Legislature(1993 - 1994)
03/03/1994 05:00 PM O&G
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL & GAS March 3, 1994 5:00 p.m. MEMBERS PRESENT Representative Joe Green, Chairman Representative Pete Kott (arrived at 5:30 p.m.) Representative Harley Olberg (arrived at 5:25 p.m.) Representative Gary Davis Representative Joe Sitton MEMBERS ABSENT Representative Jerry Sanders Representative Jerry Mackie OTHER LEGISLATORS PRESENT Representative Ronald L. "Ron" Larson COMMITTEE CALENDAR *HB 276: "An Act amending the purposes for which money in the oil and hazardous substance release response fund may be expended." HEARD AND HELD OVER (*First public hearing) PREVIOUS ACTION BILL: HB 276 SHORT TITLE: OIL SPILL RESPONSE FUND: FISHER LOSSES SPONSOR(S): REPRESENTATIVE(S) LARSON BY REQUEST,Carney JRN-DATE JRN-PG ACTION 04/07/93 1070 (H) READ THE FIRST TIME/REFERRAL(S) 04/07/93 1070 (H) OIL & GAS, STATE AFFAIRS, RESOURCES, FIN 02/28/94 (H) O&G AT 05:00 PM CAPITOL 124 02/28/94 (H) MINUTE(O&G) 03/03/94 (H) O&G AT 05:15 PM CAPITOL 17 WITNESS REGISTER JIM HERMAN Commercial Fisherman Kalgin Island, Alaska POSITION STATEMENT: Testified in support of HB 276. DAVID CHISSIK Commercial Fisherman Kalgin Island, Alaska POSITION STATEMENT: Testified in support of HB 276. MEAD TREADWELL, Deputy Commissioner Alaska Department of Environmental Conservation 410 Willoughby Ave, Suite 105 Juneau, Alaska 99801 Phone: (907) 465-5050 POSITION STATEMENT: Testified in opposition to HB 276 ACTION NARRATIVE TAPE 94-11, SIDE A Number 002 CHAIRMAN GREEN called the meeting to order at 5:22 p.m. HB 276 - OIL SPILL RESPONSE FUND: FISHER LOSSES Number 012 REPRESENTATIVE RON LARSON stated his appreciation of this opportunity to be heard before the committee. He indicated he is co-sponsoring HB 276 with Representative Pat Carney. Number 016 JIM HERMAN, COMMERCIAL FISHERMAN from Kalgin Island, testified via teleconference. He referred to the 1988 salmon season when he and his neighbor, David Chissik, lost several nets due to an unknown oil spill. Department of Environmental Conservation (DEC) flew to the bay where they were fishing and took samples of the oil. DEC was unable to find the party responsible for the oil spill and told him, at a later date, that the case was closed. He then wrote to the Governor and was told the matter was referred to a committee. He was informed that because there was no legislation, no funds were available in the oil spill fund to be drawn out for this investigation. He pointed out that someone should be liable for unknown oil spills and that HB 276 would protect the fisherman from unknown oil spills in the future. Number 055 DAVID CHISSIK, COMMERCIAL FISHERMAN, testified via teleconference from Anchorage. He referred to the same incident during 1988 when he had to pull his nets to save them from the oil spill. When DEC was contacted they were unable to identify the source of the spill. He expressed his desire for justice so that fisherman would be protected in such situations. He spoke in support of HB 276. Number 084 REPRESENTATIVE GARY DAVIS questioned if DEC actually investigated the situation and determined that the source of the oil remained unknown. Number 090 MR. CHISSIK replied that immediately after identifying the crude oil in the water, DEC was called on the VHF radio and a helicopter was sent out. They took samples but were unable to identify who spilled the oil and it remains a mystery. Number 094 REPRESENTATIVE DAVIS pointed out in that location, Kalgin Island/Cook Inlet, the oil could have come from a tanker coming from or heading to the docks up north, so the oil could have come from a refiner as opposed to an oil company. He asked if this was an obvious deduction. Number 097 MR. CHISSIK replied in the affirmative. Number 100 CHAIRMAN GREEN asked if the nets were located on the west or east side, and upon hearing that the nets were on the east side, he confirmed that this was on the main inlet side. He inquired as to whether the crude oil was very widespread or if it was contained to the east side of Kalgin Island. MR. HERMAN answered that he did not know. However the oil was in ten of his nets, two of which were destroyed. This was mainly on the outside. Also, driftwood, which was entangled in the nets, was covered with an eighth to a quarter inch of oil. Number 127 MEAD TREADWELL, DEPUTY COMMISSIONER, ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION, stated that he was not with the Department in 1988, and although he is not familiar with the incident under discussion, he indicated he would check into it. He said there are routine investigations in spills of this sort, including matching the spill in question to basic samples previously identified. Because of this, he was surprised it was not determined as to whether this was North Slope or Cook Inlet crude oil. MR. TREADWELL explained that under the Response Fund, revenue comes in at a nickel