Legislature(2017 - 2018)ADAMS ROOM 519
03/29/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB158 | |
| HB322 | |
| HB216 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 305 | TELECONFERENCED | |
| + | SB 158 | TELECONFERENCED | |
| + | HB 322 | TELECONFERENCED | |
| += | HB 216 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 29, 2018
1:34 p.m.
1:34:56 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:34 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
Representative Steve Thompson
ALSO PRESENT
Kristin Ryan, Director, Division of Spill Prevention and
Response, Department of Environmental Conservation; Andy
Josephson, Sponsor; Tom Atkinson, Staff, Representative
Andy Josephson; Doug Mertz, Prince William Sound Regional
Citizens' Advisory Council; Eric Cordero-Giorgana, Staff,
Representative Chuck Kopp.
PRESENT VIA TELECONFERENCE
Andy Rauwolf, Self, Ketchikan; Patti Saunders, Alaska
Community Action On Toxics, Anchorage; Kara Moriarty,
President and CEO, Alaska Oil and Gas Association.
SUMMARY
HB 216 TRANSFERS FROM DIVIDEND FUND; CRIMES
HB 216 was HEARD and HELD in committee for
further consideration.
HB 322 OIL SPILLS/POLLUTION:PENALTIES;PREVENTION
HB 322 was HEARD and HELD in committee for
further consideration.
SB 158 OIL/HAZARDOUS SUB.:CLEANUP/REIMBURSEMENT
SB 158 was HEARD and HELD in committee for
further consideration.
Co-Chair Foster reviewed the agenda for the day.
SENATE BILL NO. 158
"An Act relating to oil and hazardous substances and
waiver of cost recovery for containment and cleanup of
certain releases; and providing for an effective
date."
1:35:56 PM
Co-Chair Foster invited testifiers to the table.
1:36:08 PM
KRISTIN RYAN, DIRECTOR, DIVISION OF SPILL PREVENTION AND
RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
explained that there were 2 versions of the same bill: SB
158 and HB 322 (which had been slightly amended in the
House Resources Committee). The governor had proposed the
legislation because of problematic heating oil spills at
homes.
Ms. Ryan explained that spills of heating oil at home had
negative impacts on the homeowner and the environment, and
were costly to clean up. The Department of Environmental
Conservation (DEC) came into the home to provide assistance
with addressing a spill. It was a benefit to the homeowner.
The problem was when the homeowner received a bill. Current
law required DEC to recover all costs for responding to a
fuel spill. The bill was automatically generated by the
Division of Spill Prevention and Response (SPAR) accounting
system several weeks after the spill.
Ms. Ryan continued describing the process of assisting home
owners with heating oil spills. Once the bill was given to
the homeowner, the homeowner often became unwilling to
communicate further (to avoid further charges) which then
would inhibit the ability of the division to help clean up
the contamination. The division wanted to provide technical
assistance without sending homeowners a bill. The
legislation would allow for free technical assistance (with
limitations) for homeowners or small apartment buildings
with four or fewer units.
Co-Chair Foster reviewed the available testifiers online.
1:41:02 PM
Representative Wilson referred to page 2, lines 25-26,
which referred to retroactivity. She asked why the
retroactive date was only back until January 1, 2018.
Ms. Ryan explained that the retroactive clause would allow
for the department to cease billing current homeowners that
were being assisted. She furthered that there were
approximately 150 homeowners being assisted with active
spills. The department was not interested in going further
back and reimbursing homeowners that had been billed in
previous years.
Representative Wilson asked if the 150 actively engaged
homeowners would be billed if the bill were to pass.
Ms. Ryan replied that the division has placed a pause on
billing of the 150 active cases.
Representative Wilson asked about when billing would stop.
Ms. Ryan responded that billing would cease when the bill
went into law.
Representative Kawasaki asked about the liability of a
homeowner. He wondered if home owner's insurance covered
spills.
Ms. Ryan responded that there was typically an exclusion
clause for the cost from home heating oil spills.
Representative Kawasaki asked why the bill would be limited
to homes or small apartment buildings.
Ms. Ryan was not sure why 4 units was chosen as a limit for
apartment buildings. She pondered that a facility with more
units would be more commercial and have more resources
available. She stated that many of the spills the
department encountered were on the smaller end of the
spectrum. It had seemed a reasonable place to draw a line.
Representative Kawasaki asked if the concept was only for
residential properties.
Ms. Ryan responded in the affirmative.
1:45:50 PM
Representative Ortiz relayed that under the current status
DEC was forced to bill homeowners when the department took
up their case. It was also his understanding that if time
was spent over the phone, home owners would be billed as
well.
Ms. Ryan replied that any activity related to the case
would be billed to the homeowner.
Ms. Ryan answered in the affirmative and elaborated that
activities such as transferring the case file and writing a
letter would engender charges.
Representative Ortiz asked how long the department had been
forced to bill homeowners.
Ms. Ryan recalled that the enacting statute was put in
place in the early 1990s. She stated that most of the
division's statutes were enacted after the Exxon-Valdez Oil
Spill. She predicted that the impetus for the statute was
wanting large corporations like ExxonMobil to recover costs
associated with a large corporation spilling oil.
Representative Tilton asked who had the burden of proof to
get a waiver.
Ms. Ryan would be reliant on her staff to make a
determination in the field as to whether an incident was a
home heating oil spill or not. She thought in most cases it
would be obvious. The decision would be made by the
department and would be appealable. She stated that the
division had an informal and well-defined appeals process.
Representative Tilton indicated that the fiscal note stated
regulation would be adopted in 2020. She thought the
timeframe was lengthy.
Ms. Ryan assumed the time period would be much shorter. She
reiterated that the division was eager to implement the
bill.
Co-Chair Foster noted that Representative Pruitt had joined
the meeting.
1:49:54 PM
Representative Guttenberg considered a letter from Al-Chem
Engineering (copy on file). He mentioned that more
aggressive clean-up activities created more harmful
situations through exposing the soil and had the potential
to be expensive. He wondered if there were any less
aggressive measures that could be used. He provided a
hypothetical scenario. He wondered about containment versus
clean-up.
Ms. Ryan replied that every clean-up was different. It was
very common to leave contamination in place. She referenced
a bill pertaining to contamination. The decision to leave
the contamination required consideration of many factors.
The author of the letter disagreed with the division on
many cases, and actively participated in the regulatory
drafting process where clean-up standards were established.
She could not provide a definitive answer. For example, if
there was contamination around the foundation of a
building, often it would be left so as to not de-stabilize
the building. The first goal of the division was clean-up.
There was active monitoring to determine if in-place
contamination was not causing more problems.
1:53:17 PM
Representative Guttenberg asked how different the new
regulations might be.
Ms. Ryan responded that she did not anticipate the bill
changing how the division processed clean-ups. She thought
the bill would only impact billing. It would not impact the
advice the division provided to homeowners and commercial
operators.
