Legislature(1993 - 1994)

03/03/1994 05:00 PM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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              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.                            

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