Legislature(1993 - 1994)
04/28/1994 09:00 AM House STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HCSCSSB 215(STA) - OIL/HAZARDOUS SUBSTANCE RELEASE RESPONSE FUND Number 328 CHAIRMAN VEZEY opened HCSCSSB 215(RES) for discussion. He noted the committee had before them a proposed State Affairs committee substitute, version Z. For discussion purposes, he asked if there was a motion to adopt the new committee substitute. REPRESENTATIVE GARY DAVIS moved to adopt the work draft of HCSCSSB 215(STA). CHAIRMAN VEZEY, hearing no objection, adopted HCSCSSB 215(STA), version Z. He stated this version was identical to the version which passed the Senate, however, with a few changes. He noted Section 3 of the State Affairs version requires Community & Regional Affairs to return unused portions of grant money after one year. REPRESENTATIVE OLBERG clarified the change was on page 6, line 5. REPRESENTATIVE ULMER observed the language "at the direction of the governor or at the request of the commissioner..." was being removed, basically making it mandatory. CHAIRMAN VEZEY responded he was not sure which version of the committee substitute had made that deletion. Number 360 SENATOR MIKE MILLER, SPONSOR OF SB 215, addressed the bill. He pointed out he was before the committee to testify on the original bill which had passed the Senate and he was not that familiar with the changes in the committee substitute. CHAIRMAN VEZEY inquired if the wording "at the direction of the governor" was removed in the Senate bill, Resources version. SENATOR MILLER answered yes. REPRESENTATIVE ULMER commented the removal of this language appears to mean they do not have the discretion to decide on a case by case, or year by year basis when it should be done. She asked for comments. SENATOR MILLER responded he had not seen HCSCSSB 215(STA). He pointed out there has never been a grant issued under this section of the law. He noted or school district had been added because in some of the rural areas the school district is really the governing body. Number 392 CHAIRMAN VEZEY referred to the next change in Section 4, page 7, line 12, where the word actual has been inserted before the word "cost". This is to clarify what costs are to be considered. REPRESENTATIVE ULMER asked if this addition had special meaning. CHAIRMAN VEZEY answered it was an attempt to clarify what costs are. He noted actual cost is a narrower subject than total cost. REPRESENTATIVE ULMER clarified CHAIRMAN VEZEY was trying to narrow the bill to things that can be directly attributable by an accounting process. She asked this as opposed to what. CHAIRMAN VEZEY replied as opposed to costs that cannot be compared to an expenditure. REPRESENTATIVE G. DAVIS mentioned this addition may reduce "in-kind trading" or exchange opportunities. CHAIRMAN VEZEY noted costs do not necessarily have to be cash. REPRESENTATIVE OLBERG mentioned loss of use. CHAIRMAN VEZEY directed to Section 20 for the next change provided in HCSCSSB 215(STA). Section 20 deletes response to "a threatened release" from uses of the response fund. Section 20 also limits response uses of the prevention account to larger spills of 2,500 barrels. REPRESENTATIVE ULMER clarified the State Affairs version would read "a release," not "a threatened release" as the House Resources version reads on page 14, line 26. CHAIRMAN VEZEY affirmed REPRESENTATIVE ULMER. REPRESENTATIVE ULMER asked the sponsor to comment. SENATOR MILLER, for the committee's benefit, said he would try to reconstruct what happened in the Senate to SB 215. CHAIRMAN VEZEY mentioned he and the drafters, worked off the Senate version so it would be easier for the two bodies to compare their work. Number 458 SENATOR MILLER stated originally they thought they were passing a nickel surcharge to accumulate $50 million, which would then go away. Over a period of time however, other statutes were added which had other uses for those moneys. This meant the state was having a hard time accumulating the $50 million fund. SENATOR MILLER noted last year REPRESENTATIVE GREEN introduced legislation similar to SB 215 on the House side. SB 215 was intended to correct the problems he noticed in collecting the $50 million fund. The first concept entailed $.02 to Department of Environmental Conservation (DEC) for ongoing programs and $.03 to the $50 million fund. DEC, however, came back and said they wanted to keep the $.05 whole. SENATOR MILLER stated Senate Resources decided upon a 2.5 cent split. Industry was not satisfied with this. DEC suggested $.02 for the response side and $.03 for the prevention side. He pointed out that once SB 215 reached Senate Finance, they felt it was a fair piece of legislation with $.03 going to ongoing DEC programs and $.02 to the $50 million fund. He commented the other $37 million would be transferred over to the response side. SENATOR MILLER emphasized a lot of work has been done on SB 215. He believed it was in a form which the Administration can and does support. He felt SB 215 supports the goal of having ongoing funds, while at the same time providing a $50 million fund available to respond to spills. He mentioned some people rely on the billion dollar federal fund which could function the