Representative Guttenberg did not think it seemed like the
department would be doing more extensive remediation. He
was concerned about lack of opportunity for cost recovery
affecting the final solutions for homeowners.
Ms. Ryan understood his question. She did not see the bill
change how the division conducted cleanup. The money did
not go into the operating budget. The billing funds went
into the spill prevention account, which was used by the
legislature to fund the work of the division.
1:56:27 PM
Representative Kawasaki asked about the cost recovery
issue. He recognized that some individual homeowners could
not afford to do spill cleanup. He wondered about the
percentage of spill response for homeowners. He mentioned
the Spill Prevention and Response Fund, and wanted to make
sure that the state engaged in cost recovery when it could.
Ms. Ryan wondered if he was asking for the cost a homeowner
would experience for a cleanup.
Representative Kawasaki wanted to know about how many of
the homeowners that could not pay after a spill. He asked
how DEC would spread the message that the state was no
longer billing for spill response.
Ms. Ryan stated that there were two costs associated with a
spill: the cost for cleanup (which could run as much as
$60,000), and the cost to the state to monitor the cleanup
of the spill. She would provide him a letter to inform
which homeowners were not reimbursing the state for costs.
Ms. Ryan continued to address Representative Kawasaki's
question. The department tried to participate in home shows
and reached out to builders and handy-people. She relayed
that most homeowners were unaware that DEC would bill them
for their service until after it had occurred. Most often
homeowners stopped communicating when the process was
already underway.
Representative Kawasaki referenced insurance liability and
wondered if the division worked with a homeowner when there
was insurance to cover the incident.
Ms. Ryan relayed that it was a major point of frustration
for the division that insurance companies were not required
to provide the rider for individuals to purchase the
insurance for spills.
Co-Chair Foster OPENED Public Testimony.
2:01:21 PM
ANDY RAUWOLF, SELF, KETCHIKAN (via teleconference), spoke
in support of the legislation. He was a retired contractor.
He had a rental where an oil spill had occurred while he
was out of town. At the time, he was not familiar with the
subject, and he did not realize the extent of the problem.
He had hired an environmental consultant and had worked
with DEC. The department was very helpful and responsive.
He received a letter from DEC that mentioned there would be
associated charges. Since the issue arose, he had no oil
heating available. He discussed the onerous process of
testing the site. He had not been able to rent or to sell
the property. He had spent $12,000 thus far and still had
contaminated soil.
Mr. Rauwolf continued his testimony. He still had all of
the containment in the ground. He reported that some of the
samples he had sent to anchorage showed excessive
contamination. He was not sure how long the process would
take but thought it would cost $35,000 to $40,000. He had
been directly impacted and was shocked to receive a bill
from DEC for phone calls for just under $500. He was unsure
how DEC came up with the amount to charge. He did not want
to talk to here anymore. He thought homeowners should be
given information on the potential for spills.
2:08:26 PM
Representative Ortiz thanked Mr. Rauwof for taking the time
to call in.
Co-Chair Foster CLOSED public testimony.
Representative Wilson asked about DEC putting a covenant on
a property that had been contaminated and not cleaned up.
Ms. Ryan responded that she had been referencing SB 64, a
piece of legislation that would give the department the
authority to put a covenant on a property if contamination
remained above clean-up levels. The authority did not
currently exist.
Representative Wilson asked if the department had the
authority to place a lien on the property if the homeowner
could not pay.
Ms. Ryan answered in the affirmative. She stated that the
cost-recovery authority had other mechanisms. There was an
"inability-to-pay" and the bar was extremely low. The
department had the ability to place liens on properties to
recover costs.
Co-Chair Foster conveyed that amendments were due the
following Monday at 5:00pm.
SB 158 was HEARD and HELD in committee for further
consideration.
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."
2:11:28 PM
ANDY JOSEPHSON, SPONSOR, explained that HB 322 was an
update of spill penalties and fee assessments. The genesis
of the bill stemmed from the previous year, when there were
natural gas spills following pipeline ruptures in Cook
Inlet. At the time he had asked Ms. Ryan if there was any
authority she needed and did not have. The spill penalty
statutes had not changed much since the 1970s and 1980s,
and inflation had undercut the value of the penalties. The
bill was there to provide tools for SPAR. Spills had
continued, but the state's ability to penalize responsible
parties had diminished significantly.
Representative Josephson reviewed the sponsor statement
(copy on file):
Because oil spills harm Alaska's economy and
environment, our statutes have for decades authorized
penalties for discharges. But inflation has severely
undercut those penalties since they were enacted.
Spills have continuedthe Department of Environmental
Conservation responded to 20 in FY17but the State's
ability to penalize responsible parties has diminished
very significantly.
CSHB 322 adjusts penalties per inflation, gives the
department authority to levy administrative penalties,
and requires trucks transporting crude to submit their
federal spill response plans to DEC.
This bill mostly adjusts penalties to 2018 dollar
values, but more sharply increases penalties for
continuing violations. It ratchets up the maximum
penalty a court may impose, and also doubles the
minimum penalty a court must impose when a party is
proven responsible for a spill. If DEC levies an
administrative penalty, the court must subtract that
from any civil penalty it hands down. Penalties would
rise with inflation annually.
Representative Josephson referenced a bill he carried on
the House floor relating to failure to purchase worker's
compensation insurance, which had illustrated a similar
authority that the Department of Labor and Workforce
Development was seeking.
Representative Josephson continued to discuss the sponsor
statement:
We now see trucks transporting crude oil via Alaska's
highways, and that may increase, so this bill requires
crude oil trucks to provide their federal response
plans to DEC.
Water mixed with spilled oil (refined or crude) would
count as oil for purposes of calculating penalties.
Holding parties responsible for spills is an integral
part of the responsible development Alaska is known
for. The House Resources Committee welcomes your
support of this legislation.
Representative Josephson indicated that in the House
Resources Committee there had been a lot of complicated
testimony and dialogue about what was required relative to
the production of contingency plans. Often the plans were
prepared under federal regulation, but DEC had not been
privy to the plans directly. The bill proposed that DEC
would be cognizant of the plans. The bill also calculated
water mixed with oil as oil for the purposes of calculating
penalties. He discussed the toxicity of water mixed with
oil, which was known as "produced water."
Representative Josephson stated that the bill was not a
revenue measure but was rather a preventative measure which
would generate about $75,000 more in revenue. In the event
of a serious spill, the legislation provided "teeth." He
reflected on the need to update to statutes relating to
spills. He asserted that holding parties responsible for
spills was an integral part of the responsible development
Alaska was known for. He referenced interesting testimony
from the oil industry that indicated it was not typically
the responsible party.
2:18:30 PM
Representative Kawasaki asked if DEC had brought the bill
forward to the House Resources Committee, or if the
committee had formulated the idea for the legislation.
Representative Josephson responded that when he had asked
Ms. Ryan what she needed, she had responded that the
statutes needed updating. The bill proposal had been a
collaborative effort with work by the Legislative Legal
Division, an assistant attorney general, and others. The
committee had obtained the authorization to draft and file
the bill.
