class 8 box  trucks in 2 important  respects: they have                                                                    
     a higher center  of gravity and are  subject to "slosh"                                                                    
     (yes, that's the technical term  for it) where breaking                                                                    
     or accelerating  the vehicle causes  the liquid  in the                                                                    
     tank to  move in  the opposite  direction.   This slows                                                                    
     acceleration  and  means  that stopping  distances  are                                                                    
     longer.   After  a driver  obtains a  tank endorsement,                                                                    
     their motor  carrier must also  administer a  road test                                                                    
     to  that driver  to double  check that  the driver  can                                                                    
     safely  operate  a  tank vehicle  and  understands  the                                                                    
     differences to operate safely.  (49 CFR 391.31)                                                                            
     Switching  over  to  training,  all  drivers  operating                                                                    
     trucks carrying hazmat must have several types:                                                                            
     ?  General  awareness  (49  CFR  172.704(a)(1)):  Which                                                                    
     includes knowledge  of how to respond  to an emergency,                                                                    
     where on  the shipping paper  to find contact  info for                                                                    
     safety and  environmental remediation in the  case of a                                                                    
     release, and how to most efficiently                                                                                       
     ?  inform  enforcement  or emergency  response  of  the                                                                    
     hazardous items  in the load  should a clean  up become                                                                    
     necessary.  ?  Function-specific (172.704(a)(2):  Means                                                                    
     requiring the  driver to learn the  specific safety and                                                                    
     welfare    requirements   that    attach   to    trucks                                                                    
     transporting hazardous materials.   Drivers in the tank                                                                    
     field  will  have   driver-specific  training,  tanker-                                                                    
     specific  training,  and,  sometimes  training  on  the                                                                    
     specialty  type of  tank  they're  operating. ?  Safety                                                                    
     training  (172.704(a)(3)): Which  specifically includes                                                                    
     "emergency  response  information,"  and  "measures  to                                                                    
     protect  the  employee"  from a  release.  ?  Security-                                                                    
     awareness  training  (172.704(a)(4)): General  security                                                                    
     training  is  required  for   all  loads  of  hazardous                                                                    
     materials  The  Transportation Security  Administration                                                                    
     has developed a sample training  that is widely used. ?                                                                    
     In-depth  security  training   (172.704(a)(5):  If  the                                                                    
     petroleum load qualifies as a  Class 3 Flammable Liquid                                                                    
     in Packing Group  I or II (some  petroleum products do,                                                                    
     some  don't.   Almost all  crude oil  does now,  by DOT                                                                    
     rule), the  motor carrier must also  develop a security                                                                    
     plan.   This security  plan requires the  motor carrier                                                                    
     to  ensure  they are  securely:  o  Hiring and  vetting                                                                    
     employees   The background check  on the HME takes care                                                                    
     of this for drivers o  Protecting their facilities   In                                                                    
     responsible  plans,   this  includes   protection  from                                                                    
     terrorists getting in  and spills getting it  and o En-                                                                    
     route   security      Generally   requiring   "constant                                                                    
     attendance"   of  the   load,  which   defends  against                                                                    
     accidental releases.                                                                                                       
     There are  other required trainings that  might come in                                                                    
     to  play   for  loading  (PHMSA),   unloading  (PHMSA),                                                                    
     transport of hazardous waste (EPA), and others.                                                                            
     Not  only  are  there  state  and  federal  regulations                                                                    
     governing   the  transport   of  oil,   companies  that                                                                    
     contract   with  the   motor   carriers  place   strict                                                                    
     environmental requirements  on the motor  carrier which                                                                    
     many  times  far  exceed the  regulatory  requirements.                                                                    
     Insurance  companies place  additional requirements  on                                                                    
     motor  carriers to  manage the  risk  involved in  such                                                                    
     activities.     Only  the  best   survive  in   such  a                                                                    
     competitive market place.                                                                                                  
     We urge that  Sections 13-18 be stricken  from HB322 as                                                                    
     duplicative  and  unnecessary.    Thank  you  for  your                                                                    
1:14:45 PM                                                                                                                    
CO-CHAIR JOSEPHSON asked whether the two companies that are                                                                     
trucking crude oil in Alaska are not required to have                                                                           
contingency plans.                                                                                                              
MR. THOMPSON expressed his belief [Title 49 Code of Federal                                                                     
Regulations (CFR) Part 130: Oil Spill Prevention and Response                                                                   
Plans] specifically requires that they do.                                                                                      
CO-CHAIR JOSEPHSON questioned whether  said contingency plans are                                                               
"not  copied to  [the  Department  of Environmental  Conservation                                                               
MR. THOMPSON  advised CFR  requires the  contingency plans  to be                                                               
maintained  at  the  principal  place  of  business  and  at  the                                                               
location from where the trucks are dispatched.                                                                                  
CO-CHAIR JOSEPHSON surmised DEC  does not receive the contingency                                                               
plans required by CFR.                                                                                                          
