Legislature(1999 - 2000)
04/14/2000 01:20 PM House RES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
April 14, 2000
1:20 p.m.
MEMBERS PRESENT
Representative Bill Hudson, Co-Chair
Representative Beverly Masek, Co-Chair
Representative John Cowdery, Vice Chair
Representative John Harris
Representative Carl Morgan
Representative Ramona Barnes
Representative Jim Whitaker
Representative Reggie Joule
MEMBERS ABSENT
Representative Mary Kapsner
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 273(RLS)(title am)
"An Act regarding oil discharge prevention, and relating to
contingency plans and proof of financial responsibility for all
self-propelled nontank vessels exceeding 400 gross registered
tonnage and for railroad tank cars; authorizing inspection of
nontank vessels and trains; and providing for an effective date."
- MOVED HCS CSSB 273(RES) OUT OF COMMITTEE
HOUSE BILL NO. 347
"An Act relating to the disposition of surplus moose, caribou,
deer, Dall sheep, elk, and musk oxen; and providing for an
effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: SB 273
SHORT TITLE: OIL SPILL RESPONSE; NONTANK VESSELS & RR
Jrn-Date Jrn-Page Action
2/15/00 2305 (S) READ THE FIRST TIME - REFERRALS
2/15/00 2305 (S) RES, FIN
2/21/00 (S) RES AT 3:00 PM BUTROVICH 205
2/21/00 (S) Heard & Held
2/21/00 (S) MINUTE(RES)
3/03/00 (S) RES AT 3:00 PM BUTROVICH 205
3/03/00 (S) Heard & Held
3/03/00 (S) MINUTE(RES)
3/20/00 (S) RES AT 3:00 PM BUTROVICH 205
3/20/00 (S) Moved CS(Res) Out of Committee
3/20/00 (S) MINUTE(RES)
3/21/00 2677 (S) RES RPT CS 5NR SAME TITLE
3/21/00 2677 (S) NR: HALFORD, MACKIE, TAYLOR, GREEN,
3/21/00 2677 (S) PETE KELLY
3/21/00 2677 (S) FISCAL NOTES (DEC, DOT)
3/24/00 (S) FIN AT 9:00 AM SENATE FINANCE 532
3/24/00 (S) Heard & Held
3/27/00 (S) FIN AT 9:00 AM SENATE FINANCE 532
3/27/00 (S) Moved CS(Fin) Out of Committee
3/27/00 2745 (S) FIN RPT CS 2DP 6NR SAME TITLE
3/27/00 2746 (S) DP: TORGERSON, PARNELL; NR: PHILLIPS,
3/27/00 2746 (S) GREEN, ADAMS, PETE KELLY, WILKEN,
LEMAN
3/27/00 2746 (S) PREVIOUS FISCAL NOTES (DEC, DOT)
3/30/00 (S) RLS AT 11:45 AM FAHRENKAMP 203
3/30/00 (S) MINUTE(RLS)
3/31/00 2814 (S) RLS TO CAL W/CS 1OR 03/31
NEW TITLE
3/31/00 2814 (S) PREVIOUS FISCAL NOTES (DEC, DOT)
3/31/00 2815 (S) READ THE SECOND TIME
3/31/00 2815 (S) RLS CS ADOPTED UNAN CONSENT
3/31/00 2815 (S) ADVANCED TO THIRD READING
UNAN CONSENT
3/31/00 2815 (S) READ THE THIRD TIME CSSB 273(RLS)
3/31/00 2816 (S) AM NO 1(TITLE AM) ADOPTED
UNAN CONSENT
3/31/00 2816 (S) PASSED Y16 N2 E2
3/31/00 2816 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
3/31/00 2819 (S) HALFORD NOTICE OF RECONSIDERATION
3/31/00 2819 (S) RECON TAKEN UP SAME DAY
UNAN CONSENT
3/31/00 2820 (S) PASSED ON RECONSIDERATION Y17 N1 E2
3/31/00 2820 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
3/31/00 2821 (S) TRANSMITTED TO (H)
4/03/00 2831 (H) READ THE FIRST TIME - REFERRALS
4/03/00 2831 (H) RES, WTR, FIN
4/12/00 (H) RES AT 1:45 PM CAPITOL 124
4/12/00 (H) Heard & Held
4/12/00 (H) MINUTE(RES)
4/14/00 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
PAT CARTER, Staff
for Senator Drue Pearce
Alaska State Legislature
Capitol Building, Room 111
Juneau, Alaska 99801
POSITION STATEMENT: Answered question with regard to CSSB
273(RLS)(title am).
LARRY DIETRICK, Acting Director
Division of Spill Prevention & Response
Department of Environmental Conservation
410 Willoughby Avenue, Suite 105
Juneau, Alaska 99801-1795
POSITION STATEMENT: Answered question with regard to CSSB
273(RLS)(title am).
SENATOR DRUE PEARCE
Alaska State Legislature
Capitol Building, Room 111
Juneau, Alaska 99801
POSITION STATEMENT: Testified as the sponsor of CSSB
273(RLS)(title am).
MICHELE BROWN, Commissioner
Department of Environmental Conservation
410 Willoughby Avenue
Juneau, Alaska 99801-1795
POSITION STATEMENT: Testified on CSSB 273(RLS)(title am).
DOUG DONEGAN
Trident Seafoods Corporation
5011 Jewel Lake Road
Anchorage, Alaska 99517
POSITION STATEMENT: Testified on CSSB 273(RLS) (title am).
PETE CARAY, Captain
[Address not provided]
Homer, Alaska
POSITION STATEMENT: Testified on CSSB 273(RLS) (title am).
JIM BURNS
16200 Luna Street
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on CSSB 273(RLS) (title am).
JOE LEBEAU
Alaska Center for the Environment
[Address not provided]
POSITION STATEMENT: Testified on CSSB 273(RLS) title am).
TOM RUETER
North Star Maritime Agencies
790 Ocean Dock Road
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on CSSB 273(RLS) (title am).
JIM BUTLER, General Counsel
Alaska Chadux Corporation
721 West 1st Avenue
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on CSSB 273(RLS)(title am).
