Legislature(2001 - 2002)
04/27/2001 09:09 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 27, 2001
9:09 A.M.
TAPE HFC 01 - 100, Side A
TAPE HFC 01 - 100, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 9:09 A.M.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Eldon Mulder, 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
ALSO PRESENT
Representative Beth Kerttula; Michelle Brown, Commissioner,
Department of Environmental Conservation; Mike Conway,
Director, Division of Statewide Public Service, Department
of Environmental Conservation; Lynne Smith, Staff,
Representative Con Bunde; Mark Hickey, American Cancer
Society, Coalition of Alaskans for Tobacco Free Kids,
Juneau; John Bitney, Legislative Liaison, Alaska Housing
Finance Corporation, Department of Revenue; Craig Tillery,
Assistant Attorney General, Environmental Division,
Department of Law.
SUMMARY
HB 234 An Act relating to the financing of construction
and renovation of certain public facilities; and
providing for an effective date.
CS HB 234 (FIN) was reported out of Committee with
a "do pass" recommendation and with a fiscal note
by Department of Revenue.
HB 260 An Act requiring the owners or operators of
certain passenger vessels operating in the marine
waters of the state to register the vessels;
establishing information-gathering, record
keeping, and reporting requirements relating to
the vessels' graywater and sewage; prohibiting the
discharge of untreated sewage from the vessels
unless exempted; placing limits on discharges of
treated sewage and gray water from the vessels
unless exempted; establishing a commercial
passenger vessel coastal protection fund;
establishing a fee on commercial passenger
vessels, that are not exempt from the fee, for
each voyage during which the vessels operate in
the marine waters of the state based on the
overnight accommodation capacity of the vessels
determined with reference to the number of lower
berths; establishing penalties for failure to
comply with certain laws relating to the vessels;
authorizing the Department of Environmental
Conservation to encourage and recognize superior
environmental protection efforts related to
commercial passenger vessels; authorizing
exemptions from some laws relating to discharges
from the vessels and from the fee requirements
related to the vessels; requiring a report from
the Department of Environmental Conservation
concerning matters relating to the vessels; and
providing for an effective date.
HB 260 was HELD in Committee for further
consideration.
HOUSE BILL NO. 234
An Act relating to the financing of construction and
renovation of certain public facilities; and providing
for an effective date.
Vice-Chair Bunde MOVED to ADOPT the new Amendment #1, 22-
LS0863\O.2, 4/26/01. [Copy on File]. Representative Davies
OBJECTED for discussion.
Vice-Chair Bunde explained that the amendment would secure
the final 20% of the Tobacco Settlement money for funding
smoking education and cessation and would remove any
reference to the University.
Representative Davies asked for more detail. Vice-Chair
Bunde explained that "taxable versus non-taxable" was still
being debated. The amendment would provide the detail and
vehicle to address the consequences.
Representative Davies questioned how the payout could be
addressed through the legislation.
Representative Croft interjected that it is imperative that
the final 20% of the money be used for tobacco cessation
programs.
Vice-Chair Bunde explained that there is a moral connection
with the use of that money.
MARK HICKEY, AMERICAN CANCER SOCIETY, COALITION OF ALASKANS
FOR TOBACCO FREE KIDS, JUNEAU, discussed that the amendment
would take the remaining 20% from the Master Settlement
Agreement (MSA) and would trade it in the same fashion as
the 40% was treated last year. The other 40% would be sold
to the Alaska Housing Finance Corporation (AHFC) or to its
subsidiary, the Northern Tobacco Seuritization Program, with
the intent to issue debt bonds. The corpus that comes from
that would have to be appropriated to the account created in
the bill. That account is located on Page 2, Section 3, the
Smoking Education Account. That is where the money
generated from the bond sale would be deposited and subject
for legislative appropriation. The intent is to have that
money used for prevention education cessation activities.
The Legislature would have to appropriate annually out of
that account for the program. He concluded that the
amendment attempts to address that detail.
Representative Davies asked an estimate of annual funds that
would be available. Mr. Hickey replied that AHFC has
indicated that the range would be between $40 to $63 million
dollars. Mr. Hickey stated the need was $8.1 million
dollars per year, in a perfect scenario. It could not be
done at the proposed level. The recommendation is to
provide that amount as close as possible, in the
neighborhood of $5-$6 million dollars per year. He
emphasized that number was conservative.
JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, responded that based on
the current market condition, the amount would need to be in
taxable bonds with a 25-year term. He believed that could
generate about $40 million dollars in proceeds.
Co-Chair Mulder commented that the intent was to put a
"fence" around the payout. The payout averages $6.82
million dollars. He commented that in order to maximize
with a minimal amount of confusion, the language needs to
clarify the intent.
Representative Croft argued that there would be a benefit to
using the money for cessation programs. He pointed out that
the proposed language moves the Legislature out of the
program. He reminded members that the money is not
guaranteed.
Vice-Chair Bunde agreed that it is important to do things
the simplest way possible, however, there is a risk that the
tobacco industry will fall on hard times and that the income
stream would need to be securitized for other takers. He
commented that the legislation would build a "moral fence"
around the money. Vice-Chair Bunde wanted to guarantee
various groups offering programs that there would continue
to be an income stream.
Representative Hudson asked how much money would the 20%
generate. Mr. Hickey replied that the annual average would
be a little under $5 million dollars, unsecuritized. In
2008, there would be an additional $2.5 million dollars.
Mr. Hickey pointed out that the formula is complicated.
Representative J. Davies WITHDREW his OBJECTION. There
being NO further OBJECTION, the amendment was adopted.
Representative Foster MOVED to report CS HB 234 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 234 (FIN) was reported out of Committee with a "do
pass" recommendation and with a fiscal note by Department of
Revenue.
HOUSE BILL NO. 260
An Act requiring the owners or operators of certain
passenger vessels operating in the marine waters of the
state to register the vessels; establishing
information-gathering, record keeping, and reporting
requirements relating to the vessels' gray water and
sewage; prohibiting the discharge of untreated sewage
from the vessels unless exempted; placing limits on
discharges of treated sewage and gray water from the
vessels unless exempted; establishing a commercial
passenger vessel coastal protection fund; establishing
a fee on commercial passenger vessels, that are not
exempt from the fee, for each voyage during which the
vessels operate in the marine waters of the state based
on the overnight accommodation capacity of the vessels
determined with reference to the number of lower
berths; establishing penalties for failure to comply
with certain laws relating to the vessels; authorizing
the Department of Environmental Conservation to
encourage and recognize superior environmental
protection efforts related to commercial passenger
vessels; authorizing exemptions from some laws relating
to discharges from the vessels and from the fee
requirements related to the vessels; requiring a report
from the Department of Environmental Conservation
concerning matters relating to the vessels; and
providing for an effective date.
Co-Chair Mulder provided an overview of the handout titled,
"Comparison Between HB 260 HFC - HB 22 Kerttula - HB 183
Knowles". [Copy on File].
He noted that the handout addressed the following concerns:
· Permits
· Registration requirements
· Prohibited discharges
· Gray water standards
· Discharge of treated sewage of gray water
· Air quality
· Monitoring and environmental studies
· Safety exception
· Information gathering requirements
· Record keeping requirements
· Reporting requirements
· Fees
· Penalties
· Commercial passenger vessel coastal protection
program
· Commercial passenger vessel coastal protection
fund
· Covered vessels
· Geographic coverage
· Exemptions
· Regulations
· Definitions
· Statutory changes
Co-Chair Mulder stressed that the bill provides the State of
Alaska a compromise and provides some certainty and some
harsh penalties for those that do illegal activity. He
added that the bill provides the industry with specifics and
which marks must be met for the industry to operate in
Alaska State waters. Co-Chair Mulder emphasized that HB 260
would go further than any other state throughout the United
States to protect Alaska's water rights.
Representative Davies MOVED to INCORPORATE HB 260 into HB
22. Co-Chair Mulder OBJECTED.
Representative Davies advised that a lot of hard work had
gone into HB 22. He added that HB 22 has been under
negotiation for a much longer period of time. The normal
process would be to take the material from HB 260 and
incorporate it into HB 22.
Co-Chair Mulder commented that HB 260 was substantially
different from HB 22. He stated that there was not a need
to replace that legislation and that HB 260 had merits to
"stand on its own".