MR. THOMPSON said  correct.  He restated the  plans are available                                                               
at the principal place of business and at the point of dispatch.                                                                
CO-CHAIR JOSEPHSON asked Mr. Thompson  if he agreed the bill does                                                               
not impact the regulation on the transportation of refined fuel.                                                                
MR. THOMPSON said yes.  He remarked:                                                                                            
     My understanding  is that this  bill deals,  deals with                                                                    
     the transport  of crude oil.   However,  throughout the                                                                    
     hearings  I've  heard  several  references  to  refined                                                                    
     product, and what  about this and what  about that, and                                                                    
     I just,  so that's the  reason that I mention  that the                                                                    
     transport of  refined product.   Part 130  requires, in                                                                    
     my understanding of  the law, requires that  there be a                                                                    
     [contingency]  plan  for  both crude  oil  and  refined                                                                    
CO-CHAIR  JOSEPHSON agreed  there has  been varied  discussion in                                                               
this regard and media reports on a related topic.                                                                               
CO-CHAIR TARR asked  if there is a  jurisdictional issue [between                                                               
DEC and  the federal  government] over  the responsibility  for a                                                               
cleanup of a spill.                                                                                                             
1:19:10 PM                                                                                                                    
KRISTIN  RYAN,   Director,  Division  of  Spill   Prevention  and                                                               
Response,   DEC,   said   she   was  unaware   of   an   existing                                                               
jurisdictional  issue.    The  state is  allowed  to  enforce  or                                                               
implement  federal  standards;  for example,  the  Department  of                                                               
Transportation &  Public Facilities (DOTPF) or  DEC could request                                                               
a copy of the contingency plans for review.                                                                                     
CO-CHAIR  TARR  acknowledged   requiring  trucking  companies  to                                                               
produce a new plan would  be duplicative, but suggested a company                                                               
could   share  its   existing  plan   with  DEC,   although  both                                                               
jurisdictions  would  need a  physical  copy  of the  contingency                                                               
plan.   She asked whether DEC  has the ability to  request access                                                               
to the contingency plans.                                                                                                       
MS.  RYAN agreed  DEC  expertise could  help  companies with  the                                                               
contingency plans and would benefit from an awareness thereof.                                                                  
CO-CHAIR TARR remarked:                                                                                                         
     If   these  [contingency]   plans  are   already  being                                                                    
     prepared,  you know,  and  they don't  have  a need  to                                                                    
     prepare a new [contingency]  plan but instead ... share                                                                    
     that [contingency] plan  with DEC so that  they can ...                                                                    
     take  a look  at  it, and  make  sure everything  looks                                                                    
         correct, does that address your concern about                                                                          
     duplication of effort?                                                                                                     
MR.  THOMPSON  pointed  out transporters  of  bulk  oil  products                                                               
adhere  to strictly-enforced  spill  reporting requirements  that                                                               
would provide specific information following  a spill.  He opined                                                               
there would  not be "too  much objection to sharing  those plans"                                                               
but  acknowledged  he  has  not discussed  this  topic  with  ATA                                                               
members.   He referred to  [Title 49 Code of  Federal Regulations                                                               
(CFR)  Part 130.31  Response Plans],  which  states the  specific                                                               
elements  of  the [contingency]  plan.    Further, he  noted  the                                                               
federal regulation applies to  interstate and intrastate carriers                                                               
at  various  levels  of  volume.     He  concluded  submitting  a                                                               
contingency plan to another level  of review would be duplicative                                                               
and unnecessary.                                                                                                                
CO-CHAIR TARR  surmised the contingency  plans would be  the same                                                               
whether they  are prepared for  state or federal government.   In                                                               
addition, DEC  needs access due  to the preventative nature  of a                                                               
contingency plan.   She restated the idea  of sharing information                                                               
rather than duplicating work.                                                                                                   
1:25:46 PM                                                                                                                    
MR. THOMPSON  inquired as to  whether the bill  envisions another                                                               
level  of review  and approval  of the  contingency plans  by the                                                               
CO-CHAIR JOSEPHSON stated                                                                                                       
      ... I don't intend to offer any amendments to change                                                                      
      [contingency] plans relative to refined or non-crude                                                                      
     oil truck traffic.   It's not in the bill  now, and the                                                                    
     discussion is ... the genesis  of it is, I suppose, the                                                                    
     bill, but it's not part of the bill.                                                                                       
MS. RYAN  said the  fact that companies  hauling oil  and refined                                                               
fuel  in  Alaska have  already  crafted  prevention and  response                                                               
plans is  "exciting news to  us and we're really  looking forward                                                               
to working  with the  companies to  make sure  that maybe  we can                                                               
participate  when they're,  they're conducting  their drills  and                                                               
exercises  of those  plans which  are, which  looks like  is also                                                               
required  by  the  federal  law,  so  hoping  to  be  in  a  more                                                               
collaborative  role in  the future  ...."   She  pointed out  DEC                                                               
functions   in  an   approval   role   and  reviews   prevention,                                                               