JEFF THOMPSON
Alaska Maritime Agencies
4341 B Street, Suite 101
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on CSSB 273(RLS) (title am).
JOE KYLE, Executive Director
Alaska Steamship Association
234 Gold Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in opposition to CSSB
273(RLS)(title am) as presently written.
HANS ANTONSEN, Captain
President
Southeast Alaska Pilots' Association; and
Co-Chairman, Marine Safety Task Force
1621 Tongass Avenue, Suite 300
Ketchikan, Alaska 99901
POSITION STATEMENT: Testified in support of CSSB 273(RLS)(title
am).
ERNEST PIPER, Vice President
Safety and Environment
Alaska Railroad Corporation
Department of Community & Economic Development
P.O. Box 107500
Anchorage, Alaska 99510-7500
POSITION STATEMENT: Testified on CSSB 273(RLS)(title am).
BRECK TOSTEVIN, Assistant Attorney General
Environmental Section
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Answered question regarding the Intertanko
case.
ACTION NARRATIVE
TAPE 00-35, SIDE A
Number 0001
CO-CHAIR MASEK called the House Resources Standing Committee
meeting to order at 1:20 p.m. Members present at the call to
order were Representatives Hudson, Masek, Morgan, Barnes,
Whitaker and Joule. Representatives Cowdery and Harris arrived
as the meeting was in progress.
SB 273 - OIL SPILL RESPONSE; NONTANK VESSELS & RR
CO-CHAIR MASEK announced that the committee would consider CS FOR
SENATE BILL NO. 273(RLS)(title am), "An Act regarding oil
discharge prevention, and relating to contingency plans and proof
of financial responsibility for all self-propelled nontank
vessels exceeding 400 gross registered tonnage and for railroad
tank cars; authorizing inspection of nontank vessels and trains;
and providing for an effective date."
CO-CHAIR MASEK indicated that there were five amendments before
the committee for consideration.
CO-CHAIR HUDSON said he believes the amendments have come before
the committee as a way to improve the bill. He made a motion to
adopt Amendment 1, which read:
Page 4, following line 6:
Insert a new subsection to read:
"(g) A nontank vessel that is
conducting, or is available only for
conducting, oil discharge response operations
is exempt from the requirements of (a) of
this section if the nontank vessel has
received prior approval of the department.
The department may approve exemptions under
this subsection upon application and
presentation of information required by the
department."
CO-CHAIR MASEK asked if there were any objections. There being
none, Amendment 1 was adopted.
CO-CHAIR HUDSON made a motion to adopt Amendment 2, which read:
Page 4, lines 1-6:
Delete existing language.
Insert:
(f) In place of the requirements of
(a)(1), (b)(1), and (c)(1) of this section,
the department may adopt regulations by
negotiated regulation making under AS
44.62.710 - 44.62.800 to provide for
alternative means to obtain equivalent levels
of spill prevention and response, including
fleet plans, generic contingency plan
contents established by regulation, and
streamlined contingency plans with membership
in a non-profit corporation that is a primary
response action contractor.
LETTER OF INTENT
Nothing in this Bill is intended to alter the liability
provisions of contingency plan holders, parties
responsible for a discharge of oil, or oil spill
response action contractors. Unless specifically
identified as a contingency plan holder, a non-profit
corporation that is primary response action contractor
and provides a portion of a department-approved
contingency plan is not by virtue of providing that
portion of the contingency plan deemed a contingency
plan holder for purposes of AS 46.04.030.
REPRESENTATIVE BARNES objected for the purpose of discussion.
She referred to Amendment 2, where it read, "the department may
adopt regulations by negotiated regulation making under AS
44.62.710 - 44.62.800". She indicated that nothing in the
amendment stops them [the department] from promulgating
regulations that no one agrees with, especially with regard to
the "may."
PAT CARTER, Staff for Senator Drue Pearce, Alaska State
Legislature, explained that it is not new language; the "may" has
been there. The intent was to allow them [the department] to
have maximum flexibility, but the intent has always been that
they adopt the regulations through the negotiated regulation
["neg reg"] process.
REPRESENTATIVE BARNES asked if she is to understand that the
amendments have only been approved by the sponsor of the bill,
since it is the bill sponsor's staff person speaking to them.
CO-CHAIR HUDSON indicated that other people would be testifying.
REPRESENTATIVE BARNES asked where the amendments came from.
CO-CHAIR HUDSON indicated that the amendments did come from the
prime sponsor [Senator Pearce].
Number 0814
MR. CARTER explained that the amendments are in response to
discussions that have taken place in the working group meetings.
They had three working group meetings prior to the meeting at the
Department of Environmental Conservation (DEC), and at the DEC
meeting there continued to be discussion about limiting the
liability to a Primary Response Action Contractor (PRAC). Right
now, the contingency plan [C-plan] holder is the responsible
party; the cooperatives were concerned, if they provided all or
large portions of the C-plan, as to whether they would be
considered civilly and criminally liable. The actual correction
to subsection (f), page 4, is the removal of the language on line
5, "and a contingency plan holder."
REPRESENTATIVE BARNES wondered if the C-plan holder - being the
contract group - is then exempt from liability.
MR. CARTER explained that they had tried to figure out a way to
bring them under the umbrella. However, through the working
group, they had decided it was best if the C-plan holder was
still the responsible party, even if the cooperatives provided a
vast majority of the compliance measures. What they decided on,
without going back and rewriting the whole statute, was that the
responsible party would still be liable unless they opted to come
under the umbrella of a cooperative. Mr. Carter added that the
cooperative said, "Well, we'll be willing to provide all these
things. We just don't want to be subject to criminal and civil
liabilities." He said that was the intent of the correction.
REPRESENTATIVE BARNES responded, "That's the most preposterous
thing I've ever heard of." She pointed out that the carriers
paying into groups like Alaska Chadux Corporation and other
nonprofits would still get stuck with the liability if everything
does not go according to plan. She said that to her something
does not quite ring true.
CO-CHAIR HUDSON expanded on Representative Barnes' question:
I am a ... nontank vessel - say, a cruise ship vessel -
and I have to go out and pay to have a ... response
action contractor, or a group like SEAPRO [Southeast
Alaska Prevention Response Organization], or Chadux, or
something of this nature there; and in this exemption
here, we would hold the response action contractor not
liable.