Representative Croft agreed that it would be appropriate to
start with a bill that had a lower number. The content
would be the same and the amendments would still apply.
Co-Chair Mulder exclaimed that there had been no procedure
previously established. He stated that HB 260 was an
allowable option.
Representative Davies argued that there is a normal
procedure and that the Committee works with the bill that
has the lowest number.
A roll call vote was taken on the motion.
IN FAVOR: Croft, Davies, Moses
OPPOSED: Foster, Harris, Hudson, Lancaster, Whitaker,
Williams, Mulder
Representative Bunde was not present for the vote.
The MOTION FAILED (3-7).
MICHELLE BROWN, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, spoke to the Alaska Cruse Ship Initiative and
the four objectives:
· Steering committee members;
· Sub groups: wastewater, air, oil spill prevention,
and environmental leadership;
· Meetings; and
· Formation of a website.
The first objective is to get the facts on cruise ship
wastewater discharges and air emissions to find out whether
there are problems. The Department developed testing
parameters and protocols collaboratively so that they would
not later disagree with what the results meant. The
findings were for wastewater:
· Only 1 of 80 treated sewage samples met federal
standards;
· More than 75% of the gray water samples exceeded
the level required for treated sewage;
· Some gray water samples were as high as 50,000
times treated sewage limits; and
· No serious priority pollutant problems were found,
the types of hazardous materials that RCCL
discharged which led to the court actions.
Commissioner Brown continued, the findings for air were:
· 15% of opacity readings violated standards; and
· The limited ambient air testing down at four sites
in Juneau did not show any excess of health-based
standards.
Commissioner Brown noted that after the results revealed
such serious problems, the Department started working with
the industry on the second objective to find technology and
management improvements. The industry has been looking at
some potentially good treatment means. She noted that
equipment testing and review process is still underway.
Commissioner Brown continued, the third objective set for
the Cruise Ship Initiative was to establish a process for
long-term compliance verification. Neither the State nor
residents of coastal communities could ever allow themselves
to be so ignorant of and powerless from the impacts from
cruise ships' wastes.
The need for State oversight and monitoring program to
verify compliance led the Governor to introduce legislation,
HB 183. The bill would bring the cruise industry in line
with every other industry in the State that presents the
potential to pollute. For a successful compliance
verification program, there must be clear standards for
what, where, when, and how pollutants can be discharged or
emitted. She submitted that Alaskans for Alaska should
establish those standards. At that time, the State would
need to verify that standards are being met. Commissioner
Brown advised that credible verification would mean having
the authority and funding to check compliance, and having
enforcement authority for failures.
Commissioner Brown discussed in detail each program and the
elements and how they relate in HB 260 as compared to the
Governor's bill.
Commissioner Brown addressed the standards. The Governor's
bill states that standards should be set consistent with
federal law unless more protective standards were necessary
such as protecting shellfish growing areas. HB 260 cedes
the State's authority to establish standards to the federal
Environmental Protection Agency (EPA). She commented that
no state has ever given that authority over to the EPA,
especially since the federal Clean Water Act provides that
it is up to each state to set their own water quality
standards.
She noted that it is troubling, since the recently passed
federal cruise ship legislation, that HB 260 copies,
virtually verbatim, and specifically allows Alaska to set
its own standards and to develop its own programs to protect
Alaska's own interests.
Commissioner Brown added that the specific reservation of
the State's rights is exceptionally important because Alaska
is the only place in the U.S. that cruise ships travel where
the ships remain in state waters for the majority of their
voyage. At other ports, the cruise ships come into port to
load passengers and supplies and then head back out to
international waters. Those vessels retain their wastes and
discharge at high seas. In Alaska, State waters are the
destination, not just a drop off point. Because of that the
vessels discharge their wastes in State waters.
The next critical element of an oversight and monitoring
program is a solid program of sampling and verification.
The Governor's bill provides for that but HB 260 does not.
She suggested that this could be a serious problem given the
track record of that industry.
Commissioner Brown pointed out that the cruise ship industry
said its wastes contained no hazardous materials. That was
found to be false. The cruise ship industry stated that its
sewage discharges were fully treated and met federal
standards. She pointed out that last summer showed that
only 1 of the 80 samples met standards. The industry claims
that its untreated gray water was benign. Commissioner
Brown noted that last summer, the Department learned that
was not true and most samples looked like raw sewage.