contingency, and response  plans, so DEC would seek  to "add some                                                               
value there," especially  because the plans are  not submitted to                                                               
a federal agency for approval.                                                                                                  
1:29:01 PM                                                                                                                    
REPRESENTATIVE  BIRCH observed  the bill  is clearly  duplicative                                                               
and  confusing.   He directed  attention to  the bill  on page  7                                                               
[beginning  on line  22, and  continuing to  page 9,  lines 1-3],                                                               
which read:                                                                                                                     
     (a)  In  addition to  the  actions  available under  AS                                                                    
     46.03.758  - 46.03.760,  the department  may assess  an                                                                    
     administrative penalty  against a person who  causes or                                                                    
     permits  a serious  discharge or  repeat discharges  of                                                                    
     oil  not permitted  under applicable  state or  federal                                                                    
     law.  (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   (1)   the  effect  of the  discharge on  the                                                                    
     public health or the environment;                                                                                          
     (2)   reasonable  costs incurred  by the  state in  the                                                                    
     detection, investigation,  and attempted  correction of                                                                    
     the  discharge;     (3)     any  previous   history  of                                                                    
     compliance or  noncompliance by the   person  with this                                                                    
     chapter, AS  46.04, AS 46.09, and  AS 46.14;  (4)   the                                                                    
     need to  deter future discharges;  and (5)   the extent                                                                    
     and  seriousness   of  the  discharge,   including  the                                                                    
     potential  for the  discharge to threaten public health                                                                    
     or the environment.   (c)  If a person  fails to pay an                                                                    
     administrative  penalty  assessed under  this  section,                                                                    
     the  department  may bring  an  action  to collect  the                                                                    
     penalty. The  amount of the  penalty is not  subject to                                                                    
     review  by  the  court  in an  action  to  collect  the                                                                    
     penalty  described  in  this  section.     (d)    In  a                                                                    
     collection action under (c) of  this section, the court                                                                    
     shall  award  the   prevailing  party  full  reasonable                                                                    
     attorney  fees and  costs  incurred  in the  collection                                                                    
     action.    (e)    Action  under  this  section  by  the                                                                    
     department  does  not  limit or  otherwise  affect  the                                                                    
     authority of  the department to otherwise  enforce this                                                                    
     chapter, AS  46.04, AS  46.08, AS  46.09, AS  46.14, or                                                                    
     regulations  adopted   under  those  statutes,   or  to                                                                    
     recover  damages,  restoration expenses,  investigation                                                                    
     costs, court  costs, attorney fees, or  other necessary                                                                    
     expenses. The  court shall set  off against  a judicial                                                                    
     civil   assessment   subsequently  awarded   under   AS                                                                    
     46.03.758,  46.03.759, or  46.03.760 an  amount ordered                                                                    
     to be  paid under this  section by the same  person for                                                                    
     the  same  discharge.     (f)    For   the  purpose  of                                                                    
     determining  the volume  of discharged  oil under  this                                                                    
     section,  the  department  shall include  the  produced                                                                    
     water, if any,  that was mixed with  the discharged oil                                                                    
     at  the time  of  the discharge.  (g)   The  department                                                                    
     shall   annually   increase    the   amounts   of   the                                                                    
     administrative  penalties  authorized  in (b)  of  this                                                                    
     section  by a  percentage  equal to  the percentage  of                                                                    
     increase in all  items of the Consumer  Price Index for                                                                    
     all urban  consumers for  Anchorage, Alaska.  The index                                                                    
     for January  of 2018 is  the reference base  index. (h)                                                                    
     In  this section,  (1) "discharge"  means entry  of oil                                                                    
     into  or on  the water  or  public land  of the  state,                                                                    
     regardless  of  causation,  except discharges  into  an                                                                    
     enclosed  and impervious  oil  spill containment  area;                                                                    
     (2)  "oil"   means  crude   oil,  petroleum,   and  any                                                                    
     substance refined from petroleum.                                                                                          
REPRESENTATIVE  BIRCH   said  imbedded  in  the   proposal  is  a                                                               
definition of  a refined oil  product.  He directed  attention to                                                               
Section 10  [on page 6, beginning  on line 25, and  continuing to                                                               
page 7, lines 1-5] which read:                                                                                                  
     (g)  As used in  this section, "economic savings" means                                                                    
     the economic  benefit of noncompliance [THAT  SUM WHICH                                                                    
     A PERSON WOULD BE REQUIRED  TO EXPEND FOR THE PLANNING,                                                                    
     ACQUISITION,  SITING,  CONSTRUCTION,  INSTALLATION  AND                                                                    
     OPERATION   OF    FACILITIES   NECESSARY    TO   EFFECT                                                                    
     COMPLIANCE]   with   the    standard   violated.   When                                                                    
     determining  an  "economic   savings,"  the  court  may                                                                    
     consider  (1) deferred  and avoided costs of compliance                                                                    
     with  the   standard  violated;  (2)     a  competitive                                                                    
     advantage  gained by  noncompliance  with the  standard                                                                    
     violated;  and  (3)  income  derived  as  a  result  of                                                                    