REPRESENTATIVE BARNES indicated that Representative Hudson did a
good job interpreting what she was asking.
Number 1160
LARRY DIETRICK, Acting Director, Division of Spill Prevention &
Response, Department of Environmental Conservation, replied that
the purpose of the change, as included in the letter of intent,
is to clarify, to those who are concerned, that there is
absolutely no change intended in the current underlying liability
structure. With regard to responsibility for PRACs, they are
already under a burden, under the existing law, such that if they
fail to perform under their contracts, they are liable;
therefore, there is still a shared liability here. He explained
that if a nontank vessel signs up with a PRAC, they have a
contractual arrangement. A PRAC, who is now immune to liability
under law, would lose that immunity if the PRAC failed to perform
those services. They have to live up to and respond as agreed
with whomever they contract with.
REPRESENTATIVE BARNES asked whether, if they do not totally
perform for some reason, the person paying them money is still
criminally liable.
MR. CARTER indicated that is the way it currently works.
However, under the proposed amendment [CSSB 273(RLS)(title am)],
if the PRAC actually does provide a portion of the C-plan
compliance, the civil and criminal penalty cannot go through the
cooperatives.
CO-CHAIR HUDSON restated that what Representative Barnes is
asking is what liability the vessel owners will have, [under] the
nontank vessel contracts with SEAPRO or Chadux to move on their
behalf, should they have a grounding.
MR. CARTER replied that if any particular PRAC did not fulfill
its contractual obligations, then it would be subject to
liability.
CO-CHAIR HUDSON wondered whether, if [the PRAC] did the contract
but made mistakes, there would be a shared liability.
MR. CARTER explained that if [PRACs] do not fulfill their
contractual obligations, then they are liable for whatever they
do not fulfill.
REPRESENTATIVE BARNES indicated she understands clearly what is
being said: if a nonprofit has a contract and performs at
whatever level, but is not totally able to respond, then the
liability goes back to the vessel that has been paying the
nonprofit. She said that in her way of looking at it, the vessel
does not have much of an insurance policy.
SENATOR DRUE PEARCE, Alaska State Legislature, sponsor of CSSB
273(RLS)(title am), clarified that under present law and under
CSSB 273(RLS)(title am) if a vessel goes aground and is not a
member of a cooperative the vessel is responsible and has the
entire liability. For example, if Petro Star Inc. had a barge go
aground and SEAPRO did not respond in a proper manner then SEAPRO
is responsible for their response. Petro Star Inc. would then
have the right of action against SEAPRO, but the owner is always
responsible under CSSB 273(RLS)(title am) and under present law.
REPRESENTATIVE BARNES indicated that she clearly understands that
the owner of the vessel under present law is liable, but the
proposed law is adding another layer. For example, she said,
"You're still liable to a degree, but we forced you to pay into
these nonprofits, and for whatever reason that they may not be
adequately able to perform, we have gone right back to the owner
of that vessel in the same manner as under present law."
CO-CHAIR HUDSON replied that he reads it the same way, except
with Amendment 2 he believes that it shares the culpability
between the owners and whomsoever they contract with. He
believes that Amendment 2 is a necessary piece, because without
it they are placing the entire burden on the vessel owner, who
would have to - by law, with the passage of CSSB 273(RLS)(title
am) - have a C-plan in place.
REPRESENTATIVE BARNES withdrew her objection, indicating
agreement that Amendment 2 does make the bill a little bit
better. She added that under existing law, if they are talking
about tank vessels, they are talking about giant vessels.
However, most of the things covered under CSSB 273(RLS)(title am)
are small potatoes compared to the tanker vessels, which do not
have the same deep pockets that the oil companies have.
CO-CHAIR HUDSON agreed with that explanation and restated the
motion to adopt Amendment 2. There being no objection, Amendment
2 was adopted.
Number 1730
CO-CHAIR HUDSON made a motion to adopt a conceptual amendment,
Amendment 3, "[Under Section 7] that would require that the
commissioner [of DEC] negotiate regulations establishing
prevention credits, which could result in lower planning
standards."
CO-CHAIR HUDSON explained that a number of the "industry people"
who will now be subject to this law believe that there are
different circumstances for different vessels; for example, the
Greens Creek Mine and Red Dog Mine vessels have different
standards than the cruise ships. Therefore, this amendment would
require the commissioner to establish prevention credits.
REPRESENTATIVE WHITAKER indicated that he was having difficulty
determining what [the "industry people"] are conceiving.
CO-CHAIR HUDSON noted that [lobbyist] Paul Fuhs is the maker of
the amendment and believes that it is pretty much exactly as he
[Co-Chair Hudson] stated it.
Number 1936
MR. DIETRICK pointed out that the fundamental concept is having
prevention credits as a way to create an incentive for vessels to
go beyond mandatory onboard requirements. The challenge is to
create in the negotiated regulation process a means by which they
can have a proper incentive to do that. He explained that in
speaking with Mr. Fuhs, they conceptually agreed that they want
to create the right economic incentive to do that; therefore, by
having recommended prevention measures and having them weighted,
they can create a system by which the insurers and the
cooperatives then can discount their fees, based on the
additional prevention measures that a vessel carries.
REPRESENTATIVE WHITAKER said he understands and is in agreement.
CO-CHAIR MASEK asked if there were any objections to adopting
Amendment 3. There being none, Amendment 3 was adopted.
CO-CHAIR HUDSON indicated that Amendment 4 comes from the Alaska
Maritime Agencies, who have suggested that on page 4, line 7, the
additional language, "For the purpose of this act, the department
[DEC] is authorized to negotiate with vessel agents to assure
compliance with the act by the vessels they represent." He made
a motion to adopt Amendment 4. There being no objection,
Amendment 4 was adopted.
