Legislature(2001 - 2002)
02/28/2001 01:35 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 28, 2001
1:35 PM
TAPE HFC 01 - 34, Side A
TAPE HFC 01 - 34, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:35 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
None
ALSO PRESENT
Carol Carroll, Director, Division of Support Services,
Department of Natural Resources and Military and Veterans
Affairs; Pat, Staff, Senator Drue Pearce; Larry Dietrick,
Director, Division of Spill Prevention and Response,
Department of Environmental Conservation; Paul Fuhs,
Technical Support Contractor on Marine Issues, Task Force on
Motorized Oil Transportation;
PRESENT VIA TELECONFERENCE
Brian Rogers, Facilitator, Task Force on Motorized Oil
Transportation, Fairbanks; Breck Tostovin, Anchorage;
SUMMARY
HB 72 An Act relating to an assistant adjutant general
for national missile defense in the Department of
Military and Veterans' Affairs.
HB 72 was REPORTED out of Committee with a "do
pass" recommendation and with a fiscal impact note
by the Military and Veterans Affairs.
CS SB 16(RLS)
An Act regarding oil discharge prevention and
cleanup involving self-propelled nontank vessels
exceeding 400 gross registered tonnage and
railroad tank cars and related facilities and
operations and requiring preparation and
implementation of oil discharge contingency plans
for those nontank vessels and railroad tank cars;
amending the definition of 'response action' that
relates to releases or threatened releases of oil
and thereby amending the duties and liabilities of
response action contractors; authorizing
compliance verification for nontank vessels and
for trains and related facilities and operations;
and providing for an effective date.
CSSB 16 (RLS) was REPORTED out of Committee with
"no recommendation" and two fiscal impact note by
the Department of Environmental Conservation
(published note #2) and the Department of
Transportation and Public Facilities (published
note #1).
HOUSE BILL NO. 72
An Act relating to an assistant adjutant general for
national missile defense in the Department of Military
and Veterans' Affairs.
CAROL CARROLL, DIRECTOR, DIVISION OF SUPPORT SERVICES,
DEPARTMENT OF NATURAL RESOURCES AND MILITARY AND VETERANS
AFFAIRS explained that the bill would create an Assistant
Adjutant General for National Missile Defense. The position
would be authorized for the duration of the development and
deployment of the missile defense system in Alaska. Only
the legislature has the authority to create positions of
Assistant Adjutant General. Currently, the department is
authorized an Assistant Adjutant General for the Army
National Guard and an Assistant Adjutant General for the
Air National Guard. The position would be federally funded
and would be in effect during the development and
deployment of the missile system in Alaska. The Assistant
Adjutant General for National Missile Defense would be a
member of the Alaska National Guard and the site commander
for the development of missile defense in Alaska. She
stressed the importance of filling the position with an
Alaskan and member of the Alaska National Guard in order to
promote Alaska jobs and training.
In response to a question by Vice-Chair Bunde, Ms. Carroll
clarified that the position has not been created. The
legislation would require that the position be a member of
the National Guard.
Vice-Chair Bunde asked how the position would affect
training. Ms. Carroll replied that an Alaskan perspective
would increase the likelihood that Alaskans would be hired
and that training needed to deploy the system in Alaska
would occur.
Representative Foster inquired what a chain of command would
look like. Ms. Carroll replied that they would report to
the Adjutant Commander. They would work with the National
Missile Defense Joint Program Office, which would be the
site Activation Command in Alaska.
Representative Harris asked if the Governor had submitted a
name for the position. Ms. Carroll could not confirm that
any name had been indicated. To her knowledge, no name had
been submitted.
Representative Hudson MOVED to report HB 72 out of Committee
with the accompanying fiscal note.
Vice-Chair Bunde OBJECTED for comment. He pointed out that
the legislation would increase the budget by $200 thousand
dollars per year.
There being NO FURTHER OBJECTION, HB 72 was reported out of
Committee.