Representative Guttenberg referred to page 4, line 19,
which added the need for enhanced civil penalties to deter
future non-compliance. He asked if the intent was to turn
the matter over to the department or elsewhere to do a
regulatory regime on spills.
Representative Josephson deferred to his staff. He
indicated that the section being referred to was Section 6,
and in Section 7 the language existed in current law and
was designed to be one of many elements that would go into
consideration of a proper and equitable fine.
2:21:14 PM
TOM ATKINSON, STAFF, REPRESENTATIVE ANDY JOSEPHSON, pointed
to page 2, Section 2 of the bill. He noted that previous
legislatures had authorized the department through
regulation to set a schedule of fixed penalties for the
court to follow in civil processes. He imagined that the
same process would be used by fixing the penalties in
regulation promulgated by the department. He invited Ms.
Ryan to respond.
2:22:30 PM
KRISTIN RYAN, DIRECTOR, DIVISION OF SPILL PREVENTION AND
RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION,
responded that the legislation would add the ability of
deterrence for the department when calculating penalties.
Representative Guttenberg pointed out that Section 1 of the
bill was legislative findings. He asked if Ms. Ryan could
speak about what was in place.
Ms. Ryan responded that the bill would change existing law
in terms of considering deterrents when calculating
penalties. She referenced page 2, line 15 of the bill. She
thought it was a significant consideration for the House
Resources Committee to allow the department to consider
punitive or deterrent considerations when calculating a
penalty.
Representative Guttenberg asked if the punitive damages
were considered inside of the department or in the courts.
Ms. Ryan responded that only oil spill penalties had the
punitive aspect removed by existing law. Violations of
other environmental law (air and water), the punitive
aspect was allowed to be considered by existing law. As the
department obtained primacy for certain programs from the
Environmental Protection Agency (EPA), it required the
state to consider punitive aspects when it considered
deterrents. Spill prevention response did not have an
equivalent federal paradigm, and the state did not have
primacy for the EPA to do oil spill response. When the
state developed the laws in the 1970s, punitive
considerations were not part of an oil spill response.
Vice-Chair Gara recalled that in 1989 when the state
litigated the case of the Exxon-Valdez oil spill, there had
been two forms of damages: the actual damages that could be
proved, and the per-barrel oil spill penalty. He asked
about the per-barrel penalty and whether it had been
changed.
Mr. Atkinson replied that the information would be provided
in the upcoming presentation.
2:27:14 PM
Ms. Ryan clarified that the penalties were enacted after
the Exxon-Valdez oil spill in the early 1990s.
Ms. Ryan introduced the PowerPoint presentation: "Division
of Spill Prevention and Response: Spill Penalties
Overview."
Ms. Ryan began with slide 2: "The Division's Mission":
Preventing spills of oil and hazardous substances,
preparing for when a spill occurs, and responding
rapidly to protect human health and the environment.
Ms. Ryan reviewed slide 3: "2017 Spill Statistics."
2,046 substance releases
271,809 gallons spilled:
1,665 gal crude oil
188,379 gal non crude oil
62,527 gal hazardous substances
18,980 gal process water
Large spills accounted for over 80% of the total
volume released
Ms. Ryan indicated that refined fuel spills was what the
department typically responded to. She thought that
historically crude oil was probably the larger percentage
of spills by volume. She stated that producers, exporters
and transporters were heavily regulated; and made the case
that prevention had worked and that the division's
oversight had added value. There were more spills in areas
that were not regulated, and much of refined fuel
transportation was in the category via trucks and boats.
She discussed the difference between processed water
(related to mining and used to remove ore) and produced
water (which came up with oil during oil exploration).
Ms. Ryan discussed the graph on slide 4: "Total Volume
Released by Fiscal Year." The number of spills had declined
and had stayed level.
Ms. Ryan pointed to the spill locations on the map on slide
6: "Spill Locations Across Alaska." She commented that
spills happened everywhere.
Ms. Ryan reviewed the oil spill behaviors on slide 7: "How
Do Oil Spills Behave in the Environment?":
Marine Oil Spills
• Oil tends to accumulate at the surface and float on
the water and move with the current; oil sheens can
last a very long time
Land Oil Spills
• Oil can penetrate underground and move downward,
potentially reaching groundwater
• May also move laterally along less permeable layers
(including surface pavements) or with groundwater
and surface waters
Underground Oil Spills
• Spills from pipelines or leaking underground storage
tanks
• High potential to affect the groundwater since the
vertical traveling distance is reduced
Ms. Ryan indicated that water was a significant driving
factor in how quickly a spill needed to be addressed. She
mentioned the complexity of underground spills from tanks
or underground pipes.
Ms. Ryan looked at slide 8, which showed a picture of a
SPAR employee looking for a spill.
Ms. Ryan reported the health impacts of oil spills on slide
9: "Examples of Spill Impacts: Health":
Direct contact with the skin
• Oil can irritate the skin and penetrate the body via
skin absorption
Inhalation
• Many components in oil are volatile and may easily
evaporate; while breathing, these components can
enter our bodies
• Less volatile compounds may adsorb on airborne
particulates and can enter the body through
inhalation
Ingestion
• Both short and long term health problems can occur
by consuming contaminated water, particles, or
consuming contaminated food
• Oil components can bioaccumulate in organisms and
can become highly concentrated
Ms. Ryan explained that DEC did its work because it did not
want people to be harmed by spills.
Ms. Ryan turned to the picture on slide 10, which showed an
oil spill in a small body of water.
Ms. Ryan conveyed the environmental impacts of spills on
slide 11: "Examples of Spill Impacts: Environment":
• Oil spills can result in the loss of animals and
fish habitat
• Heavy oils may affect several organism functions
like reproduction and development, respiration,
feeding, and thermo-regulation
• The entire ecosystem can change due to the toxicity
of the chemical components and elements of the
spilled oil
• Oil can pollute and damage groundwater resources,
then residual oil can remain in the subsurface and
continue to pollute groundwater
2:31:14 PM
Ms. Ryan looked at the picture on slide 12, which showed a
large truck on its side. She noted that there was regularly
quite a bit of media attention focused on truck roll-overs.
The roll-overs happened somewhat regularly, however the
amount of volume released from truck spills was not in the
top ten recorded spills.
Ms. Ryan reviewed slide 13, "Examples of Spill Impacts:
Socio-Economic":
• Mariculture/Agriculture
• Valuable commercial fishing or farming areas may
be closed due to risks of contaminants
• Contaminants found in organisms can lead to bans
on human consumption
• Boats, gear, and equipment can be directly and
indirectly damaged by spills
• Tourism/Recreation
• Businesses operating or supporting recreational
or professional activities in affected areas may
suffer significant economic losses
• Industry
• Facilities relying on stable resources (such as
clean water) can be negatively affected by
contamination in their piping systems
• Property
• Property values can be adversely affected if
adjacent to or within a polluted area
• Cleanup and Resource Costs
• Costs to clean up contamination and the cost of
lost fuel can be expensive
Ms. Ryan highlighted slide 14: "Cost of Spill Response to
the State."