Commissioner Brown stated that in each of the cases, once
the truth was discovered, the industry acted to improve.
However, a credible program cannot rely solely upon the
industry self-testing and self-reporting without
verification authority. It cannot rely solely upon the
spotlight of getting caught to ensure improvement.
Commissioner Brown added that a credible oversight program
must test for the pollutants that are of concern. The
Governor's bill authorizes Department of Environmental
Conservation to work with the industry and others to
establish the list of contaminants to be tested and the
frequency to test. HB 260 only identifies a very few
potential water contaminants. It doesn't require any
verification that industry is not discharging the types of
toxic chemicals that the Royal Caribbean was caught
discharging.
Commissioner Brown stated that an oversight and monitoring
program must be flexible and developed in a way that
protects the environment, yet allows business time to come
into compliance and continue to operate. The Governor's
bill provided for negotiated rulemaking to set well defined
protective conditions of operation so industry could test
and ultimately employ new technologies until full compliance
could be achieved.
She added that in contrast, HB 260 allows gray water to be
discharged at "whatever" quality until 2003 with no
alternative, interim protective measures until full
compliance can be achieved. HB 260 also fails to address
the air emissions testing program, the subject that
Department of Environmental Conservation receives more
complaints about than any other industrial operation.
Commissioner Brown summarized that the cruise industry has
not been regulated and presents a threat to Alaska's air and
water quality. The Department has worked with the industry
to test their discharges and emissions. There is new
technology. The Department has been working with the
industry on the oversight and monitoring program to verify
future compliance. Based on the track record of the
industry, the State needs a strong oversight, monitoring,
and compliance verification program that will allow the
Alaska public to have confidence that the industry is
meeting the standards expected from all other industries.
Representative Croft asked what the Royal Caribbean charge
had been relating to their discharge.
CRAIG TILLERY, ASISTANT ATTORNEY GENERAL, ENVIRONMENTAL
DIVISION, DEPARTMENT OF LAW, advised that the discharge had
been oily waste, dry cleaning fluids, and photo chemicals,
primarily silver.
Representative Davies asked for a comparison between HB 260
and the Governor's bill given the three-mile limit "donut
holes".
Commissioner Brown explained that the Governor's bill would
cover activities in State waters. HB 260 adopts the federal
definitions only. She acknowledged that the industry had
voluntary closed the "donut" holes.
Representative Davies asked if HB 260 would limit the State
to less than all state waters. Commissioner Brown
understood that the legislation would expand State waters,
not restrict them. He noted that the Governor's bill had
not established the discharge provisions.
Representative Hudson questioned how HB 260 would compare
with the essential elements as used by the State of
Washington.
TAPE HFC 01 - 100, Side B
Commissioner Brown replied that HB 260 goes further than any
other state's legislation.
Representative Croft questioned how Alaska laws are enforced
against a foreign flag vessel. Commissioner Brown explained
that Alaska is allowed to establish standards for our own
waters. The federal legislation specifically provides that
Alaska could establish it own program as long as it does not
contradict federal law. In most cases, federal law
establishes the floor for the standard.
Co-Chair Mulder inquired what was wrong with the federal
standards. Commissioner Brown emphasized that there is no
federal standard for gray water.
Co-Chair Mulder asked the different between sewage and gray
water. Commissioner Brown stated that under State law, a
difference is not made between gray water and sewage. She
declared that a study needs to be undertaken to make that
determination.
Representative Croft referenced Pages 3 & 4, the discharge
of gray water. He asked if the Environmental Protections
Agency (EPA) standards were appropriate. Commissioner Brown
commented that HB 260 provides that the Alaska standard
would be whatever EPA promulgates. Representative Davies
clarified that regarding gray water, EPA presently has no
standard.
Representative Croft asked what is going to happen until
2003 when the EPA standard comes into place. Commissioner
Brown advised that there would be no standard until 2003.
Representative Croft questioned if the bill should pass,
what standard would the State enforce for the next two
summers. Commissioner Brown reiterated that there is no
standard to enforce for the next two summers. She added
that whatever the industry decides, is what the State will
get. Commissioner Brown stressed that there is no standard
to work with.