HB 72 was REPORTED out of Committee with a "do pass"
recommendation and with a fiscal impact note by the Military
and Veterans Affairs.
CS FOR SENATE BILL NO. 16(RLS)
An Act regarding oil discharge prevention and cleanup
involving self-propelled nontank vessels exceeding 400
gross registered tonnage and railroad tank cars and
related facilities and operations and requiring
preparation and implementation of oil discharge
contingency plans for those nontank vessels and
railroad tank cars; amending the definition of
'response action' that relates to releases or
threatened releases of oil and thereby amending the
duties and liabilities of response action contractors;
authorizing compliance verification for nontank vessels
and for trains and related facilities and operations;
and providing for an effective date.
LARRY DIETRICK, DIRECTOR, DIVISION OF SPILL PREVENTION AND
RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION testified
in support of the legislation. He observed that the Task
Force included a 23-member cross-section of the maritime
industry, the Alaska Railroad and other interested parties.
The goal of the legislation is to protect Alaska's renewable
resources and keep Alaska's waters the cleanest and most
pristine in the world by including large sea-going marine
nontank vessels and the Alaska Railroad in Alaska's safety
net for oil spill prevention and response. Alaska is the
only west coast state that does not include nontank vessels
st
in the oil spill safety net. In May of last year the 21
Legislature debated and passed Senate Bill 273 and Senate
Concurrent Resolution 1, which commissioned the Task Force
on Motorized Oil Transport to work out details to implement
oil spill contingency plans and achieve the response
planning standard in a way that was acceptable to those who
would be affected. The Task Force has completed the work
directed by the Legislature and achieved unanimous consensus
on legislation. The consensus legislation is SB 16, which
was developed by the Task Force and is predicated on no
further amendments by the members.
Mr. Dietrick observed that although the requirement for
financial responsibility was made effective last year, the
requirement to have an oil spill contingency plan and meet
the response planning standard was not. Instead, the
Legislature through SB 273 and Senate Concurrent Resolution
1 commissioned the Task Force to determine how to implement
the response planning standards and provide opportunities
for streamlined oil spill contingency plans. Those standards
were set by the Legislature in SB 273 as the containment and
control of 15% of the maximum oil capacity of a nontank
vessel or train, within 48 hours and cleanup of the
discharge within the shortest possible time, consistent with
minimizing damage to the environment. Nontank vessels were
defined as self-propelled vessels over 400 gross tons, not
including tank vessels, oil barges or public vessels.
Mr. Dietrick noted that Senate Concurrent Resolution 1
specified that there would be 23 members on the Task Force
on Motorized Oil Transport. This served to ensure a
diversity of viewpoints and adequate representation of all
groups to be regulated. The members included representatives
from the U. S. Coast Guard, the DEC, the Railroad, spill
response cooperatives, the shipping industry, spot charter
groups, the fishing industry, the Regional Citizens'
Advisory Councils, and representatives from the crude oil
industry and the refined oil distributors and transporters.
Many more persons, who were not appointed representatives,
attended the work group sessions and formal task force
meetings.
Mr. Dietrick noted that the Task Force held eleven formal
meetings over a five-month period in which the members
worked through legal and technical issues on prevention,
contingency plans, and response planning standards. Three
workgroups were created to address specific areas of
concern.
Mr. Dietrick discussed the recommendations of the Task
Force. He maintained that the recommendations are practical
and meet the requirements the Legislature established in
last years' bill. They include implementation measures that
use a market-based economy approach to keep costs down.
The recommendations are based on Alaska's existing oil spill
response infrastructure and provide maximum flexibility for
meeting the requirements. The work of the Task Force has
already fostered private sector initiatives that
significantly increase the resources that will be brought to
bear on a spill. Alliances between ship agents, stevedoring
companies and spill-response cooperatives are now being
explored to meet response needs and a new Marine Exchange
that covers all of Alaska is being created.