• If responsible parties are unable or unwilling to
pay, the liability to the State can amount to
millions of dollars
• The estimated financial liability at sites where
the Division is leading investigation and cleanup
efforts currently stands at over $12 million
• The current fine and penalty structure addresses
less than 5% of the average oil spill response
and cleanup costs
Ms. Ryan detailed that there were costs to the state to
respond to spills. Law required a spiller to address the
spill, no matter the size. The current fine and penalty
structure was in place to encourage companies to take the
right steps to avoid spills.
Ms. Ryan reviewed slide 15, "Oil Trucking":
• One well at the Cosmopolitan oil and gas field in Cook
Inlet restarted production in March 2016. There are
currently two producing wells with a total production
of 8,083 barrels per month (Alaska Oil & Gas
Conservation Commission, 2017)
• The first tanker of crude oil from the Cosmopolitan
field delivered to the Tesoro refinery in Kenai in
April 2016. At that time, they expected to deliver two
tankers per day to the refinery. (Alaska Business
Magazine, 2017)
• The highest producing month was August 2017 at 10,653
barrels of crude.
• Current contingency plan indicates tanker trucks up to
250 barrel capacity would be used to haul oil. That
would mean about 1 tanker per day to keep up with
production.
• As the Cosmopolitan field increases production, tanker
truck traffic will increase on the Kenai Peninsula.
This will ultimately increase the risk of a crude
spill.
Ms. Ryan provided examples of the effects of penalty
changes on slide 16: "Examples of Penalty Change Effects":
For including produced water in penalty volume:
There were three large primarily produced water spills
within two months during the winter of 2009 (DS 6 Well
11, L3 Common Line, and R Pad Produced Water Spill).
Individually, none of them exceeded 18,000 gallons of
oil. Had we been able to consider the produced water,
the L3 Common Line release would have totaled 46,000
gallons spilled, allowing the Department to assess
fines for the damage caused. The other two would have
remained under the 18,000 threshold even if the
produced water was considered.
For lowering penalty volume threshold:
A 2008 spill from a facility released approximately
13,630 gallons of Jet-A into containment. A tear in
the lining allowed 2,777 gallons to enter the
surrounding soil. The release did not meet the penalty
volume threshold. This case was eventually transferred
to the Contaminated Sites Program.
Ms. Ryan discussed produced water, which DEC considered to
be as damaging as the oil itself. She spoke of the
difficulty of cleaning salt water from soil. The slide
discussed volumes and thresholds. The legislation included
an administrative penalty authority for spills smaller than
18,000 gallons. She felt the department's penalty authority
could be improved to deter spills.
2:35:44 PM
Representative Kawasaki referred to slide 14 and asked
about responsible persons or companies being subject to
violation and assessed fines and penalties.
Ms. Ryan stated that there was currently a penalty
structure in place; the proposed legislation would increase
the amount of penalty the department could consider.
Representative Kawasaki mentioned the previous bill having
to do with residential spills. He contrasted that one bill
encouraged people to contact DEC, while HB 322 seemed to do
the opposite.
Ms. Ryan clarified that the cost recovery was different
than penalties. She asserted that penalties were only
brought into play when there was a variety of factors that
happened. An accidental release by a homeowner would not
instigate a penalty - mainly due to volume.
2:38:31 PM
Representative Kawasaki had a question about slide 5 and
the aggregated number of spills per fiscal year. He
wondered if the number included all spills of all
substances.
Ms. Ryan explained that the slide listed an aggregate of
all spills. She noted that the division, by law, was
required to publish a detailed annual report of all spills
each year.
Representative Kawasaki mentioned the rate of inflation and
raising fees. He thought it seemed like there were fewer
spills and wondered about the logic behind raising the
fees.
Representative Josephson thought that there was truth in
what Representative Kawasaki stated. However, he thought it
was important to have a penalty that reflected the actual
costs for damages, as well as the inevitability of a large
spill.
Representative Wilson referred to page 4. She thought
normally penalties were added to change behavior. She
commented that from 2011 it appeared folks were complying.
Representative Josephson indicated that a lot of the
improvement was commendable but did not offset the need to
increase the penalties. He reiterated that the penalties
should have meaning and value in the current economic
climate.
2:42:47 PM
Representative Wilson reiterated that penalties should
incentivize behavior change. She imagined that the federal
government also had penalties depending on the location of
the spill. She wondered if the sponsor thought the spills
were intentional.
Representative Josephson responded in the negative.
Representative Wilson thought it was commendable that
spills were decreasing, but reiterated Representative
Kawasaki's point about two groups being treated
differently.
Representative Josephson thought cost containment was also
part of the picture, and whether the department had to
absorb some of the expenses.
Ms. Ryan reported that the question had come up when a
spill had occurred in Cook Inlet the previous year, and DEC
had not had the authority to penalize the company. She
thought the oil industry had done a great job. When
something when wrong and the environment had been
negatively impacted, she thought the penalty should be
commensurate with the damage caused.
2:45:15 PM
Representative Wilson thought she had heard that industry
did not always have to pay the cost of what DEC did. She
recalled that DEC was required to do cost recovery.
Ms. Ryan answered in the affirmative and replied that many
times there were spills where there were no parties at
fault.
Representative Wilson noted letters of concern from the
Alaska Trucker's Association and the Alaska Oil and Gas
Association (AOGA) (copy on file). She asked how the
department had addressed the concerns.
Ms. Ryan indicated that she had had some conversations with
the trucking association and learned that the members had
to contingency plans for the federal government. The
division had no interest in duplicating response plans. She
thought it was a positive result of bringing the
legislation forward.
Representative Wilson suggested that although the state
would not necessarily penalize, there's no guarantee that
someone might pursue litigation for damages.
Ms. Ryan confirmed that the proposed legislation would not
impact the ability to pursue a court case against a
spiller.
Representative Guttenberg referenced slide 4 and thought
there were unanswered questions. He could not tell the size
and number of spills. He referenced a problem on the Glenn
Highway. He asked Ms. Ryan if she had a sense of behavior
and volume of spills in various industries. He wondered if
there was a profile of where remedial work needed to be
done by contractors.
Ms. Ryan responded that the department had detailed
information in the slide which went into further detail in
the annual report. She offered to provide a link to the
report.
2:49:38 PM
Representative Pruitt was very surprised that DEC had not
known the federal government required contingency plans.
Ms. Ryan confirmed that the department had not known about
the plans, and detailed that the federal Department of
Transportation had not required the plans to be submitted.
She continued that it was unknown that truckers had to
submit contingency plans until the legislation was
proposed.
Representative Pruitt asked if Ms. Ryan was suggesting the
duplicative section be removed from the bill.
Ms. Ryan believed that the House Resources had addressed
the issue by changing the bill to ensure the department
would be given copies of the contingency plants.