a barrel and is put aside either to respond to spills or to use for operation prevention. As this bill is written, if this incident had occurred and this law was on the books at the time, the fishermen would still have needed to contact DEC to make a claim and DEC would then perform the job of an insurance adjuster so to speak, and investigate the spill. Also, an allocation would be necessary, ahead of time, to determine the amount of funding to be set aside for these spills. When this bill was introduced last year, DEC signaled opposition because there were areas that needed to be studied before moving ahead. He suggested that perhaps Legislative Research, Regional Citizens' Advisory Council, Fish and Game, and/or the Division of Insurance could be involved in further researching this bill. He stated that it would be very hard at this time to give any kind of fiscal note. He said DEC is aware of a large numbers of oils spills that are either crude oil spills or spills that are caused by the fishing industry itself and that they need more information before getting further into the insurance adjustment business. He said some jurisdictions have tackled this problem and he mentioned Greenland as an example. Greenland has something similar to an uninsured motorist policy, and takes out a 10 million dollar insurance policy every year to cover phantom oil spills that affect resources. He said under the Oil Pollution Act of 1990 and/or Damage Assessment Claims, there may be some other way to address this issue. He further stated, in attempts to build a consensus on the Response Fund, since it has been said that fines should be more discretionary in their use, the use of fines might be considered. Finally, another idea worthy of study is to look at this in combination with the limited entry fees in order to cover the cost of uninsured coverage. He said since the time of this incident of 1988, the capacities of the laboratory used to identify different types of oil have been expanded. As a point of discussion, he mentioned that some of the tar balls in Prince William Sound were identified as coming, not from the Exxon Valdez, but from oil spills during the 1964 earthquake. In short, there is technology available today that was not available in 1988. MR. TREADWELL mentioned the two demonstration projects that are in the field right now, both of which depend on local response vehicles. He pointed out that if a fishing vessel is involved in a response and gets its gear damaged, gear can be replaced under that provision. He said under the circumstances described by the testifiers, there is no provision for gear replacement. Number 217 MR. HERMAN assured the commissioner that the spill was real. It was noted to be about three miles long and several hundred yards wide. He said Fish and Game and possibly the Coast Guard should have records of this. He further stated a man with the first name of Paul, possibly with DEC, was present during the spill investigation. This incident occurred during the first part of August or last part of July 1988. Number 235 CHAIRMAN GREEN questioned whether the department had the means to identify a sample through spectrographic analysis to determine the origin of the sample. MR. TREADWELL confirmed that the department has a good track record of matching samples. He re-stated that he was not familiar with this particular incident before today and did not, at this time, know why there was difficulty in identifying the source of the spill. He pointed out from the example of Exxon Valdez, that oil that is spilled even hundreds of miles away can show up in a tide rip. Therefore, the spill could have been from a tanker cleaning its bilges as it approached the Gulf Coast of Alaska, inbound from Valdez. He stated there have been problems with this in the past and those problems have stopped as a result of strong enforcement from DEC and also from federal laws like the International Convention for the Prevention of Marine Pollution, which have come into effect since 1988. He suggested it was possible that DEC was able to identify the source of the crude but not determine, with any certainty, what ship it was. Number 254 REPRESENTATIVE DAVIS asked if the setnet fleet was notified in addition to the driftnet fleet which apparently was alerted by Fish and Game. MR. HERMAN stated they did not alert Fish and Game. His brother called the Federal Aviation Administration (FAA). Evidently Fish and Game saw the oil and alerted fishermen on the VHF radio. He said he just happened to pick up the message on the radio. He explained that because the drift was about five miles away, he did not realize oil was going to get into his nets. Number 271 REPRESENTATIVE JOE SITTON inquired as to the replacement costs of the nets. MR. HERMAN estimated the nets to be about $750 each. Number 280 REPRESENTATIVE LARSON commented that the purpose of this bill was to bring up a