The members of the Task Force were extremely attentive to
the proceedings and assimilated a tremendous amount of
information during their tenure. All meetings were well
attended and the level of dialogue was frank, constructive
and productive. After careful and thorough consideration of
all ideas and requests brought before them, they achieved a
unanimous consensus to support 31 recommendations.
Mr. Dietrick observed that the Task Force also exhaustively
reviewed the legal issues and meticulously identified what
elements should be contained in regulation and what should
be contained in statute.
Mr. Dietrick maintained that the legislation provides a
foundation for enhanced spill prevention and response
preparedness thereby ensuring that state resources and
economy are adequately protected for future generations.
BRIAN ROGERS, FACILITATOR, TASK FORCE ON MOTORIZED OIL
TRANSPORTATION, FAIRBANKS testified via teleconference. He
explained the work of the task force was how to implement
the legislation. Most of the changes are not statutory but
pertain to the regulatory process. The legislation contains
the minimum changes necessary to:
Activate the contingency planning process, establishing
a streamlined procedure for nontank vessels;
Limit liability for response action contractors,
including those providing incident management team
services and response planning facilitator services;
Enable the Department to adopt regulations consistent
with the Task Force report.
Mr. Rogers reiterated that the recommendations follow a
market-based approach giving affected vessels alternative
means for compliance and allows a phased implementation to
spread the cost on the regulated industry. The Task Force
recommended a letter of Intent, which has been adopted as
section 1 of the bill. He reiterated that the goals of the
Task Force were met, which were that the process be
realistic, effective, economically feasible and flexible.
Mr. Rogers reviewed the provisions of the recommendations.
The response finding standards calls for control and
containment within 24 hours. Vessels can demonstrate this
ability through sufficient boons to go three times the
lengths of the vessel and the means for deployment. To meet
the clean up standard, vessels should have a skimmer
appropriate for the type of oil in the operations or be able
to be mobilized to the area of the operations within 24
hours. The recommendations provided for alternative
calculations on the size of the response planning standards
for vessels that are carrying less than a full load of oil.
Contingency planning is a streamline process that begins
with the information required for financial responsibility
and a qualified individual able to make decisions in a spill
event. A response action plan would be required, which would
include initial notification procedures, contract with a
primary response action contractor and a contract with a
incident management team or the equivalent resources brought
by the vessel or a combination of contract and resources.
The legislation allows the development of fleet plans or
generic plans that could be set up for the spot charter
industry. The Department of Environmental Conservation would
review timeframes and conduct drills and vessel
verifications.
Mr. Rogers discussed prevention measures. He noted that all
prevention measures are voluntary. The Task Force endorsed
the risk analysis process being undertaken by the Alaska
Railroad. The Alaska Railroad Corporation's contingency
planning would go through the same guidelines as other
regulated facilities.
Mr. Roger reviewed the legislation by section. Section 1 is
the intent section. Sections 2 - 4 limit civil liabilities
of action response contractors. Section 5 amends the
definitions of "response action" to include civil
liabilities for management team services and response plan
facilitator services. Section 6 amends last year's
legislation on proof of financial responsibility to make the
language identical for tank vessels. Section 7 extends the
inner passage exemptions. Section 8 adds new provisions
requiring sea plans and authorizes the Department of
Environmental Conservation to adopt implementing
regulations. Section 9 gives the Department of Environmental
Conservation verification authority. Section 10 requires
that the lieutenant governor to certify to the revisor of
statutes the effective date of the regulations.
Representative Hudson noted that since the Exxon Valdez
spill the legislature has taken an in-depth look at the oil
spill laws. He maintained that the legislation is the best
piece of abbreviated legislation and regulations yet
accomplished and should give Alaska protection from the
nonpaying as well as the paying vessels.
Representative Hudson noted that gross registered ton would
be determined by the US Coast Guard under 33 C.F.R.