same; however, this would not benefit and is not accessible to those in the Interior with the pipeline. The federal fund applies to those communities on the water. SENATOR MILLER noted the accounting problems DEC had with the nickel collections. He felt if proper accounting had taken place as was intended, the $50 million would already be in place and the nickel would be gone per their vote in 1989. He said he viewed SB 215 as adding a $.03 tax back permanently. SENATOR MILLER further stated he had not had a chance to look over HCSCSSB 215(STA) and its ramifications. Number 506 CHAIRMAN VEZEY commented they had gone considerably beyond the scope of Section 20, which actually sets up the fund. REPRESENTATIVE ULMER questioned the change in Section 20, whereby "threatened release" is deleted. SENATOR MILLER responded he supported the version which came out of the Senate. CHAIRMAN VEZEY answered threatened releases are covered in the fund created under Section 20, paragraph (2). The fund created under Section 20, paragraph (1), had covered them previously, but in the State Affairs version they are not. REPRESENTATIVE ULMER, looking for expertise, questioned the significance of having "threatened release" in the bill. Number 532 DAVID ROGERS, SPECIAL COUNCIL ON HCSCSSB 215, SENATE FINANCE COMMITTEE, answered questions for the committee. He believed the definitions for "threatened release" are in Sections 41 and 42 of HCSCSSB 215(RES). SENATOR MILLER noted in the Senate version definitions are in Section 39. MR. ROGERS pointed out the definitions tighten up an existing definition in current law of "threatened release." CHAIRMAN VEZEY clarified the question was "threatened release" was included in both funds (1) and (2); however, now it is only in fund (2). The implication, therefore, is fund (1) cannot be used for a threatened release. REPRESENTATIVE ULMER asked if the sponsor supported this. SENATOR MILLER reiterated he supported the version which came out of the Senate. REPRESENTATIVE ULMER said she interpreted this to mean "threatened release" should also be in fund (1). SENATOR MILLER replied, from his understanding, DEC has not spent a lot of money on "smaller spills." He estimated $2-3 million had been spent. He felt they did a fair job at spending the money. He noted there may be times when a threatened release will need to be considered to keep it from becoming a large release. Number 557 CHAIRMAN VEZEY directed to Section 26 for the next change. Section 26 also deletes response to a "threatened release" as a use of the response fund. REPRESENTATIVE G. DAVIS clarified there is a spill response fund and a prevention fund. An interpretation of a threat is that it is not a spill and it can be investigated from a prevention standpoint. CHAIRMAN VEZEY affirmed REPRESENTATIVE G. DAVIS. REPRESENTATIVE OLBERG suggested everyone in the committee should read the definition of "threatened release" on page 26 of HCSCSSB 215(STA). REPRESENTATIVE ULMER commented "threatened release" per REPRESENTATIVE OLBERG's suggestion, makes it sound imminent. "Threatened" sounds like it may or may not happen. She questioned if adequate response to an imminent, as opposed to "threatened" release, might "raise the anti." She inquired if this was the original reason for accessing both funds. SENATOR MILLER responded he would rather spend a little on preventative maintenance rather than a lot on cleanup. He noted the factor of immediate access to the funds on the prevention side. CHAIRMAN VEZEY pointed out imminence carries no time frame. Certain problems, for example, can be addressed over five years. REPRESENTATIVE OLBERG mentioned he did not see anything in HCSCSSB 215(STA) which would preclude the commissioner from responding to a circumstance. He noted response is in the judgment of the commissioner. He felt removing "threatened" tightened the bill up a little bit. Number 593 CHAIRMAN VEZEY concurred. CHAIRMAN VEZEY directed to Section 29, page 22, line 6, whereby the response fund is now limited to spills 2,500 barrels of oil, or larger. He pointed out this figure gets out of the normal commercial storage size and into industrial size storage capacities. REPRESENTATIVE ULMER asked the sponsor to comment on the 2,500 barrels of oil threshold. SENATOR MILLER responded 2,500 does correspond with the threshold on the grant side. He noted there had been discussion in Senate Resources on this subject and there had been concerns that even 100 barrels of oil in the Kenai River in the wrong time of year would be a disaster. Therefore, this was one of the reasons they did not provide a limit in the Senate version. He noted 2,500 barrels has been established in law on the grant side for some time. REPRESENTATIVE ULMER clarified if the spill is 2,400 barrels of oil as opposed to 2,500, the response fund money cannot be used to clean it up. CHAIRMAN VEZEY affirmed REPRESENTATIVE ULMER. REPRESENTATIVE ULMER asked what is used to clean it up. Would the general fund be used. CHAIRMAN VEZEY replied he believed there were options available to the commissioner, other than the response fund. CHAIRMAN VEZEY reiterated for those people who live along the pipeline it is very important to have the response fund readily