Number 2124
REPRESENTATIVE BARNES indicated that in the last meeting she had
asked for a proper fiscal note from the railroad; she
acknowledged receipt of that. For the first year, it would be
$1,650,000, and for subsequent years, it would cost the railroad
$750,000 a year. She pointed out that what she had figured on
the other fiscal notes was $731,507. She stressed that it is a
very expensive bill for the agencies of government. She also
wondered what it was going to cost individual vessel [owners] to
comply, and indicated something had been received from Chadux
regarding a fee schedule. She asked if someone could relate how
the vessels - and what they carry - relate to the fees; for
example, Chadux has an annual fee, an initiation fee and a vessel
capacity fee.
Number 2278
MR. CARTER explained that he had broken it down using Chadux's
proposed fee schedule. The biggest concerns that they have been
addressing, as far as the fee schedule, have been with the
tramper vessels, which are doing one-port calls. Under Chadux's
fee schedule for a tramper vessel hauling 200 gallons of fuel and
approximately 5,000 tons of fish, the fee would be $550 for a
two-week port call. He noted that if [the vessel] is there only
two days, the fee would still be $550 because there is a minimum
charge. He calculated that for two weeks at $550 and 5,000 tons
of fish, it would be 11 cents a ton. On a coal ship coming in
and out of Seward, the loads vary from 50,000 to 80,000 tons. He
had run the calculation at 60,000 tons of coal with a 200,000-
gallon fuel capacity at $550, and it would be less than 1 cent
per ton.
REPRESENTATIVE BARNES asked Mr. Carter if he would give her the
bottom line, because it is difficult to follow without the
calculations in front of her.
MR. CARTER said that he would give Representative Barnes a copy
of his calculations. He continued, saying the cruise ships carry
2,000 passengers at 20 trips per year, over a four-month period,
and have a million-gallon capacity for fuel. Calculated on a
quarterly rate and a monthly rate at $6,050 divided by 40,000
passengers, it ends up being 15 cents per passenger.
CO-CHAIR HUDSON wondered about the railroad.
MR. CARTER indicated he was perplexed by the railroad's fiscal
note as well. It shows $750,000 per annum after the initial
capital improvements. He explained that the railroad hauls up to
50 cars at 22,000 gallons per car, which is about a million
gallons, and under Chadux that would be $16,000 per year - quite
a difference from $750,000. He said that in speaking with the
railroad it seemed that they use cleanup costs as part of the
assessment, assuming that they would have to hire other
contractors.
CO-CHAIR MASEK invited (DEC) Commissioner Michele Brown to the
table.
REPRESENTATIVE BARNES commented that she just did not want the
railroad's fiscal note to be left unchallenged.
Number 2530
MICHELE BROWN, Commissioner, Department of Environmental
Conservation (DEC), read her testimony into the record:
We're here today discussing this bill because we have a
gaping hole in the state's oil spill prevention and
response safety net.
At the 10-year commemoration of the Exxon Valdez
disaster, a number of us involved in this subject took
a hard look at the significant improvements that have
been made, what was working and what was not, and
analyzed the remaining risks.
A major remaining risk is that posed by the unregulated
tank vessels and the railroad. Alaska has arguably the
best oil spill prevention and response program in the
United States, if not the world, for those vessels it
covers. This excellence is demonstrated by the routine
requests for program development assistance we get from
around the world, and the favorable reception our oil
support industry businesses get when they offer their
services worldwide. But our program has no provisions
whatsoever - that's zero requirements - for spill
prevention and response preparedness for the nontank
vessels operating in Alaska's waters and for the
railroad, although both at times carry even greater
amounts of oil.
Over the last 20 years, we have had several railroad
spills and 22 serious spills from the unregulated tank
vessels, and a like number of incidents where spills
were narrowly averted. When we compare this record
with the record we have for the covered vessels, we
know that the unregulated vessels are having far more
incidents that could lead to spills, far more spills
than the vessels the law currently covers, and far more
volumes of oil actually spilled.
This bill mends the hole in the safety net by requiring
that all vessels carrying a significant volume of oil
participate in the state's safety net. Surely, the
terms of that participation in the safety net will be
different than the currently covered vessels, but the
basic obligation to prevent and be prepared to respond
to a spill will be uniformly applied to all vessels
operating in our waters and to the railroad.
This is critical, both for the obvious protection
enhancement it provides [and] to level the playing
field on the marine side for the costs for spill
preparedness and response. Right now, the backbone of
the state's response network is provided by the covered
vessels through their contractors and co-ops, and by
the state's oil spill response fund, which is paid by
the crude oil producers.
If one of the unregulated vessels has a spill, it can
try, after the fact, to get a contract for response
from a co-op or a private contractor, or the state will
have to step in using the response fund, or the Coast
Guard will step in using public monies. Even if the
owner of the vessel which had the spill ultimately pays
back those costs, they are still gaining a benefit from
the preparedness infrastructure that others had to
develop at those companies' sole expense.
It is time to have all involved participate in Alaska's
oil spill safety net. Yes, there are many details to
be worked out on how we do this so that it is not too
costly, not too administratively burdensome, and
addresses the risk in the most common-sense, practical
manner. But to do that, we need to start at the basics
by establishing the most fundamental principle: and
the principle is that the railroad and all who carry
large amounts of oil in Alaska's water need to be part
of the safety net.
Again, the levels and the means of participation should
be tailored to the risks posed and to specific elements
of each industry's operations and market realities.
But what is before you today is the most basic policy
question: should all who ply our waters carrying large
amounts of oil be part of the safety net? Every other
West Coast state and British Columbia [have] already
made this choice. Only Alaska remains unprotected.
I totally agree that there are many issues to be
resolved in how to accomplish this basic policy. The
questions posed are valid and important points, to be
thoroughly vetted and addressed as we collectively
develop the most efficient and effective way to mend
the safety net without unduly burdening our important
industries.
I truly believe, though, that the best way to get there
is by first establishing the policy that we need
universal participation in the safety net and in the
dialogue on how best to achieve the goal.
We are not asking people - as I have heard say - to
simply trust us. This is not a trust issue; that
implies a passivity that we don't want, because we do
not want to develop this program without the active
collaboration of those affected by it. Rather, in my
view, this is a participation and a responsibility
issue. The nontank vessels and the railroad need to be
part of the solution.