Mr. Dietrick agreed and noted that the definition was put
into effect in last year's bill. The term was defined in
regulation. There is a specific reference to the US Coast
Guard's regulation 33 C.F.R. 13830. Representative Hudson
reiterated that it is the regulatory gross tonnage
definition.
Representative Harris asked if there were enough responders
within the state to handle the requirements. Mr. Dietrick
explained that five spill cooperatives have developed
throughout the state. Cooperatives account for 80% or more
of the response capability in the state. The state needs to
build from that capability. There is no requirement to
belong to a cooperative, but the intent is to strengthen the
cooperatives to receive a stronger response.
Representative Harris asked for clarification of the fund
source 1052 designation. Mr. Dietrick noted that funds would
come from the Prevention Account in the Oil and Hazardous
Substance Release Prevention Response Fund.
Co-Chair Mulder asked what would constitute "innocent
passage".
BRECK TOSTOVIN, DEPARTMENT OF LAW testified via
teleconference. He stated that "innocent passage" is an
international law concept, which allows vessels of foreign
nations to travel through territorial waters. The
legislation would extend that concept to flagged vessels of
the United States. It would allow for a vessel to transit
through our waters, but they could not call at a port or
engage in fishing.
Co-Chair Williams inquired how much time would be given to
spot charters to review documents. Mr. Dietrick replied that
under a generic or fleet plan spot charters could give
notice in as few as 5 days.
Co-Chair Williams asked about the comparison of the fees
with other stats. Mr. Dietrick replied that all the West
coast states currently have similar legislation. The state
of Washington's model was used for the contingency model. He
pointed out that Alaska could not use the model completely
due to the length of coastline within the state. Alaska is
using a regional approach based on the state of Washington
model.
Co-Chair Williams commented that Puget Sound and SE Alaska
cannot be compared. There are many more ships and ports in
Puget Sound.
PAUL FUHS, TECHNICAL SUPPORT CONTRACTOR ON MARINE ISSUES,
TASK FORCE ON MOTORIZED OIL TRANSPORTATION provided
information on the legislation. He noted that a dollar
figure could not be assessed because the cooperatives do not
know how many people would join. The Task Force determined
the equipment schedule for the tank vessels with a minimum
of new equipment purchases. He stressed that additional
vessels would substantially bring the costs down.
Limitations on liability were included for vessel agents and
spot charters because it would not be known until 10 days
before which vessel would come. This allows a generic plan
with the Department of Environmental Conservation
demonstrating financial responsibility and a contract with a
spill response contractor and incident management team.
Vessels can have a certificate to come into the state of
Alaska within five days. He emphasized that this is an
efficient system.
Co-Chair Mulder asked for more information regarding the
current structure of the Alaska Railroad's response. Mr.
Dietrick replied that currently the Railroad is not under
any state requirements for a contingency plan or required to
meet a response plan standard. He added that the
implementation for the railroad would be a more complex
planning effort under the legislation. The plan would have
to cover from Seward to Anchorage and Fairbanks. He provided
more information on how spills by the railroad could be
contained.
Co-Chair Mulder noted that the railroad would have a
response-planning standard of 15 percent of the maximum fuel
carried and asked if any railroads in the lower 48 have
similar requirements. Mr. Dietrick did not believe so.
Co-Chair Mulder asked how much it would cost the railroad to
meet the standard. Mr. Dietrick could not answer, but
thought that the railroad had made an estimation.
Mr. Fuhs noted that the railroad had already moved in the
direction adopted by the Task Force. The Alaska Railroad
Corporation is supportive of the requirements.
TAPE HFC 01 - 34, Side B
Co-Chair Mulder thought that there would be a significant
cost to the railroad. Mr. Fuhs noted that the railroad is
counting on the road system or aircraft as the primary means
of delivery. Equipment would not be on site. The requirement
for delivery is 24 hours.