     noncompliance   with   the   standard   violated   from                                                                    
     operations that were not authorized or permitted.                                                                          
REPRESENTATIVE    BIRCH   questioned    the   clarity    of   the                                                               
aforementioned language because it  does not refer to quantities,                                                               
time limits,  or "how that's going  to be calculated."   He asked                                                               
Mr. Thompson how the proposal would be assessed.                                                                                
MR.  THOMPSON   opined  there  is  no   standard  methodology  to                                                               
determine the  economic benefit  of noncompliance,  and expressed                                                               
his interest in knowing how that  would be calculated.  Also, the                                                               
provision  related to  indexing of  the  penalties to  a cost  of                                                               
living  allowance   seems  new   to  state  government,   and  he                                                               
questioned its place in the bill.                                                                                               
CO-CHAIR JOSEPHSON  advised indexing  [to a consumer  cost index]                                                               
is  found in  Alaska law  in the  labor code  related to  minimum                                                               
wage, and in  the criminal code, thus the bill  is not "inventing                                                               
the  concept  of  indexing."   Furthermore,  the  term  "economic                                                               
savings"  already   exists  in   AS  46.03,  the   statute  under                                                               
1:33:05 PM                                                                                                                    
REPRESENTATIVE  PARISH returned  attention to  [Title 49  Code of                                                               
Federal Regulations  (CFR) Part 130.31 Response  Plans], which is                                                               
divided into two tiers:   [subsection (a)], transport of oil when                                                               
there is a  contingency plan retained on  file; [subsection (b)],                                                               
transport  of a  quantity greater  than 1,000  barrels or  42,000                                                               
gallons, and  in the  latter case, the  contingency plan  must be                                                               
submitted to the Federal  Highway Administrator, Washington, D.C.                                                               
He asked for  the extent of the burden on  ATA members to provide                                                               
copies to the state.                                                                                                            
MR.  THOMPSON  said  [subsection]   (a)  refers  to  cargo  tanks                                                               
carrying greater  than 3,500 gallons and  [subsection] (b) refers                                                               
to  volumes  of  42,000  gallons,  which  could  not  be  legally                                                               
transported by a tanker truck.                                                                                                  
REPRESENTATIVE   PARISH  restated   his   question  relative   to                                                               
[subsection] (a).                                                                                                               
MR.  THOMPSON  said, "I  don't  believe  that would  be  terribly                                                               
difficult.   I  don't want  to speak  for my  membership at  this                                                               
point, as I pointed out,  I, we haven't discussed that particular                                                               
aspect  of it.    I guess  my  concern would  be  the review  and                                                               
approval aspects of that process."                                                                                              
REPRESENTATIVE  LINCOLN  asked  whether the  current  contingency                                                               
plans are reviewed and approved by a government agency.                                                                         
MR. THOMPSON  advised the  contingency plans  are required  to be                                                               
prepared and maintained  at certain locations and  are subject to                                                               
inspections by  enforcement officers -  both state and  federal -                                                               
which are also known as compliance reviews.                                                                                     
REPRESENTATIVE LINCOLN  said, "Is that  a yes  or a no  on review                                                               
and approval?"                                                                                                                  
MR.  THOMPSON further  explained an  initial review  and approval                                                               
would  take  place at  the  time  of inspection,  and  corrective                                                               
action could be required; however,  there is no advance submittal                                                               
or approval required by federal regulation.                                                                                     
1:38:20 PM                                                                                                                    
CO-CHAIR JOSEPHSON  stated in  [AS] Title  46, the  penalties are                                                               
more  severe for  the spillage  of crude  oil than  for non-crude                                                               
oil; he  expressed his understanding  Mr. Thompson  testified the                                                               
state is  not allowed to  approve the contingency plans  for non-                                                               
crude oil,  but can inspect and  review the plans.   However, the                                                               
bill  is related  to  crude oil  transportation  along the  Kenai                                                               
River, where no  contingency plans for trucks  carrying crude oil                                                               
are required, and he asked for affirmation.                                                                                     
MR. THOMPSON  said contingency plans  are required for  crude oil                                                               
transport  by the  code of  federal regulation.   He  added, "Now                                                               
whether  the  state  comes  to  look  at  those  or  not,  in  an                                                               
enforcement  proceeding  ...   they're  certainly  available  for                                                               
inspection  and if  they're  found wanting,  then  I'm sure  that                                                               
penalties would, would follow."                                                                                                 
CO-CHAIR  JOSEPHSON   surmised  the  position  of   ATA  is  that                                                               
contingency plans  are inspected  at the time  of a  penalty, but                                                               
are not reviewed before an accident.                                                                                            
MR.  THOMPSON  said,  "Yes,  that's  not  my  interpretation  Mr.                                                               
Chairman, that's what the federal  regulation says, and we try to                                                               
abide by the regulations."                                                                                                      
REPRESENTATIVE PARISH  pointed out the federal  definition of oil                                                               
means "oil  in, of any  kind, or in  any form, including  but not                                                               
limited  to  petroleum, fuel  sludge  -  I'm  sorry -  fuel  oil,                                                               
sludge, oil refuse, and oil  mixed with wastes other than dredged                                                               
spoil."  He surmised there  are already contingency plans on file                                                               