The best way to predict the future is to create it. If
we can start, with this bill, establishing the policy
that the railroad and all who operate in our waters
need to help protect them, I have no doubt that the
creative minds in our industries and our agency can
devise a program that accomplishes the goal effectively
and practically, and can be a model like the rest of
the oil spill prevention and response program.
Number 2802
CO-CHAIR HUDSON asked how the negotiated rule making process will
go forward, when going into a totally new system which requires
that vessels that have operated for many years in Alaska must
assume financial responsibility and take action to be prepared to
clean up a spill.
COMMISSIONER BROWN explained that they see the negotiated rule
making process as the embodiment of the working groups that they
have seen a lot of in DEC. If they are going to have a program
that makes new requirements on people, then the only way it is
going to work is to have those people help in the drafting of the
regulations.
CO-CHAIR HUDSON surmised that [DEC] would develop the regulations
in coordination with professional agencies like the U.S. Coast
Guard.
COMMISSIONER BROWN affirmed that.
CO-CHAIR HUDSON said he understands that it is a give-and-take
system where people come to the table and understand what their
capabilities are; it is negotiated and ultimately embodied in
regulation.
COMMISSIONER BROWN explained that there are three places for
input: in the negotiation session, during the formal public
comment [period], and during one or two legislative check-ins to
make sure the process is working.
CO-CHAIR HUDSON wondered if the participation includes all the
parties that have an interest in it, including the shipping
companies and public interest groups.
TAPE 00-35, SIDE B
COMMISSIONER BROWN [begins midspeech because of tape change]
said, "... these are charged with actually promulgating
regulation, but that's why there's legislative check-in times in
this process."
CO-CHAIR HUDSON wondered if the process has been used in the
past.
COMMISSIONER BROWN replied that this particular negotiated
regulation process in statute has not been used, because it was
just passed. But they have used negotiated rule making and
working groups extensively in the last several years.
CO-CHAIR HUDSON wondered if Commissioner Brown felt confident
that it would be a good, democratic process.
COMMISSIONER BROWN responded that it is a good process. It can
be a bit painful at times, but it always produces a far better
result.
CO-CHAIR HUDSON wondered if it would be akin to when they
developed the Forest Practices Act.
COMMISSIONER BROWN agreed that it would be very much like that.
Number 2907
DOUG DONEGAN, Trident Seafoods Corporation, came forward to
testify. He stated:
Alaska is a large state with a tremendous coastline and
a limited road system. As a consequence, our citizens
and businesses are extraordinarily dependent on vessels
to move supplies and products. We are especially aware
of this in the seafood industry. Seafood processing
occurs over a vast geographical area of the state,
including many operations in remote areas. During the
coarse of a year, a single processing vessel may
operate in Norton Sound, Bristol Bay, the Pribilofs and
Southeast Alaska. Freighters from throughout the world
come to these operations to receive and ship [the]
finished product. Tender vessels collect fish from
fishermen and deliver it to floating and land-based
facilities. This bill will affect all of these types
of operations.
Unfortunately, at this state, we do not know what will
be required if this law is passed or how much it will
cost. In theory, operators will be able to join
response groups, but we do no know if they can provide
a level of response the department will accept in
remote areas far from airports and roads. It may be
impossible to find response providers in some areas, or
fees may be prohibitively expensive.
We have no clear [concept] of how the Act will apply to
foreign freighters that come into Alaska on short
notice to pick up finished [the] seafood product. This
Act may reduce the number of these vessels available to
ship product. Potentially, these requirements might
force fundamental changes in how and where seafood is
processed. I think we are moving far too quickly on a
bill that is going to have unpredictable consequences.
Legislation that is this significant must be carefully
and cautiously developed. It is not safe to assume
that what works in California and Washington is going
to work in Alaska.
I know that Senator Pearce has made a great effort to
address the many concerns with this bill. She has
established work sessions in an attempt to identify
potential problems and solutions. But, frankly, we did
not get started soon enough, and we do not have enough
time left. More and more questions keep popping up,
and there are many fundamental uncertainties.
Why can't we take the time to do this right? I do not
think there is any compelling evidence that the current
system is egregiously inadequate or deficient. We must
remember that many of these vessels fall under current
federal regulations enforced by the Coast Guard. These
include financial responsibility, reporting
requirements, and response capability requirements that
are based on risk. If necessary, the Coast Guard
responds to spills, cleans them up and bills the
responsible party. It seems to me that they do a good
job, and I would hazard to guess they have more
resources at their disposal than any private response
provider could ever provide.
This bill will not prevent spills. Vessels run
aground, operators make mistakes, systems and equipment
fail. These things will continue to occur, with or
without this bill. The vessels that would fall under
this Act's requirements are much smaller than oil
tankers and carry comparatively tiny amounts of fuel.
Most of them use lighter fraction fuels that pose less
risk to our environment, and even in the worst case
scenario, their potential to damage the environment is
completely insignificant compared to an oil tanker.
Alaska certainly has a legitimate interest in
protecting its waters. There may be inadequacies and
gaps in the current system that need to be addressed.
But this is a large state with a heavy reliance on
vessels. We need to proceed cautiously. I suggest
that we fund the study to look at this in a little bit
different way. Just back up, put the nontank vessels
in a category that (indisc.) and report back to the
legislature.
I think the study should include the following:
1. A comprehensive review of nontank vessels, including
existing regulations and requirements, areas and types of
operations, and a general review of current private and
government response capabilities.
2. Identify inadequacies and associated risks in the
current system.
3. Propose new requirements that would eliminate or
reduce inadequacies and risks.
4. Consider various options that operators could use
to meet proposed requirements.
5. Perform a cost/benefit analysis that evaluates the
level of risk posed by inadequacies versus the cost of
implementing new requirements.
6. Review the effectiveness and problems of similar
legislation in other states.
This study should provide the essential information we
need to have a bill that fixes the problems with the
least impact on our industries.
Number 2907
PETE CARAY, Captain, testified via teleconference from Homer. He
indicated that he works with Alaskan marine pilots in Western
Alaska. He stated:
Our state-piloted waters are unique for a variety of
reasons, one of which is because of the remote location
throughout our state waters where commercial shipping
activity takes place. This is particularly true in
Western Alaska. Normally in the Lower 48 or, for that
matter, the rest of the world, ships go to established
ports that have infrastructures that can accommodate
the commerce which takes place. Out West, that's not
always the case. We oftentimes take our ports out to
the remote locations where the ships conduct
activities.