Mr. Dietrick noted that the railroad had committed to
upgrading their ability to respond and that fair amount of
pre-stage gear already exists. The railroad has done a lot
of work with the truckers. They have been cooperative with
the department.
Representative Davies asked if there would be any cost
recovery for the plans. Mr. Dietrick stated that the fiscal
note is based on using funds from the Prevention Account.
They would be applied if there were a spill. There would not
be any cost recovery in terms of contingency plan review.
Representative Davies asked if a 50/50 model was considered.
Mr. Dietrick stated that discussion has occurred regarding
fee structures, but that the Task Force did not focus on fee
structures. The Task Force deliberations were centered on
finding an affordable system. The Task Force assumed that
the Prevention Account would be the appropriate direction to
go to for the funding. Representative Davies voiced concern
that other activities would be displaced by the use of those
funds. Mr. Dietrick noted that projections by the
Legislative Finance Division, used in other Committees,
indicated that the Prevention Account would not be adversely
affected.
Vice-Chair Bunde expressed concern that contributors to the
470 Fund were not considered. Mr. Fuhs stated that there
were concerns regarding the cost of the legislation to the
industry. The industry will bear the largest portion of the
responsibility.
Representative Croft asked to see the Legislative Finance
sheet regarding the distribution costs.
Co-Chair Mulder asked the intention of section 9, page 6:
Compliance verification for nontank vessels and for
trains and related facilities and operations. In
addition to other rights of access or examination
conferred upon the department by law or otherwise, to
ensure compliance with the provisions of this chapter
relating to oil pollution control, the department may
at reasonable times and in a safe manner enter and
examine
(1) nontank vessels; and
(2) trains, railroad tracks, associated
facilities, and railroad operations.
Mr. Tostovin explained that the language gives the
department the ability to access facilities to assure
compliance to oil pollution laws and C-planning
requirements. The intention was not to create a track
inspection program. The intent was to give the department
access to tracks in the event of an incident or in an
inspection for the sea plan requirements. The intention was
to give the Department the ability to track the C-plan
requirement.
Co-Chair Mulder pointed out that all associated facilities
would be included. He suggested that the broadness of the
language could result in the Department of Environmental
Conservation running the railroad. Mr. Fuhs disagreed. He
emphasized that the Department of Environmental Conservation
would not hire train track specialists. The intent is to get
access to the premise in the event of an incident or to
check on certificates of financial responsibility.
Representative Hudson stressed that the Department of
Environmental Conservation would not supplant the US Coast
Guard's marine safety specialist in hiring ship inspectors.
Mr. Dietrick stated that there is a detailed operating
agreement for nontank vessels and tightly coordinated
procedures with the Coast Guard to prevent overlapping. He
stressed that there is a good working relationship with the
US Coast Guard. The Department's concern is that they do not
have legal access to react to a spill. The intent is to
travel the rail right-of-way to get to a site.
Co-Chair Mulder summarized that the intent of the language
is to gain legal access in the event of a spill. He noted
that the language is broadly worded and asked if the
Department would be willing to reword the language. Mr.
Dietrick commented that there was extensive dialogue
regarding that language.
Mr. Fuhs noted that the legislation states:
In addition to other rights of access or examination
conferred upon the department by law or otherwise, to
ensure compliance with the provisions of this chapter
relating to oil pollution control, the department at
reasonable times and in a safe manner enter and
examine...
Co-Chair Mulder voiced concern that the language is too
broad. Mr. Dietrick stated that the language limits
authority to the provision of the chapter, which deals with
compliance of response planning standards.
Representative Davies thought that the language was
preventative and would guarantee that things were in place.
Mr. Dietrick agreed. Representative Davies noted that the
legislation provides for prevention and response. Mr.
Dietrick replied that the language was written specifically
to prevention, but would also apply to spills.
Representative Davies questioned if the department currently
has legal access for spills. Mr. Dietrick stated that the
Department is required to get the legal access if it does
not already exist.