at the  principal places of business  of all truckers who  are in                                                               
compliance,  and  that  Mr.  Thompson  said it  would  not  be  a                                                               
considerable burden to provide copies to the state.                                                                             
MR.  THOMPSON opined  it  would not  be a  huge  burden to  share                                                               
reports.   He  restated  he  does not  have  permission from  ATA                                                               
membership to issue  a commitment on this issue  on their behalf.                                                               
He restated  his concern is  related to an additional  review and                                                               
approval process.                                                                                                               
CO-CHAIR JOSEPHSON remarked:                                                                                                    
     Your position,  for the association, is  that the State                                                                    
     of Alaska should not play  a role in needing to approve                                                                    
     crude trucking  contingency plans,  ... that  we should                                                                    
     be powerless in terms of that issue.                                                                                       
MR.  THOMPSON stated  if  federal regulations  are  met, that  is                                                               
meeting the law as currently written.                                                                                           
CO-CHAIR  JOSEPHSON returned  attention to  the provision  in the                                                               
bill  related  to consumer  price  indices,  and pointed  out  AS                                                               
46.03.758  was written  in the  Tenth  Alaska State  Legislature,                                                               
circa 1979.   He  asked whether Mr.  Thompson's position  is that                                                               
fines assessed in 1977-79 should not increase due to inflation.                                                                 
MR. THOMPSON acknowledged some things  go up, and some don't, and                                                               
restated his concern about indexing.                                                                                            
1:43:57 PM                                                                                                                    
REPRESENTATIVE JOHNSON asked Mr. Thompson if there is confusion                                                                 
as to whether the bill applies to crude oil, all types of oil,                                                                  
or mixed oil products.                                                                                                          
MR. THOMPSON remarked:                                                                                                          
     ...  there  is some  blurring  of  the lines  there,  I                                                                    
     think, in the  definitions as to whether  this is crude                                                                    
     oil  ... the  co-chairman  has made  it  clear that  he                                                                    
     believes it  is for  crude oil only,  and I  think that                                                                    
     was  the intent,  but there  are some  definitions that                                                                    
     cause one to  think that perhaps it might  sort of slip                                                                    
     over into refined products ....                                                                                            
CO-CHAIR JOSEPHSON clarified that  the contingency plans refer to                                                               
crude oil transportation;  in Section 1, the bill  refers to non-                                                               
crude oil - as in current law -  and in Section 5 the bill refers                                                               
to crude  oil.  He stated  the bill makes no  changes relative to                                                               
the categorizations of oil.                                                                                                     
REPRESENTATIVE JOHNSON stated:                                                                                                  
     ...  different parts  of  the  bill indicate  different                                                                    
     things.   There's discharged  crude oil,  to determine,                                                                    
     include,  so  for  volume for  that  includes  produced                                                                    
     water mixed with the oil.   There's also a section that                                                                    
     says,  "discharged mixed  with water  or anything  that                                                                    
     was mixed with the discharged  oil," could be listed as                                                                    
     the total  volume.   It talks  about anything  that ...                                                                    
     "there  will   be  damages  that  will   be  determined                                                                    
     according   to   toxicity,   degradability,   dispersal                                                                    
     characteristics  of   the  substance   discharged,  the                                                                    
     sensitivity  of  the   receiving  environment  and  the                                                                    
     degree  to which  the discharge  degrades the  existing                                                                    
     environmental quality," so ...  its not really specific                                                                    
     as to what that is that's being discharged.                                                                                
REPRESENTATIVE JOHNSON  continued to note definitions  of oil and                                                               
oil discharges  and suggested the definitions  and references are                                                               
not just to crude oil.                                                                                                          
CO-CHAIR  JOSEPHSON   acknowledged  the  existing   law  requires                                                               
careful  reading   and  recommended  the  committee   review  the                                                               
PowerPoint  presentations  provided  [at   the  bill  hearing  of                                                               
2/2/18].    He  restated  HB   322  makes  no  changes  regarding                                                               
degradability or other features of  the existing law, but updates                                                               
penalties and adds the contingency plan feature for crude oil.                                                                  
1:49:01 PM                                                                                                                    
REPRESENTATIVE JOHNSON directed attention to  the bill on page 2,                                                               
lines [7-8] which read [in part]:                                                                                               
      losses from oil pollution for which, because of its                                                                       
     subtle, long-term, or unquantifiable nature                                                                                
REPRESENTATIVE JOHNSON  urged the  committee to  carefully define                                                               
terms because of their potential effects on industry.                                                                           
CO-CHAIR JOSEPHSON pointed out the  aforementioned section of the                                                               
bill  has been  existing  law  for decades.    Further, AS  46.03                                                               
provides that [action by the  responsible party] can mitigate its                                                               
penalties,  which  is   unchanged  by  HB  322.     The  bill  is                                                               
fundamentally about updating 40-year-old [provisions].                                                                          