Because ports out in Western Alaska are sometimes set
up in Timbuktu, if you will, this results in commercial
shipping activity in extremely remote and
environmentally sensitive areas where there is no
shoreside infrastructure to respond to any sort of
environmental calamities when they occur as a result of
these activities. I choose my words here carefully -
"when" instead of "if" - because, politely stated, in
my business, stuff happens. Western Alaska is a region
of extremes and hazards, and there's a lot of risk that
comes along with moving ships out there.
In the areas where little or, in some cases, no
infrastructure exists, a plan - such as this piece of
legislation provides for - would prevent some marine
casualties from happening in the first place. And, in
the unfortunate event of others taking place, I believe
it would limit their destructive effects. I believe
people's intentions are admittedly always for the best,
but good intentions alone are not enough to prevent
marine casualty.
Self-regulation of the shipping industry by the
shipping industry to police after themselves, when and
where necessary, is not a responsible solution. There
needs to be accountability. Without it, there will
never be 100 percent compliance, because there's always
going to be [a] rogue operator.
I recently submitted a proposal to the Board of Marine
Pilots and several other people in the state, in the
form of a regulatory reform package which promotes a
proactive approach of preventing marine casualties
through licensing and registration of vessel agents.
Basically, what it'll do is provide for accountability.
Briefly, in it I describe this state's shipping safety
matrix and point out the different participants and
their respective roles in this matrix. As an example,
a pilot's job or responsibility is to exercise maritime
judgment and move ships. While ships' agents are not
expected to exercise maritime judgment, they are
responsible for being the primary couriers of
information between all parties involved in this system
(indisc.) do. Rendered down, my argument is where that
information impacts and is vital to the safety of
shipping; agents should be held accountable to see that
it is effectively communicated to the other
participants in the matrix. Oftentimes, as things
stand now, this is not effectively communicated.
I've included in my proposal, and I think you guys have
some of those examples which illustrate this fact:
self-regulation does not work. Some of the examples
are more innocent than others. I think a not-so-
innocent example is the narrative of the [M/V] Jacha,
which I believe Senator Pearce discussed yesterday.
This is a case which demonstrates the fact that some
ship operators will not only not report marine
casualties, they will attempt to cover them up. Again,
I think the plan such as the one that you're talking
about with CSSB 273(RLS) (title am) would help prevent
these sort of shenanigans from continuing out West. I
encourage you to shepherd this bill into law because,
from a professional mariner's point of view simply
stated, I think it's a darn good piece of common sense
that has been successfully rendered down into the
language of the law.
Number 2463
JIM BURNS testified via teleconference from Anchorage.
Indicating he was representing himself, he said his interest in
CSSB 273(RLS) (title am) was to streamline some of the issues so
that vessels which enter into Alaska waters could do that more
easily than what he has experienced in the oil industry. He has
been involved in the oil industry for about 30 years. He had
objected to the direct-action language as it was changed, Mr.
Burns noted. He had read it repeatedly and is now satisfied. In
response to a question by Representative Barnes, he said that he
still has some concern regarding whether or not additional
equipment will have to be purchased to set up the prevention
criteria for responding to the additional class of vessels. He
said he is still concerned that a company like Chadux or SEAPRO
currently has equipment for the customers and members they have
now. There may well have to be additional equipment purchased,
but he is not sure what that would be at this time.
REPRESENTATIVE BARNES commented:
I have read in here where ... it says just exactly what
he said, that the equipment they presently have is for
a response to the present customers they have, and that
they would require additional equipment for them to
respond to the new ones, and it may be ....
CO-CHAIR MASEK asked Mr. Carter to speak while Representative
Barnes located the information she was referring to.
MR. CARTER informed the committee that the issue of whether or
not additional equipment would be needed has been discussed with
the department. He stated, "For instance, Chadux currently has
37-odd members. And what would happen if they ended up with 60
members or 100 members: would they need additional equipment?"
He indicated the department has responded that no additional
equipment would be required because the equipment Chadux
currently has would be adequate to respond to any spill by any of
the additional vessels that would be brought into the safety net.
REPRESENTATIVE BARNES responded that she does not believe what
Mr. Carter stated. She added, "I have read in these documents
where the people that are responsible for it have clearly said -
and I will find it - that they have to have additional equipment
because the pool that they serve would be much larger and it
would require ...."
Number 2236
MR. CARTER interjected and said the bottom line comes down to
whether or not the desire is to have them plan for two spills at
one time. He noted that DEC said, "No, we would not require
additional equipment." Mr. Carter suggested that Commissioner
[Brown] from DEC could state that for the record if
Representative Barnes would like.
REPRESENTATIVE BARNES maintained that she has read something
where it is clearly laid out that additional equipment would be
required for the addition of vessels that would fall under CSSB
273(RLS) (title am).
MR. CARTER said he is not sure which document Representative
Barnes is referring to.
REPRESENTATIVE BARNES reiterated that she will find it.
MR. DIETRICK commented that the current regulated industry in the
state is required to meet a certain response planning standard.
The new standard being proposed to the nontank vessels does not
exceed that standard, so they are "piggy-backing" on the existing
capability. The fundamental, threshold planning requirement is
already in place by the current regulated industry, and that is
being built on.
CO-CHAIR HUDSON said he does not think they are taking into
consideration the fact that the requirement is being expanded to
many of the operations in Western Alaska. He stated:
I'm afraid that you're wrong if you believe there's not
going to be new equipment, particularly up out of, say,
the Kodiak area, and up out of Bethel and places like
that, because we've got these nontanker operations, the
ore ships that'll be calling in on the Red Dog Mine, up
there - even the ability to take a C130 up into some of
the smaller fields where they'd have to be landed in
order to cart it out if you had a grounding, say,
somewhere off of Hooper Bay or something like that. I
don't want the department to say that there won't be
new equipment required, because there's going to be, I
believe.