Representative Pruitt was still uncomfortable with the fact
that DEC had not spoken with the stakeholders regarding the
contingency plans.
Representative Josephson referenced Representative Wilson's
remarks. He thought that the subsequent presentation would
show that the efforts would not be duplicative. Part of the
issue had grown out of increased crude oil trucking on the
Kenai River, which was a sensitive environment. He
specified that he and his staff had conferred with
BlueCrest Energy, Inc., on advance of any hearing of the
bill; and he did not think the company was caught unawares.
He thought there had been broad consensus that copying the
contingency plans was not overly burdensome. He queried
whether Mr. Atkinson had the same recollection.
2:53:29 PM
Mr. Atkinson responded that he had conversation with Benji
Johnson from BlueCrest Energy, Inc. prior to the bill
having its first hearing in the House Resources Committee.
He had also communicated with an individual from the
trucking association, who had brought to his attention that
truckers were required to submit response plans to the
federal government.
Co-Chair Seaton discussed marine contingency plans for
vessel spills that were submitted electronically and had
taken legislative action to require. He thought it would be
important that electronic submission would be required. He
noted that contingency plans changed, and it was important
to have all parties connected.
2:56:24 PM
Representative Pruitt wanted people to understand that
instituting state penalties would not change the actions of
a trucker. He did not believe Alaska's penalties would be
an incentive. He thought the provision was a desire for
access to information and was duplicative. He thought the
provision was excessive regulation and would be an
administrative burden for the user. He thought it was a
burdensome bill.
Representative Josephson asked Ms. Ryan to respond. He had
seen a rash of tractor-trailer roll-overs and wondered
about DEC's response vis--vis the federal government. He
thought the bill was not duplicative. He thought it was the
committee's view that the state would want to know how the
trucking industry intended to respond to spills on state
land. He reminded that contingency plans were already
required by the federal register, so the information could
be shared. He stated that no one from the industry had
suggested that the information was privileged.
3:00:09 PM
Representative Kawasaki agreed with the bill sponsor. It
sounded like it was something the parties already had to
submit, the state should have the information. He did not
want things duplicated. He thought it was important to
respond to spills promptly before it was a problem for the
environment. He referred to Section 13 wondered if the bill
only addressed crude oil transport. He asked why other
fuels had not been discussed.
Mr. Atkinson answered that the committee had contemplated
covering other items; however, the structure in law was
much more complex with overlapping federal jurisdictions.
Representative Kawasaki argued that the state should have
information to be able to respond to a crude oil spill. He
wondered why a contingency plan requirement would not be
extended to other items.
Representative Josephson deferred to Ms. Ryan.
Ms. Ryan answered that the department's largest concern was
with crude oil spills. The department considered crude oil
to be more damaging to the environment than refined fuel,
which was why it was most interested in receiving
contingency plans for its transport. Transport of crude oil
was a rare occurrence, and there was a company that
transported across sensitive habitat in Alaska. There were
concerns that existing statutory authority did not
contemplate crude oil being moved by truck. The fact that
there were more refined-fuel truck rollovers was not a
reflection of the industry, but rather, volume. Most but
not all were transporting to the North Slope. There was
much less of an impact with refined fuel spills. Since the
department was aware that trucking companies moving refined
fuel were required to have contingency plans, it was happy
to participate in drills to execute response plans and
would be working with federal partners.
3:05:06 PM
Co-Chair Seaton asked about page 9, lines 7-9 and whether
to add the word "electronically."
Ms. Ryan did not anticipate having to add language - she
anticipated that electronic copies of plans would be
available.
Co-Chair Seaton thought availability of electronic
contingency plans would aid in spill response.
Representative Guttenberg asked if the intent was to access
the contingency plans through a trucker or through the
government. He asked about the effects of the bill on those
that did not spill fuel.
Ms. Ryan specified that the United States Department of
Transportation office of Pipeline and Hazardous Materials
Safety Administration (PHMSA) was the agency that required
the contingency plans for the trucking of oil, refined fuel
and hazardous substances. There was not a requirement for
the plans to be submitted. She thought a requirement for
the state to receive copies of the plans would add value as
they would exist in a public arena. She did not foresee an
additional burden on a company that did not spill. The bill
did not impact the responsibilities of companies and did
not change federal requirements. The bill would require
those transporting oil to submit the contingency plan to
the state. She reiterated that she was aware of only two
companies engaged in hauling oil.
3:08:50 PM
Co-Chair Foster asked members to hold questions until the
end of the meeting. He would announce an amendments
deadline at the next meeting.
Mr. Atkinson reviewed the sectional analysis in the form of
a slide show (copy on file):
Section 1Findings
Acknowledges that a penalty may be punitive. Applies
findings to non-judicial penalties.
Section 2Civil penalties for discharges of oil
Increases penalties (in regulations) for non-crude oil
spills over 18,000 gallons into aquatic environments
and onto public land.
Mr. Atkinson explained that the bill added administrative
penalties that did not exist in law. He pointed out that
the bottom of page 2 showed more severe penalties for
spills in anadromous environments and high value aquatic
environments. Penalties were less severe for spills in
intertidal or confined salt water environments; and even
less severe for spills on land. He gave an example of the
increase for a spill penalty in anadromous waters, and
noted that the penalties had not been raised since 1977.
Representative Josephson informed members that the previous
committee had considered a couple of amendments relating to
increasing the penalties to the full rate of inflation. The
amendments had not passed.
3:11:46 PM
Mr. Atkinson continued to address the sectional analysis:
Section 3Inflation proofing
Directs the Department of Environmental Conservation
(DEC) to increase civil penalties annually for non-
crude discharges into aquatic environments and onto
public land.
Section 4Civil penalties for discharges of crude oil
Updates penalties for crude oil spills over 18,000
gallons. Existing penalties adjusted for inflation
roughly equal the proposed new penalties.
Mr. Atkinson pointed to the chart on the slide for Section
4. He noted that the existing civil penalties had not been
updated since 1989.
Mr. Atkinson turned back to Section 2 to address a previous
question from Vice-Chair Gara relating to penalties imposed
following the Exxon-Valdez oil spill.
Vice-Chair Gara asked for clarification. He asked if spill
penalties had been adjusted in 1989 or 1990.
Mr. Atkinson responded that the Section 2 of statute had
not been updated.
3:14:25 PM
Mr. Atkinson continued to address the sectional analysis:
Section 5Civil penalties for discharges of crude oil
Calculates penalty amounts by counting produced water
mixed with crude oil as crude oil. Directs DEC to
increase civil penalties annually for crude oil
discharges.
Section 6Civil action for pollution; damages
Doubles the minimum penalty, established in 1976, for
illegal discharges under 18,000 gallons of oil and
crude oil, and discharges of any amount of other
hazardous substances (such as ballast water,
pesticides and paints, and discharges from underground
storage tanks, cruise ships and illegal drug sites).