CO-CHAIR  TARR  provided  her  interpretation  of  Representative                                                               
Johnson's concerns.                                                                                                             
REPRESENTATIVE  BIRCH  raised  a  point  of  order  that  invited                                                               
testimony is  open and suggested  the committee  complete witness                                                               
testimony before beginning debate on the bill.                                                                                  
REPRESENTATIVE PARISH  asked Mr.  Thompson whether  the following                                                               
is  correct:    a  contingency plan,  filed  in  accordance  with                                                               
federal code, is not subject to external review unless audited.                                                                 
MR.  THOMPSON said  yes.    He explained  the  state and  federal                                                               
governments  can review  and  approve the  plans.   Firstly,  the                                                               
Federal Motor  Carrier Safety Administration, U.S.  Department of                                                               
Transportation (USDOT),  has enforcement  officers who  conduct a                                                               
review  of new  entrants to  trucking -  similar to  a compliance                                                               
review -  and corrections can  be made  at that time.   Secondly,                                                               
the Federal  Motor Carrier Safety Administration  has enforcement                                                               
personnel in Alaska who perform  compliance reviews at cargo tank                                                               
facilities to check equipment,  drivers' records, and contingency                                                               
plans, also providing an opportunity for corrective action.                                                                     
REPRESENTATIVE  PARISH  questioned   whether  the  aforementioned                                                               
procedures occur in Alaska.                                                                                                     
1:56:13 PM                                                                                                                    
MR. THOMPSON said yes.   He suggested further information in this                                                               
regard is  available from the  division of  Measurement Standards                                                               
and Commercial  Vehicle Enforcement, DOTPF.   In further response                                                               
to  Representative  Parish,  he  said he  does  not  monitor  the                                                               
frequency of inspections.                                                                                                       
CO-CHAIR  JOSEPHSON related  DEC's estimate  that the  bill would                                                               
cost all  industries that transport  fuels a [combined  total] of                                                               
an additional  $75,000 annually;  he questioned  whether industry                                                               
"[would] survive," after paying an additional $75,000.                                                                          
MR. THOMPSON asked for clarification.                                                                                           
CO-CHAIR   JOSEPHSON   directed   attention   to   [Fiscal   Note                                                               
Identifier:    HB322-DEC-SPAR-02-01-2018]  which read  [in  part]                                                               
[original punctuation provided]:                                                                                                
     Change in Revenue:                                                                                                         
     The  amount of  revenue generated  from existing  civil                                                                    
     penalty amounts varies significantly  from year to year                                                                    
     and  is  dependent  on several  factors  including  the                                                                    
     number of releases that occur,  specific details of the                                                                    
     releases, as  well as  the status  and length  of civil                                                                    
     actions/litigation.  Over the  past three fiscal years,                                                                    
     the   Department    has   received   an    average   of                                                                    
     approximately  $150.0 per  year  associated with  civil                                                                    
     penalties   from   releases   of   oil   or   hazardous                                                                    
     substances.   With  the  increases  of penalty  amounts                                                                    
     provided  in the  bill and  basing estimates  on recent                                                                    
     data, it  is estimated  an additional $74.7  of revenue                                                                    
     will  be received  into the  Prevention Account  of the                                                                    
     Oil  and  Hazardous  Substance Release  Prevention  and                                                                    
     Response  Fund,  with  an   annual  increase  based  on                                                                    
     average inflation rates.                                                                                                   
MR.  THOMPSON  recalled previous  testimony  that  there are  two                                                               
companies in Alaska transporting  crude oil, and [increased costs                                                               
of] $37,500 each may be an onerous burden.                                                                                      
CO-CHAIR JOSEPHSON said:                                                                                                        
     ...  you're conflating  all  industries that  transport                                                                    
     this sort  of hazardous or  fuel material and  just the                                                                    
     C-plan  carriers, and  I'm talking  about hundreds  and                                                                    
     hundreds  of  transporters  of  all  manner,  could  be                                                                    
     airplane companies, could be  the railroad, all of them                                                                    
     together,  according  to   the  department,  would  pay                                                                    
     $75,000 more under the bill.                                                                                               
REPRESENTATIVE  RAUSCHER  suggested  Representative  Johnson  was                                                               
concerned about increased  fines and also unseen  costs to manage                                                               
the  details  of the  legislation,  which  would affect  industry                                                               
MR.  THOMPSON closed,  noting there  are  two carriers  currently                                                               
transporting crude oil:   one carrier transports  oil from Anchor                                                               
Point to Nikiski, and the  other, located on the Kenai Peninsula,                                                               
has been  transporting crude oil  by truck  for 30-40 years.   He                                                               
opined  this activity  has continued  safely and  conscientiously                                                               
without significant spills.                                                                                                     
REPRESENTATIVE LINCOLN requested  additional information from DEC                                                               
that justifies its estimate of $75,000.                                                                                         
2:02:28 PM                                                                                                                    
KARA  MORIARTY, President/CEO,  Alaska  Oil  and Gas  Association                                                               
(AOGA),  provided  a   PowerPoint  presentation  entitled,  "AOGA                                                               