MR. DIETRICK answered that the department has been through two
alternative compliance schedules of the existing non-crude
industry in dealing with this issue. The existing fuel barges
that go up to Nome, even prior to this legislation, had to deal
with the very same issues of remoteness and access with respect
to launching a response if necessary. The framework proposed for
handling that now is a hub system that includes hubs at Nome,
Bethel, Dillingham, Naknek, Kodiak and Dutch Harbor. The current
response planning standard for nontank vessels is fairly minimal
and basically requires getting booms out to a boat within 48
hours, and cleanup in the shortest possible time. The capability
to launch out of those hubs is the framework that handles the
Western Alaska and Aleutian regions, and Kodiak. It was designed
so the response would be launched to hit the remote areas of the
state, backed up by equipment that is positioned in Anchorage. A
tiered response capability calls for getting the initial
containment out within 24 hours and requires backup from
Anchorage to the hub within 24 hours; then, if necessary, it
requires additional equipment within 72 hours. This exceeds what
has to be done for the new nontank vessels.
Number 1973
JOE LEBEAU, Alaska Center for the Environment, testified via
teleconference from the Matanuska-Susitna Legislative Information
Office (LIO). He stated:
I live in the Mat-Su Borough near Palmer, where I've
resided since 1979. I recently retired from the state
government with over 23 years of service. Twenty of
those years were in the areas of the Railbelt; the
remainder was in coastal communities. During my state
career, I responded to hundreds of oil spills. On
March 24, 1989, I traveled to Valdez by car over three
mountain passes and flew out to the Exxon Valdez within
10 hours of the grounding. I stood on the bridge
waiting for the oil spill equipment to arrive. There
was no oil spill equipment in sight until after 2:30 in
the afternoon. Then the equipment that did arrive was
filled to capacity in a few minutes.
Nontank vessels without contingency plans currently
spill more oil than the vessels with contingency plans.
Nontank vessels need to have contingency plans and
certificates of financial assurance to make the state
whole when their vessels run aground again. Nontank
vessels and the railroads need to have contingency
plans so we can responsibly say we tried to protect our
resources.
While working in the Mat-Su area, I responded to at
least three train wrecks. At each of these
derailments, I was frustrated when I saw the railroad
trying to clean up a spill with no spill response
equipment or training. Railroad workers were
frustrated too. Railroad workers are good people, just
like you and me. During the winter of 1999 and 2000,
the railroad had two more derailments. At one of these
derailments, Mother Nature provided some beaver ponds
for oil spill containment. The railroad finally had
some equipment. At the second spill this winter, over
120,000 gallons of oil was discharged. Mother Nature
failed to provide the beaver ponds for this one, but
provided lots of snow that contributed to the accident.
Again, the railroad had inadequate equipment to deal
with the immediate response. To date, the railroad has
only been able to recover 10 to 12 percent of its
spilled oil. The railroad needs to have the capacity
to respond to oil and hazardous substance spills in the
Railbelt communities. Please vote to pass this bill
out of committee.
Number 1794
TOM RUETER, North Star Maritime Agencies, testified via
teleconference from Anchorage. He stated that he is a steamship
agent representing various nontank vessels which mostly
intermittently call in Alaska, including frozen-fish carriers and
bulk carriers that take Alaska's resources to the world market.
He has been working with the SB 273 since its introduction.
MR. RUETER agreed that significant progress has been made. There
are still some key questions, however, and he is hopeful that
through the negotiated regulation process those issues can be
addressed. He indicated there have presentations by the PRACs
regarding the costs for entry into their associations by
intermittent vessels. He asked whether the a bi-weekly or
monthly or quarterly fee was in addition to the one-time
initiation fee; if so, he said, the $5,000 initiation fee plus
the bi-weekly fee would again be an extreme different than just
the bi-weekly fee or at that lower level. This is a concern
because a majority of the vessels call one time per year,
possibly two times, and anything of that nature drives up the
cost. The consideration has not been made for the cost of
developing the C-plan itself, or for the vessel, and the costs of
any other contracts that might be associated with that. He
concluded:
I think, again, it has a start of a good, basic
statute; however, I believe there is more attention
that needs to be paid to what vessels are actually
stowing. I believe, by the way this is written, it has
precluded a lot of vessels which have spilled perhaps a
larger volume than the vessels that are affected by
this proposed statute.
CO-CHAIR MASEK informed Mr. Rueter that all the committee members
have a copy of his e-mail regarding CSSB 273(RLS) (title am).
MR. RUETER thanked the committee and said he hopes the committee
will reconsider more amendments to the bill.
REPRESENTATIVE BARNES pointed out that Mr. Rueter had asked a
question that is worthy of an answer. She stated, "Of course,
this is just from Chadux. Chadux shows an initiation fee - one-
time initiation fee per company - then the annual fee for vessel
capacity, bi-weekly, monthly, quarterly, and annually, and then a
second-year fee as well.
CO-CHAIR MASEK asked whether anyone from Chadux online could
respond to Mr. Rueter's question.
Number 1569
JIM BUTLER, General Counsel, Alaska Chadux Corporation, testified
via teleconference from Anchorage. He answered that a proposed
fee schedule that was promulgated after a few meetings allowed
for non-member vessel coverage, which would not include a
requirement for an initiation fee. There is essentially a bi-
weekly or monthly fee that has a little bit of a premium to
offset the administrative costs. The company is considering how
it can best serve the needs of these operators in a cost-
effective way. The initiation fee would not be part of that
cost.
MR. RUETER indicated Mr. Butler's explanation had addressed his
question.
Number 1458
JEFF THOMPSON, Alaska Maritime Agencies, testified via
teleconference from Anchorage. He indicated the committee has a
copy of his letter which outlines Amendment 4 regarding the
formal participation of vessel agents with DEC in the process of
regulation rule making. He appreciates that the committee
considered this amendment and passed it, he said. If CSSB
273(RLS) (title am) passes, he looks forward to working with DEC
in complying with this legislation.
Number 1401
JOE KYLE, Executive Director, Alaska Steamship Association,
testified via teleconference from an off-net site in Anchorage.
He noted that the Alaska Steamship Association includes the
Northwest Cruise Ship Association. The association, he said, is
opposed to CSSB 273(RLS)(title am), as presently written.