available. He stated "2,500 barrels is going to be a drop in the bucket if we have any major disaster." REPRESENTATIVE ULMER requested testimony from DEC as to the range of size of spills and what other sources they have for the cleanup of spills less than 2,500 barrels. CHAIRMAN VEZEY mentioned he had seen several statistics on that matter and he felt if they were all added up, every spill was in the order of a quarter a gallon. Number 639 SENATOR MILLER pointed out with the way HCSCSSB 215(STA) is worded, if the governor declares a disaster emergency they still may be able to tap the fund. He was referring to the bottom of page 21 and top of page 22. MR. ROGERS commented it appeared there are two ways to reach the fund: 1) By disaster emergency declared by the Governor with no threshold spillage requirements; and 2) the 2,500 barrel minimum requirement in the nondisaster emergency scenario. Number 649 CHAIRMAN VEZEY directed to Section 31, whereby reporting requirements are expanded to include investigating and evaluating with prevention account monies. He referred to page 23, line 4. REPRESENTATIVE ULMER noted the Resources committee version of Section 31 amended AS 46.08.050(b). She asked if this amendment was deleted from the State Affairs version. CHAIRMAN VEZEY stated he did not believe Section 31 from either bill were comparable to each other. REPRESENTATIVE ULMER referred to page 23, line 28, of HCSCSSB 215(STA) and noticed it amends AS 46.08.060(b). She observed AS 46.08.050(b) was not amended in Section 31. CHAIRMAN VEZEY explained AS 46.08.050(b) was amended in Section 30 of HCSCSSB 215(STA), which he believed was identical to the change in HCSCSSB 215(RES). REPRESENTATIVE ULMER assumed HCSCSSB 215(STA), therefore, picked up another section. SENATOR MILLER commented that from his understanding, basically just the requirement for the reporting on the prevention account was also added. He agreed with the accounting responsibilities. TAPE 94-51, SIDE B Number 000 REPRESENTATIVE ULMER asked the sponsor to comment on the splitting of the fund. Why put all of the $37 million on the response side, as opposed to the prevention side. SENATOR MILLER answered with the 60/40 split if the over $112 million that has already been collected in nickels is divided by 40 percent, it is certainly more than $37 million. Therefore, he felt the nickels that have been collected have already been split 60/40. REPRESENTATIVE ULMER inquired what annual revenues would be generated for both purposes if collected with a 3-2 split. SENATOR MILLER answered assuming there is no production increase, in FY 95 the $.03 would generate $15.6 million and the $.02 would generate $10.4 million. REPRESENTATIVE ULMER asked how this roughly compares to the current annual expenditures for prevention. SENATOR MILLER estimated in the Senate version of the budget [we] have between $13-14 million for those programs. REPRESENTATIVE ULMER clarified this covered the total package. Number 060 REPRESENTATIVE ULMER questioned the title because it discusses marine highway vessels. She assumed HCSCSSB 215(STA) was not retroactive, whereby the money appropriated for the new ferry would not be altered. She inquired if there would not be any additional response for future ferries. SENATOR MILLER said REPRESENTATIVE ULMER was not totally correct. He referred to page 20, lines 24, subparagraph (E), whereby the fund will "pay all costs incurred to acquire, repair, or improve an asset having an anticipated life of more than one year and that is acquired, repaired or improved as a preparedness measure by which the state may respond to, recover from, reduce, or eliminate the effects of a release or threatened release of oil or a hazardous substance;". This would allow, for example, a command center to be put in a ferry. REPRESENTATIVE ULMER inquired if this would include telecommunications equipment and all other capital assets. SENATOR MILLER said yes, because the capital asset is what has the life of more than one year. REPRESENTATIVE ULMER questioned if there was a dispute about telecommunications equipment. SENATOR MILLER answered he was not sure, but he believed an appropriation from 1993 was disputed as to whether they had the authority under current law to use that money for an emergency response center. HCSCSSB 215(STA) clarifies this account can be used for that purpose. MR. ROGERS clarified the money would come out of the prevention account. CHAIRMAN VEZEY moved to pass HCSCSSB 215(STA) from committee with individual recommendations. REPRESENTATIVE ULMER objected because she had questions for DEC. CHAIRMAN VEZEY recognized REPRESENTATIVE ULMER's objection and asked the committee secretary to call the roll. REPRESENTATIVE ULMER interjected and implored CHAIRMAN VEZEY to allow testimony from DEC. She emphasized the sponsor had not yet reviewed HCSCSSB 215(STA). CHAIRMAN VEZEY called REPRESENTATIVE ULMER out of order. CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, G. DAVIS, SANDERS, OLBERG. OPPOSED: REPRESENTATIVES ULMER, B. DAVIS. MOTION PASSED ADJOURNMENT CHAIRMAN VEZEY, having no further business before the committee, adjourned the meeting at 9:57 a.m.
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