Alaska Oil and  Gas Association HB 322  Testimony," dated 2/7/18.                                                               
She said  AOGA is  a private  trade association  representing the                                                               
majority  of  oil and  gas  producers,  explorers, refiners,  and                                                               
transporters of Alaska's oil and  gas, and her testimony reflects                                                               
the opinion  of its  membership (slide 2).   Ms.  Moriarty stated                                                               
the  industry is  committed  to safety  and  seeks to  diligently                                                               
prevent and prepare  for the unfortunate instance of  a spill; in                                                               
fact, the  industry is  already prepared  with a  robust response                                                               
capability in  the event of  a spill.   Companies engaged  in, or                                                               
who  intend to  undertake oil  and gas  exploration, development,                                                               
production,  or  transportation,  are required  to  have  current                                                               
contingency plans  in place, and sufficient  equipment available,                                                               
and to  exercise both plans  and equipment  at an annual  cost to                                                               
each  operator  of $2  million  to  over  $8 million.    Further,                                                               
companies  are members  of spill  response  cooperatives such  as                                                               
Cook  Inlet Spill  Prevention and  Response,  Inc. (CISPRI),  and                                                               
Alaska Clean Seas (ACS), which  provide personnel, equipment, and                                                               
training for response  to an oil spill.  Membership  fees for oil                                                               
spill response  organization can range from  $500,000 to $100,000                                                               
in addition  to annual  fees; in  fact, Alyeska  Pipeline Service                                                               
Company  (APSC) conducted  over  200 spill  drills and  exercises                                                               
last  year.   Ms.  Moriarty described  the  procedures and  costs                                                               
attributed  to the  Ship Escort/Response  Vessel System  (SERVS),                                                               
APSC (slide  3).  She  said if  the Division of  Spill Prevention                                                               
and Response  (SPAR), DEC, responds  to an oil spill,  DEC almost                                                               
always recovers  the full cost  of the response, which  cannot be                                                               
said for non-oil industry facilities.   She directed attention to                                                               
slide 4,  which illustrated  the 22-year  average for  the number                                                               
and volume  of all spills  in Alaska is  trending down.   Slide 5                                                               
illustrated  about one-quarter  of  all spills  are sourced  from                                                               
oil-related facilities.  From fiscal year  2010 (FY 10) to FY 14,                                                               
oil and gas  exploration and production accounted  for 29 percent                                                               
of  the  total  spill  volume  by  facility.    Slide  6  further                                                               
illustrated crude oil spills from  FY 15-FY 17 accounted for less                                                               
than 2  percent of all spills  in Alaska by volume.   She pointed                                                               
out  Section 5  of HB  322 would  force DEC  to include  produced                                                               
water in the  calculation of a spill; she  acknowledged there can                                                               
be crude oil  in produced water, however, the  volumes and number                                                               
of produced water spills are also trending downward (slide 7).                                                                  
2:10:25 PM                                                                                                                    
MS. MORIARTY observed  if the purpose of the bill  is to increase                                                               
fines and penalties to deter spills,  there is no reason to do so                                                               
because  the  oil  and  gas industry  consists  of  Alaskans  and                                                               
environmentalists who  want to  protect Alaska;  furthermore, the                                                               
industry has direct  economic incentives to prevent  spills.  For                                                               
example, the  costs of prevention,  cleanup, and  restoration are                                                               
tremendous deterrents  for industry  and would probably  exceed a                                                               
fine  or penalty.   Although  the intent  of the  bill may  be to                                                               
incentivize better  behavior, AOGA  believes fewer spills  is the                                                               
goal of  all Alaskans.  In  addition, there is a  perception that                                                               
the bill is  a revenue generator for SPAR, and  she noted SPAR is                                                               
funded  by industry  and a  one  penny per  gallon assessment  on                                                               
wholesale refined fuel  products.  The state's  oil and hazardous                                                               
substance release response fund - also  known as the "470 Fund" -                                                               
is  the  primary source  of  revenue  for  SPAR and  ensures  the                                                               
state's ability to respond to a  spill.  Using the 470 Fund, SPAR                                                               
conducts  prevention,  initial  response, and  contaminated  site                                                               
cleanup activities, including  reviewing discharge prevention and                                                               
contingency   plans  (C-plans),   conducting  training   response                                                               
drills, and  verifying cleanup organizations' proof  of financial                                                               
ability.   She pointed  out, although the  470 Fund's  purpose is                                                               
cleaning   up  and   preventing   spills,  the   fund  has   been                                                               
appropriated   to  non-spill   projects   such  as   campgrounds,                                                               
airports, tank  farms, and privately-owned facilities,  which may                                                               
have  reduced the  corpus  of the  fund during  the  1990s.   Ms.                                                               
Moriarty also  noted SPAR has  not responded to  AOGA suggestions                                                               
that  may have  preserved  the fund.    She concluded  additional                                                               
revenue for  SPAR should be  collected from all  affected parties                                                               
(slide 8).                                                                                                                      
2:15:03 PM                                                                                                                    
MS. MORIARTY  turned to certain  provisions of the bill.   [AOGA]                                                               
questions the necessity of increasing  fines or linking penalties                                                               
to inflation in  order to change behavior; she  restated the cost                                                               
of remediation is a deterrent  to the industry, and characterized                                                               
the  provision as  an  automatic  tax increase.    She asked  for                                                               
clarification  of the  information  that concluded  the bill  was                                                               