Doubles the maximum penalty, established in 1976, for
an initial violation. The 1976 minimum and maximum
penalties, adjusted for inflation, would equal twice
the amount of the proposed new minimum and maximum. In
other words, to keep pace with inflation, the minimum
and maximum penalties would have to be quadrupled.
Quintuples the maximum penalty for a continuing
violation.
Allows a court calculating a penalty to increase that
penalty to deter future spills.
Mr. Atkinson explained that Section 6 was another section
where the penalties were not proposed to be adjusted for
inflation, but the amount had been doubled. In his
conversations with DEC, he understood that when the penalty
was low it considered (by spillers) to be just the price of
doing business rather than acting as a deterrent.
Mr. Atkinson continued to address the sectional analysis:
Section 7Civil action for pollution; damages
Allows a civil court to impose punitive penalties.
Conforms to the repeal in Section 14.
Section 8Civil action for pollution; damages
Doubles the minimum penalty for discharges of
hazardous wastes. The proposed new $1,000 minimum
roughly equals the existing penalty adjusted for
inflation.
Doubles the maximum penalty for an initial violation,
which roughly equals the existing penalty adjusted for
inflation.
Multiplies the maximum penalty for a continuing
violation by a factor of 2.5, which roughly equals the
existing penalty adjusted for inflation.
Mr. Atkinson highlighted that none of the penalties
proposed to be raised in the bill had been raised since
they were originally enacted.
3:17:27 PM
Mr. Atkinson continued to address the sectional analysis:
Section 9Civil action for pollution; damages
Doubles the minimum penalty for discharges under
18,000 gallons from cruise ships. The proposed new
$10,000 minimum exceeds the existing penalty adjusted
for inflation, which would be approximately $6,000.
Doubles the maximum penalty for an initial violation.
The proposed new $200,000 maximum exceeds the existing
penalty adjusted for inflation, which would be
approximately $112,000.
Multiplies the maximum penalty for a continuing
violation by a factor of 2.5. The proposed new $25,000
daily maximum exceeds the existing daily maximum
adjusted for inflation, which would be approximately
$12,216.
Mr. Atkinson elaborated that the proposed new penalties
were somewhat ahead of inflation.
Mr. Atkinson continued to address the sectional analysis:
Section 10Civil action for pollution; damages
Describes the factors a court may consider when
determining the economic benefit of non-compliance.
Section 11Civil action for pollution; damages
Describes the factors a court may consider when
determining the need for an enhanced civil penalty to
deter future non-compliance.
Directs the Department of Environmental Conservation
(DEC) to annually increase the daily civil penalty
caps described in Sections 6, 8 and 9 of the bill.
Section 12Administrative penalties for discharges of
oil and crude oil
Authorizes DEC to assess new administrative penalties
(in addition to civil penalties a court may levy) for
serious or repeated illegal discharges. DEC could
penalize the responsible party no less than $500, no
more than $10,000 for each violation.
Describes the factors DEC must consider when assessing
administrative penalties.
Allows DEC to sue a responsible party who doesn't pay
an administrative penalty. The court could not adjust
the administrative penalty, must award the prevailing
party attorney fees and collection costs, and must
subtract the administrative penalty from any eventual
civil penalty.
Directs DEC to count produced water mixed with oil as
oil when determining spill volume. Directs DEC to
inflation proof administrative penalties by increasing
them annually.
Defines "oil," in this section, to include crude,
petroleum and any substance refined from oil.
Mr. Atkinson elaborated that DEC could impose an
administrative penalty before going to court and to
encourage the responsible party to address a spill.
Mr. Atkinson continued to address the sectional analysis:
Section 13Oil spill response plans for commercial
motor vehicles.
Requires a trucking company transporting crude oil to
submit to DEC any spill response plan they're required
to submit to a federal agency. Requires such a company
to comply with their plan.
Section 14Repealers
Repeals legislative disapproval of regulations
regarding civil penalties for oil discharges. Repeals
prohibition against punitive penalties for illegal
discharges of ballast water, pesticides and paints,
and discharges from underground storage tanks, cruise
ships and illegal drug sites. Conforms to Section 7.
Sections 15-17Regulations and effective dates
Allows DEC time to adopt regulations before this bill,
if enacted, takes effect January 1, 2019.
3:22:47 PM
Co-Chair Foster OPENED public testimony.
3:23:11 PM
DOUG MERTZ, PRINCE WILLIAM SOUND REGIONAL CITIZENS'
ADVISORY COUNCIL, indicated that he fully supported the
bill. He noted that the Prince William Sound Regional
Citizens' Advisor Council (RCAC) was created by Congress
after the Exxon-Valdez oil spill, and represented the
interests of fisherman, business, tribes, governments, and
the general population in the oil transport areas of the
sound. The council thought it made sense that the effects
of inflation were counteracted by raising the penalties, so
they were effectively the same. He thought the penalties
had become so small that businesses could find it cheaper
to pay penalties as a regular matter rather than prevent
and preparing for a spill. He stated he had experience
working with spills since 1975. He had observed a
continuing pattern of great public and government interest
after a spill that wanted over the following months. He
thought there needed to be an effective set of inducements
to prevent spills over time. He supported an automatic
inflation adjustment for penalties. He thought the federal
government was being consciously less stringent in the way
it enforced spill and transportation rules on land and at
sea. He thought it was important for the state to keep
constant pressure on the industry to do things right to
prevent and minimize spills.
3:26:51 PM
Vice-Chair Gara thanked Mr. Mertz for his public service.
He recalled a spill in Glacier Bay. He believed an
adjustment to penalties was needed. He mentioned a damages
provision for oil spills. He thought it would be more of a
deterrent to not leave the penalties as they had been since
1977.
Mr. Mertz thought it was important to note that penalties
were not automatically assessed in every instance
regardless who was at fault. The largest spill ever from
the pipeline occurred outside North Pole in 1978. The spill
of 658,000 gallons was a result of an act of sabotage. Much
oil had come out, but no penalties had occurred - there had
been hardly any environmental damage. It was still possible
and expected that DEC and DOL would apply some common sense
when administering the laws.
3:29:00 PM
PATTI SAUNDERS, ALASKA COMMUNITY ACTION ON TOXICS,
ANCHORAGE (via teleconference), testified in support of the
bill. She shared that she was one of the original members
of the Prince William Sound Regional Citizens' Advisory
Committee. She had been a fisherman in Prince William
Sound. She spoke about determining ways to ensure a spill
like the Exxon-Valdez never happened again. The advisory
committee had worked on improving the state's oil spill
laws and ability to respond. She emphasized the need for a
quick response in order to minimize damage to wildlife and
environment. She thought the state had a good system in
place. There had been a comprehensive review of the
Alaska's oil spill system. She thought contingency plans
were one of the best ways to prevent spills. She thought it
would be no burden on the industry to provide the plans to
the state. She discussed the revision of penalty amounts,
and thought penalties acted as a deterrent. She discussed
the importance of the amount of penalties being high
enough. It was not surprising that industry would complain
about increasing penalties. She was disappointed that
elected officials were making the argument on the
industry's behalf rather than protecting citizens.