concern. He asked if either Mr. Herman or Mr. Chissik wanted to comment on the ideas mentioned by Mr. Treadwell. Number 284 MR. HERMAN said they knew it was not regular oil. He also mentioned that samples were taken, so the Coast Guard and/or DEC must have records of this incident. Number 294 REPRESENTATIVE LARSON said he was referring specifically to Mr. Treadwell's suggestions. Number 300 MR. HERMAN wondered what the purpose of an oil fund is if it is not going to be used for an oil spill such as this one. MR. TREADWELL said there is discussion in other legislation regarding the word, "restoration." He said he wonders what opinion the attorney general might have rendered and also what information DEC has about the source of this oil spill. He said it is possible that the current definition of "restoration" might already cover this particular incident. He pointed out the Governor has made a very strong case with Exxon Valdez civil trustees, that true restoration does cover restoring economic as well as environmental damages. Number 322 REPRESENTATIVE HARLEY OLBERG asked if it was relatively easy to differentiate between crude and bunker fuel from a ship's bilges. MR. TREADWELL replied that it involved how weathered the crude or bunker was, and also how convoluted the mixture was. He said there has been a lot of success in this identification process. Number 335 REPRESENTATIVE OLBERG asked if there were representative samples of all the crude produced in Alaska. MR. TREADWELL confirmed that all samples are kept. He also mentioned that the composition of crude does change over the years. Number 338 REPRESENTATIVE OLBERG said the possibility of insurance is perhaps something that a Regional Citizen's Advisory Council (RCAC) could pursue as a more localized function. NUmber 342 REPRESENTATIVE DAVIS said that RCACs may include the local fishing organizations. Number 345 MR. TREADWELL informed the committee that RCACs include as ex-officio members, DEC and other agencies, and they work together to try to identify problems ahead of time. MR. TREADWELL stated the proposed solution, although simple, is complicated in its application. He said although he is sympathetic to the fishermen's situation, he can imagine the possibility of fraudulent situations. He pointed out that going into the fraud protection business is not a mission to assume right now if there are other ways to address the problem. Number 371 REPRESENTATIVE DAVIS stated he felt sympathetic for fishermen who suffer economic losses through no fault of their own. He said having lived in the Cook Inlet area for 30 years and knowing the fishing groups and oil groups, he thinks there will be a group that can address this concern and arrive at a solution if the legislature does not. He explained to Mr. Chissik and Mr. Herman that the 470 Fund, the fund being considered for compensating this type of loss, is currently undergoing close scrutiny and discussion in the Capitol. Number 390 CHAIRMAN GREEN was informed by the long-distance operator that there was difficulty with the telephone system and the teleconference calls may not be on-line for approximately five minutes. Number 400 REPRESENTATIVE SITTON questioned a citizen's possible recourse when no regulatory avenue is available for use in recovering losses. He wondered if one's recourse was to go to court and sue the state; the state being the party responsible for ensuring there is a safe environment to operate in. Number 412 MR. TREADWELL expressed uncertainty that a third party would prevail against the state in that circumstance. He illustrated this point by drawing an analogy to a wild fire in which case the source is unknown, but there is much damage that ensues. He said in this case, we do have an oil spill fund, we do try to restore damages to the environment, and we do generally try to help citizens. He further stated although we have a responsibility to stand up for our citizens, the solution that is drafted in this bill at this point would open it up a little bit too much. Number 440 CHAIRMAN GREEN mentioned that this issue might be addressed elsewhere, on the 470 Fund. He asked for the wish of the committee. Number 422 REPRESENTATIVE LARSON stated that Mr. Treadwell brought up valuable ideas regarding the need for further research of this incident and possibly the problems which existed in 1988 have already been addressed. Number 465 CHAIRMAN GREEN agreed that the ramifications of this research would be important information for the committee to have and he asked that Mr. Treadwell address this issue. Number 473 REPRESENTATIVE OLBERG said his particular interest was with the insurance aspect of this concern. Number 475 REPRESENTATIVE LARSON thanked the committee and said he is looking forward to continued work on this issue. Number 480 CHAIRMAN GREEN stated the committee would hold HB 276 in abeyance. CHAIRMAN GREEN adjourned the meeting at 5:59 p.m.