necessary.   Section 5  expands the definition  of oil  spills to                                                               
include  produced  water and  she  said  although produced  water                                                               
contains a  small amount of crude  oil, it does not  create equal                                                               
damage, and should not be treated  as the same.  [AGOA] considers                                                               
Section 10 to be subjective, ambiguous,  and open to the abuse of                                                               
confidential financial records to  determine the economic benefit                                                               
of  noncompliance.   In Section  12, the  proposed administrative                                                               
penalties  are  unclear  and  subjective,  and  grant  DEC  broad                                                               
discretion without limitations.  Relative  to the need for DEC to                                                               
approve  commercial  motor  vehicle  transportation  C-plans  for                                                               
trucks that transport  crude, she said the bill -  because of the                                                               
definition of  processed water -  would apply to vehicles  on the                                                               
North Slope  and Cook  Inlet, and thus  would affect  trucks that                                                               
move  drilling water  and wastewater.   [AOGA's]  members believe                                                               
the provisions  do not provide additional  protection because the                                                               
affected   trucking  companies   already   comply  with   federal                                                               
regulations.   She cautioned the  bill could increase  the duties                                                               
of SPAR,  although the  [attached] fiscal  note does  not include                                                               
additional staffing, and  AOGA members report SPAR  staff may not                                                               
be able to meet timelines  for ongoing operations.  [AOGA] agrees                                                               
with the Alaska Trucking Association  that this section should be                                                               
removed from the bill; if the  section is not removed, AOGA urges                                                               
for an  amendment allowing trucking operations  to continue under                                                               
USDOT mandates  if DEC causes  delays.  Ms. Moriarty  stated AOGA                                                               
is not in  support of the bill and urged  the committee to search                                                               
for alternatives.                                                                                                               
2:20:54 PM                                                                                                                    
CO-CHAIR JOSEPHSON recalled past  legislation which added a penny                                                               
to the  state gasoline  tax as a  source to fund  SPAR.   At that                                                               
time, Ms.  Moriarty's position was  that because the oil  and gas                                                               
industry had  supported SPAR  for years,  all industries  and the                                                               
public should  share in  the cost; subsequent  to passage  of the                                                               
legislation,  Alaska residents  now pay  an additional  penny for                                                               
gas to  fund SPAR.  He  questioned why AOGA does  not now support                                                               
an  adjustment  to  fines  and penalties  that  are  assessed  to                                                               
industry  and   to  non-crude  oil   industry  parties   who  are                                                               
responsible for oil spills.                                                                                                     
MS. MORIARTY pointed out AOGA  members pay the costs of preparing                                                               
for  oil spill  response,  and increasing  their penalties  along                                                               
with others in the industry is  not a deterrent; she restated her                                                               
request for  specific examples to justify  additional legislation                                                               
aimed at repeat offenders.                                                                                                      
REPRESENTATIVE  PARISH returned  attention to  slide 7  and asked                                                               
why  the  number of  spills  has  increased,  and the  volume  of                                                               
produced water  spilled since [2011] has  remained even, although                                                               
oil production has decreased by approximately two-thirds.                                                                       
MS. MORIARTY explained more produced  water than crude comes from                                                               
an oil well  in a 40-year-old field.  In  fact, as the production                                                               
of oil declines, and the  amount of produced water increases, the                                                               
number and  volume of  produced water  spills may  correlate, but                                                               
[slide  7]   shows  the  opposite.     In  further   response  to                                                               
Representative   Parish,  she   said  she   would  provide   more                                                               
information  on  the  impacts of  potential  harm  from  produced                                                               
2:29:01 PM                                                                                                                    
REPRESENTATIVE PARISH  asked specifically for the  factor of harm                                                               
represented by a gallon of crude compared to produced water.                                                                    
CO-CHAIR JOSEPHSON  opened public testimony.   After ascertaining                                                               
no one wished to testify, public testimony was closed.                                                                          
REPRESENTATIVE  RAUSCHER  returned  attention   to  slide  6  and                                                               
inquired what substances other than crude oil have been spilled.                                                                
MS. MORIARTY advised  the SPAR spill response  report indicates a                                                               
range  of incidents  including  home heating  oil  spills or  oil                                                               
spills by industries other than oil and gas industries.                                                                         
2:32:36 PM                                                                                                                    
[HB 322 was held over.]                                                                                                         

Document Name Date/Time Subjects
AK Trucking Assn, 49 CFR Part 130.pdf HRES 2/9/2018 1:00:00 PM
HB 322
AK Trucking Assn testimony.pdf HRES 2/9/2018 1:00:00 PM
HB 322
HB 322 - AOGA Testimony - Final - 2.7.2018.pdf HRES 2/9/2018 1:00:00 PM
HB 322
1 2.7.2018 - DEC Response to H RES re HB322.pdf HRES 2/9/2018 1:00:00 PM
HB 322
2 OHSRRF 4th Qtr 2017.pdf HRES 2/9/2018 1:00:00 PM
HB 322
HB 322 Sectional Analysis.docx HRES 2/9/2018 1:00:00 PM
HB 322
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 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
SPAR Spill Penalties Overview Presentation.pdf HRES 2/9/2018 1:00:00 PM
HB 322
HB 322 Sectional PwrPt.pdf HRES 2/9/2018 1:00:00 PM
HB 322
HB322 Fiscal Note - DEC-SPAR 2.1.18.pdf HRES 2/9/2018 1:00:00 PM
HB 322
HB305 Transmittal Letter 1.25.2018.pdf HRES 2/9/2018 1:00:00 PM
HRES 2/23/2018 1:00:00 PM
HRES 2/26/2018 1:00:00 PM
HB 305
HB305 ver A 1.25.2018.pdf HRES 2/9/2018 1:00:00 PM
HRES 2/23/2018 1:00:00 PM
HRES 2/26/2018 1:00:00 PM
HB 305
HB305 Sectional Analysis ver A 1.25.2018.pdf HRES 2/9/2018 1:00:00 PM
HRES 2/23/2018 1:00:00 PM
HRES 2/26/2018 1:00:00 PM
HB 305
HB305 Fiscal Note DEC-SPAR 1.25.2018.pdf HRES 2/9/2018 1:00:00 PM
HRES 2/23/2018 1:00:00 PM
HRES 2/26/2018 1:00:00 PM
HB 305
HB305 Supporting Document - Fact Sheet 1.25.2018.pdf HRES 2/9/2018 1:00:00 PM
HRES 2/23/2018 1:00:00 PM
HRES 2/26/2018 1:00:00 PM
HB 305