Ms. Saunders thought Section 4 through Section 9 met the
stated goal. She thought Section 2 and Section 6 did not
meet the goal of accounting for inflation. She believed the
sections should be amended to reflect inflation rates. She
believed the bill was a step in the right direction.
Representative Wilson did not appreciate the testifier's
implication that because the committee was asking questions
they were not respecting the public or the environment.
3:34:42 PM
KARA MORIARTY, PRESIDENT AND CEO, ALASKA OIL AND GAS
ASSOCIATION (via teleconference), read from a prepared
statement:
Co-Chair Foster, Co-Chair Seaton, members of the
Committee, thank you for the opportunity to testify on
and share our concerns with HB 322. For the record, my
name is Kara Moriarty and I am the President/CEO of
the Alaska Oil & Gas Association, commonly referred to
as "AOGA." AOGA is a private trade association that
represents the majority of oil and gas producers,
explorers, refiners, and transporters of Alaska's oil
and gas. This testimony reflects the opinion of our
membership.
First, thank you for allowing us additional time to
analyze this legislation. Second, we welcome the
opportunity to share with you and the public our
commitment to safety and our diligence to prevent and
prepare for the unfortunate incident of a spill, and
to discuss our procedures and responsibilities if a
spill occurs.
We all agree that the State of Alaska must be prudent
and prepare for hazardous spills of all kinds. But I'm
sure you all recognize that the oil and gas industry
is already prepared with a robust response capability
in the event an industry-related spill occurs.
Companies that engage in or intend to undertake oil
and gas exploration, development, production, or
transport activities are required to by federal and
state regulators to have current contingency plans in
place, sufficient spill response equipment available
at a moment's notice, and exercise both plan and
equipment regularly. The annual cost for each operator
to purchase and maintain equipment and carry out oil
spill response drills ranges from $1.8 to $8 million
annually.
Further, oil and gas companies belong to not-for-
profit spill response cooperatives, such as Cook Inlet
Spill Prevention and Response, Inc. (CISPRI) and
Alaska Clean Seas (ACS). These are full-response
organizations that provide the personnel, materials,
equipment, and training to members for responding to
an oil spill. Membership fees start at $500,000 for
producers and $100,000 for non-producers, with a
$20,000 $50,000 annual fee. Daily exercise or
development fees range from $1,250 $2,500.
More specifically, Alyeska Pipeline Service Company
conducted over 200 total drills and exercises between
the pipeline and their Ship Escort/Response Vessel
System, commonly referred to as "SERVS." As you may
know, SERVS exists for prevention and response in
Prince William Sound and Alyeska spends more than $100
million annually on prevention and response readiness.
Drills and exercises along the 800-mile pipeline are
additional investments.
In the event that the Department of Environment
Conservation (DEC) Spill Prevention and Response
Division (SPAR) responds to an oil spill, DEC almost
always recovers the full cost of the response. The
same cannot be said for non-oil industry facilities.
Before we discuss the legislation before us, I'd like
to remind the committee of important statistical
trends in the number and volume of oil spills in
Alaska, especially as it related to oil and gas.
According to most recent DEC SPAR Annual Report, you
can see the 22-year average for the number of total
spills and the volume of the spills across the state.
You can see the trend is going in the right direction
for both categories.
Then if you look at the spills specifically by
facility type, you will see that oil and gas industry
related facilities for the last three fiscal years
averaged only about a quarter of the spills. I say
roughly only because DEC reported facility types in a
different manner for the last three years. However, if
you look at the period from FY 10 14, you would find
that oil and gas exploration and production accounted
for 29% of the spill volume by facility.
Getting even more granular when thinking about the
industry I represent, crude oil spills from FY 15
FY17 accounted for under 2 percent of all spills in
Alaska by volume. Of course, we would all prefer that
figure to be zero, and we strive for zero spills every
day.
3:39:50 PM
Section 5 of HB 322 would force DEC to include
produced water in the calculations of a spill. There
is often a very small amount of crude in the produced
water, but again, the trend line is the same as
before, the volume and number of produced water spills
is also trending downward.
So, this begs the question, what is the purpose of
this bill? If the purpose of the bill is to set higher
fines and penalties to deter spills, I would argue,
for the oil and gas industry, we do not need fines and
penalties to encourage us to be diligent. Why do I say
that?
We are Alaskans. We are environmentalists by choice
and by regulation. We want to protect the beautiful
lands and wildlife that many subsist from or recreate
within. We are raising our families here and we care
about our backyard. In addition to the intrinsic and
environmental reasons, companies also have a direct
economic incentive not to have a spill incident. Our
companies strive for the safest, most efficient
operations possible, and any spill is treated as a
serious event that takes away time and resources from
our main purpose- producing, refining, and
transporting oil.
The cost of prevention, clean-up, and restoration is
already a tremendous deterrent for our industry. It is
not unreasonable to expect the costs for clean up to
exceed what any fine or penalty that may be assessed.
So, for the oil and gas industry it is hard to imagine
a scenario when the fine is less than compliance,
thereby requiring the need to double, or in some cases
triple the fines and penalties that are proposed in HB
322.
If the intent of the bill is to incentivize better
behavior by potential repeat offenders, it would be
helpful to know what specific examples lead to the
assertion that HB 322 will reduce the number and
volume of spills. Ultimately, we believe that fewer
spills is the goal of all Alaskans, but we struggle to
understand how HB 322 will accomplish this goal
without specific examples justifying its necessity.
There is also the potential for this bill to be
perceived as a revenue generator for SPAR. As a brief
reminder to the committee, the SPAR division was
funded entirely by the oil and gas industry until the
passage of a bill that assesses just under one penny
per gallon of wholesale refined fuel products, with
several products excluded.
As you know, the state has an Oil and Hazardous
Substance Release Response Fund, commonly referred to
as the "470 fund." The fund is the primary source of
revenue for the SPAR division to ensure that Alaska is
prepared and capable of responding to spills and other
hazardous materials. This fund allows SPAR to conduct
three main activities; prevention, initial response
and contaminated site cleanup, which includes
reviewing discharge prevention and contingency plans;
conducting training, response drills, inspections, and
tests; and verify an organization's proof of financial
responsibility to clean up spills.
Despite the stated purpose of cleaning up and
preventing spills, the fund has historically been
appropriated to non-spill projects such as
campgrounds, state airports, tank farm remediation,
privately owned greenhouses, and new ferries.
Fortunately, under the current leadership of DEC,
these types of expenditures are no longer being made,
but the corpus of the fund may have been unnecessarily
reduced during years when these types of expenditures
were authorized. Additionally, AOGA has identified
efficiencies for SPAR to consider internally that to
our knowledge have yet to be adopted. These
efficiencies could potentially save the state more
than the projected fiscal note. We also believe that
if DEC is looking for additional revenue for SPAR,
those revenues should be collected from all parties
that utilize functions of the Division.
In addition to the questions we have already asked
above, I'd like to highlight a few portions of the
bill that cause us the most concern.