Representative Croft asked what the State could do if a
foreign flag vessel dumps. Commissioner Brown replied that
Alaska could only fine that vessel. That would be the
State's sole authority. Mr. Tillery added that most of the
vessels have offices in the United States and that the State
of Alaska would be able to get to them through those
offices.
Representative Croft pointed out that the alternative to the
system of going to courts on fines would be a system of
registration through a permit system. Mr. Tillery explained
that with a permit system, Alaska would have the ability to
fine the vessel for violating the permit. Alaska would have
the authority to discuss with that specific line what would
be allowed to be discharged in State waters.
Representative Croft asked what rights under HB 260, does
Alaska have if a vessel repeatedly violates discharge
standards in State waters. Mr. Tillery explained that is
not a question which has been determined in the State of
Alaska. There is a body of law in federal court that
suggests that Alaska could prohibit them from State waters
and could not control their activities. Under HB 260, that
could not be done. Under the Governor's law, it would be
allowed.
Representative Davies spoke to the definition of pollutants.
He recommended limiting the topics of concern to gray water.
Commissioner Brown stated that under the Governor's bill,
the Department would look at all the potential pollutants
and decide which to test for and which were of the most
concern. HB 260 does not pick up most of the conventional
pollutants. She noted that is important because in 2003, if
EPA has not established standards, Alaska will end up with
the standard recommended in HB 260. If the industry wants
that, one of the easiest ways to kill fecal matter is the
use of chlorine. She maintained that chlorine is very
dangerous to aquatic life. Under the terms of HB 260, the
State could not regulate the amount of chlorine being
discharged. Commissioner Brown advised that there should be
detailed water discussions when establishing the standards.
Representative Croft referenced Page 5, Lines 9-10, the gray
water definition. He asked if there was evidence that the
vessel had been using chorine, how could that be established
under HB 260. Commissioner Brown explained that chorine is
one of the topics that could be self-tested by the vessel.
HB 260 is not authorized to establish requirements of what
should be tested for.
Representative Hudson asked what section in HB 260 would
preclude the State from monitoring discharges and the
reduction of those impacts. Commissioner Brown understood
that the bill would only provide regulatory authority to do
a few things. The bill does not allow the Department
authority to promulgate rules to see all aspects of it
through. The funds could not be used to do the monitoring
or study. Mr. Tillery added that the State does not have
authority to have the funds to do that.
Representative Davies asked if "off-loading" was addressed
in HB 260. Commissioner Brown noted that HB 260 does not
deal with that concern; however, both of the other bills do
address it. The Governor's bill requests authority to
create a solid waste management plan.
Co-Chair Mulder questioned what the issue was. Commissioner
Brown responded that solid waste and hazardous waste
facilities are tightly managed. Co-Chair Mulder argued that
HB 260 is a water bill and addresses keeping Alaska's water
clean. Commissioner Brown emphasized that the Governor's
bill is about water, air and solid waste, all the potential
impacts from industry.
Representative Croft referenced Page 4, Section ©, and asked
if that section allowed for the State to say that State law
is whatever it is decided to be. Mr. Tillery stated that
setting up the law dealing with future amended statutes is a
problem, particularly in this case, as it does not exist in
current statute. The Legislature has no idea of what these
laws will be and the Alaska Supreme Court has not spoken to
the issue in the past 20 years. He indicated that each time
he has checked the standards, the process of HB 260 would be
declared illegal. The likely effect is that the standards
would not be in effect in Alaska.
Representative Croft asked if the ability to change the
standard would become problematic. Mr. Tillery explained
that it would be a problem. If EPA had already adopted
their regulations, then the Legislature could clearly adopt
those. It becomes the illegal delegation of authority of
the Legislature.
Co-Chair Mulder inquired if Mr. Tillery was stating that the
standards proposed in HB 260 were "illegal provisions". Mr.
Tillery replied that the Supreme Court has not spoken
definitively. He added that in the four states that he had
looked at, and dealing with the delegation by the
legislature to the federal government for standards, each of
those states has come to the conclusion that it would be an
illegal delegation. Based on previous action by the Supreme
Court, Mr. Tillery noted that it was his view, that it would
be likely, that the Court would uphold that they are not
legally permissible.
HB 260 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 10:20 A.M.
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