Representative Davies pointed out that the department is not
being given authority to control operations.
Co-Chair Mulder questioned what would happen if the
Department determined that there were not enough "boom" on
board. He maintained that the legislation gives the
statutory authority to shut down an operation if the
required equipment is not present. Mr. Dietrick emphasized
that a shut down would be an extreme action that would only
be taken with the commissioner's authority under an
emergency order. Co-Chair Mulder stressed that government is
not always reasonable and added that politics affect
governmental actions. He wanted additional assurances.
Mr. Dietrick responded that the Department's approach to
compliance in the state is education, technical assistance,
and voluntary compliance. Enforcement action would be the
last step. Compliance by consent is the primary focus.
Mr. Fuhs noted that the decision was made by the Legislature
last year in SB 273. Industry voiced the same concerns as
Co-Chair Mulder. The Task Force was formed as a result of
concerns by industry. He noted the letters of support from
industry. He maintained that the concerns have been met.
Representative Croft acknowledged Co-Chair Mulder's concern
with section 6, "A person may not operate," but concluded
that the authority was needed to ascertain compliance. He
voiced confidence that the department would work into
compliance.
Representative Davies noted that the department's track
record has been good.
Co-Chair Mulder asked if there were other entities capable
of doing the reports. Mr. Dietrick responded that the state
has not been involved in this arena to date. There are none
in the Coast Guard area. He did not know if there were any
exceptions. Mr. Fuhs asked if the department's regulatory
activity would be discretionary. He noted that if it is not
discretionary the department could not contract out for
services. He pointed out that if an entity stated that they
were not signing with a cooperative and that they had their
own equipment the department would want to ascertain if they
have the equipment and if they have the needed personnel.
The oil spill response organizations have already been
preauthorized and might be discretionary.
Mr. Tostovin referred to opinions regarding delegating
decision-making functions. The opinions concluded that
decision-making functions should remain in government.
Courts in other states have upheld delegation to private or
other governmental entities if there is very structured
oversight and little discretion or decision-making by the
private entity. Clerical and objective items can be
delegated. Decisions where judgment is involved cannot be
delegated. He stressed that the oversight by the department
would require two extra positions. If a private entity were
used the department would still need a position to
supervise. He concluded that only one position is in
question.
Co-Chair Mulder discussed the fiscal note. He observed that
there are two permanent and two temporary employees for two
years as applications are submitted. He noted that the
question is what is a reasonable workload for the amount of
work that needs to be done.
Mr. Dietrick explained that the Task Force's intent would be
to approve plans as they are submitted. Review of plans
would be staggered overtime on a three-year cycle. Co-Chair
Mulder commented that the initial rush would be in the first
year and questioned why funding was retained for FY04. Mr.
Dietrick responded that the reviews would span over a two-
year period. More than one year would be needed to come to a
steady workload. The department would also be responsible
for training, electronic posting of plans, technical
assistance, registering primary response action contractors
and launching the prevention credit program during the
startup period. These costs would be backed out by FY05. He
voiced concern with the aggressive review times.
Co-Chair Mulder cautioned that the numbers for travel,
contractual and supplies were generous. He noted that he
would continue to keep an eye out on the recommended
numbers.
Vice-Chair Bunde noted concern with public policy that
requires some people to pay for the regulation while others
do not.
Representative Hudson MOVED to adopt CS SB 16 (RLS) out of
Committee with individual recommendations. There being NO
OBJECTION, it was so ordered.
Co-Chair Mulder noted that he would be working with the
department to address his concerns.
CSSB 16 (RLS) was REPORTED out of Committee with "no
recommendation" and two fiscal impact note by the Department
of Environmental Conservation (published note #2) and the
Department of Transportation and Public Facilities
(published note #1).
ADJOURNMENT
The meeting was adjourned at 2:55 p.m.
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