There has been an argument made that this bill is
needed because penalties have not increased for some
time and that there should be an adjustment tied to
inflation. Again, we struggle with understanding why
increasing fines or making them subject to change
based on inflation will change behavior, given that
the cost of cleanup and remediation is already a
powerful deterrent. And while it's certainly within
your purview to instill an automatic tax increase
every year, we hope you will fully consider the
implications of such a policy.
At the very beginning of the bill, it states that
based on information gathered this bill is necessary.
We would ask the committee to identify what specific
information drew them to this conclusion.
As previously mentioned, Section 5 expands the
definition of oil spills to include produced water.
Claims have been made that produced water is just as
damaging to the environment as straight crude oil.
While produced water typically does contain small
amounts of crude which the percentage of crude oil
can be determined produced water clearly does not
cause the same level of damage as pure crude, and we
do not agree they should be treated the same for the
purposes of this bill.
Section 10 is also a concern as we see this as a
subjective and ambiguous section that could lead to a
series of issues, not the least of which is the
intrusive nature as to how this could be implied, and
the eventual request for confidential financial
records to determine the economic benefit of
noncompliance.
The new administrative penalties in Section 12 are
extremely unclear and another subjective section which
gives the department the potential for broad
enforcement and penalty assessment discretion. This
additional authority granted to DEC to issue new
administrative penalties without clear parameters for
how that is administered leaves us questioning how,
when, or why these penalties would be assessed.
Sections 13 15 expand the need for commercial motor
vehicles to obtain contingency plans approved by DEC
if they are transporting crude oil. Because this bill
expands the definition of oil to include processed
water, such as drilling water or wastewater, this bill
will apply to vehicles on the North Slope and Cook
Inlet as their tankage contents include small amounts
of crude oil. These sections provide no additional
protection, since companies who operate these types of
vehicles already must comply with federal Department
of Transportation regulations requiring response plans
found in 49 CFR 130.31.
Further, the bill could increase the duties of SPAR
division staff by requiring additional contingency
plan reviews, which makes us concerned that the fiscal
note does not include additional staff to accommodate
the added workload. It has been the recent experience
of some of my member companies that the current staff
are struggling to meet the timelines for current
levels of contingency plan renewals and applications
for facilities and regular operations. Because
contingency plans are already required by the federal
DOT and this section would require duplicative plans
to be filed and reviewed with the State, we
respectfully ask that this section be removed from the
bill. Finally, if this section were to remain in the
bill, we would ask for clarifying language explicitly
stating that if DEC does not approve the contingency
plans for commercial vehicles on time, then
transportation can continue under federal DOT
mandates.
In closing, AOGA is opposed to this bill. We urge you
to reconsider moving this bill forward and to work
with the industry and DEC to find alternative ways to
meaningfully incentivize compliance of environmental
safety provisions in Alaska.
Thank you for the opportunity to testify and I welcome
questions from the committee.
3:45:26 PM
Co-Chair Seaton indicated written testimony could be
submitted to the committee.
Co-Chair Seaton CLOSED public testimony.
Co-Chair Seaton reported that there was not a deadline set
for proposed amendments. He asked the department to respond
to the committee with a definition for "produced water."
HB 322 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 216
"An Act relating to transfers from the dividend fund;
creating the restorative justice account; relating to
appropriations from the restorative justice account
for payments for and services to crime victims,
operating costs of the Violent Crimes Compensation
Board, operation of domestic violence and sexual
assault programs, mental health services and substance
abuse treatment for offenders, and incarceration
costs; and providing for an effective date."
3:46:49 PM
Co-Chair Seaton relayed that the bill sponsor was not
feeling well. The committee would only be hearing the
changes to the bill as shown in the committee substitute.
ERIC CORDERO-GIORGANA, STAFF, REPRESENTATIVE CHUCK KOPP,
reviewed the changes in the committee substitute. In
Section 6, the minimum range was lowered to total less than
100 percent of the full amount. The change was made to
provide more discretionary opportunity for the legislature
to appropriate funds. He directed attention to table that
showed changes in percentage ranges. He expanded that there
had been an ongoing conversation with the Office of
Management and Budget, the Legislative Finance Division,
and several other stakeholders to formulate a range that
all the entities were comfortable with.
Co-Chair Seaton asked for a presentation of the bill.
Mr. Cordero-Giorgana reminded that HB 216 established the
Restorative Justice Account. He continued that the second
change would change the effective date from July 2018 to
January 2019.
Co-Chair Seaton asked for more detail.
Mr. Cordero-Girogana relayed that 30 years ago the
legislature had established an account from Permanent Fund
Dividends that no longer belonged to offenders. The fund
was designed to help victims, but over time the funds had
been used for other things. The original recipient of the
funds was the Violent Crimes Compensation Board. Most of
the funds currently went to the Department of Corrections
to pay for inmate healthcare. The intent of the bill was to
set a priority list to put victims first.
Mr. Cordero-Girogana continued that the entities that could
potentially receive the funds was not changing. The change
was a list of percentages and priorities, along with
discretion for the legislature to appropriate those funds
if they were available. Some of the entities were no longer
being funded due to the volatility of the Permanent Fund.
He discussed the gap in compensation and restitution. He
spoke of the huge backlog in court-ordered restitution. The
majority of victims were owed less than $1000. The bill
added the opportunity for the legislature to put some of
the money toward restitution through the Office of Victim's
Rights.
Co-Chair Seaton would have the bill presented by the
sponsor at a later time.
3:51:51 PM
Representative Wilson wanted to understand Section 6 on
page 5 and 6. She wondered if the percentages were added.
Mr. Cordero-Giorgana responded in the affirmative and noted
that there had been changes to the ranges since the last
committee presentation.
Representative Wilson MOVED to ADOPT proposed committee
substitute for HB 216, Work Draft (30-LS0572\L).
There being NO OBJECTION, it was so ordered.
Co-Chair Seaton wanted to ensure the public was familiar
with the version of the bill being considered.
Representative Kawasaki asked for information on a
memorandum that discussed dedicated funds. He thought the
percentages were added to address the matter, but he did
not see the explanation.
Mr. Cordero-Giorgana would make sure to bring the
information back to the committee.
Representative Wilson asked about the percentages. She
thought the percentages offset the reason for the list of
priorities in the bill.
Mr. Cordero-Giorgana referred to a memo from Legislative
Legal Services (copy on file). It indicated that the
legislature had the discretion to appropriate any amount
regardless of the percentage or priority as proposed in the
bill. He thought the language acted as a guideline.
Co-Chair Seaton noted that the percentages reflected
historic use of the fund.
HB 216 was HEARD and HELD in committee for further
consideration.
Co-Chair Seaton reviewed the agenda for the following day.
ADJOURNMENT
3:56:33 PM
The meeting was adjourned at 3:56 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB 322 (RES) Sectional PPT_TA.pdf |
HFIN 3/29/2018 1:30:00 PM |
HB 322 |