MR. KYLE further stated that he feels he must respond to the
remarks made by Captain Pete Caray, in which he imputed motives
to action that a tramper vessel took in the Bering Sea. He
pointed out that there are humans involved in the system, and one
of Captain Caray's ex-pilots is currently in a state court for
abandoning his ship when it was in extremis in Dutch Harbor. Mr.
Kyle said there are three issues relating to CSSB 273(RLS)(title
am):
1) The state feels there is a gap in its ability to
recover costs in relation to spills;
2) The spills need to be responded to; and
3) The nontank vessel sector of the industry is being a
"Freddy Freeloader" in relation to the tank vessels and
the apparatus that is set up for them.
MR. KYLE told listeners it is understood that the state cannot
get paid through the federal funds from the Coast Guard as fast
as it would like. And, from the Coast Guard's perspective, the
state seeks reimbursement for funds that the federal government
wouldn't normally think are appropriate for reimbursement. In
that regard, the association is sympathetic with the state and
has tried to work on the language in the bill; while it is not
totally to their liking, it is language that they can live with.
MR. KYLE said the association has a severe problem with the
language in the bill that sends them into the hands of the oil
industry with very little legislative guidance in relation to the
cooperatives and contingency plans. As DEC Commissioner Brown
has indicated, there are many details that need to be worked out;
there are numerous issues that need to be thoroughly vetted; and
the bill sends the industry to DEC with very little legislative
guidance. The industry doesn't want to be a "Freddy Freeloader"
in the state's safety net, nor do they want to be taken advantage
of. If there is a problem with the industry not paying its way,
he said, then that needs to be studied.
Number 1150
HANS ANTONSEN, Captain, President, Southeast Alaska Pilots'
Association [SEAPA]; and Co-Chairman, Marine Safety Task Force,
testified via teleconference from an off-net site in Ketchikan.
The Southeast region is the largest contiguous pilot authority in
Alaska, he told members. Approximately 96 percent of the ship
traffic subject to state pilotage is from cruise ships, which
carry more than a million gallons of products. The increase in
ship size and vessel traffic congestion also results in an
increased risk of a marine casualty, despite the best planning
efforts in relation to risk management. Some companies, he said,
do an excellent job in relation to risk management; others need
vast improvement. He has participated in the last three years of
cruise disaster exercises, and each exercise points to an
improvement in communication in every area of spill and casualty
response. In that regard, SEAPA supports SB 273 in its present
form; it provides accountability on the part of industry for oil
spill contingency planning and increases communications and
expectations in responding to a spill, if one should occur.
Number 1014
ERNEST PIPER, Vice President, Safety and Environment, Alaska
Railroad Corporation [ARRC], Department of Community & Economic
Development (DCED), testified via teleconference from Anchorage.
He said ARRC believes that the purpose behind CSSB 273(RLS)(title
am) and the intent to increase the safety net are sensible. In
that regard, ARRC believes that it can comply, particularly
through the negotiated regulation process. Although ARRC is
interested to see how equivalency would be determined when
dealing with the rail industry as opposed to the marine industry,
Mr. Piper said he thinks it can be worked out well with DEC.
Number 0997
REPRESENTATIVE BARNES pointed out that she went directly to ARRC
yesterday for a fiscal note. She asked Mr. Piper whether the
fiscal note is correct.
MR. PIPER replied yes, the fiscal note is correct, if
Representative Barnes is referring to one that extends through to
FY [fiscal year] 2004 and shows several categories of items.
REPRESENTATIVE BARNES replied that the fiscal note that she has
extends through to FY 06; it shows $1,650.0 [thousand] for FY 00
and $750.0 [thousand] for every fiscal year thereafter through FY
06.
MR. PIPER replied that it sounds well within the range. The
fiscal note, however, was prepared fairly quickly and some time
ago.
REPRESENTATIVE BARNES asked Mr. Piper why she had to insist
yesterday on a fiscal note that didn't contain zeros, if one was
prepared some time ago.
MR. PIPER replied that he thinks it is because of the confusion
in relation to the general fund use and railroad fund use. From
the standpoint of the general fund, there is indeed no cost; but
from the standpoint of ARRC, there are costs associated with the
bill that come solely from its revenues.
REPRESENTATIVE BARNES asked Mr. Piper whether he concurs with the
statement that ARRC is owned by the State of Alaska and its
people.
MR. PIPER replied, "Yes."
REPRESENTATIVE BARNES further asked whether any expenditure has
an effect upon a state asset owned by the people of this state.
MR. PIPER replied in the affirmative.
Number 0820
REPRESENTATIVE BARNES said, "I still haven't figured out how we
got from a February 22 fiscal note that was proper ... to one
that was given to us yesterday that was all zeros, to getting
back to the one that was proper. I suppose I'll figure that out
in time."
Number 0596
MR. BUTLER offered some history regarding Alaska Chadux
Corporation, a not-for-profit corporation formed in 1993 to
assist members in managing the cost associated with compliance in
response to state and federal laws in the post-Exxon Valdez era.
He said the not-for-profit corporation concept was used because
it allowed for member companies to come together in the most
practical, cost-effective way to meet a variety of compliance
elements. Members participate and control their costs when they
are a part of a not-for-profit corporation. He noted that
primary cargo operators were the original founding members;
involved in expanding operations into Western Alaska, they have a
five-year capital equipment expansion that is part of meeting the
alternative compliance worked out in a manner similar to the
negotiated rule making that has been proposed with the Coast
Guard and the state.
MR. BUTLER continued. After OPA 90 [the Oil Pollution Act of
1990], some nontank vessels were required to have contingency
plans. After the demise of a for-profit company that provided
some service, many operators turned to Chadux for assistance. In
1995, Chadux created the membership class; in 2000 there are 17
member companies, approximately 17 facilities, and 15 different
vessels operating in Western Alaska. Since Chadux was formed, it
has successfully provided response services in Prince William
Sound, Cook Inlet, Kodiak, Unalaska and Western Alaska using the
logistical systems developed via road, rail, vessel and cargo
aircraft.
MR. BUTLER said Chadux recognizes that CSSB 273(RLS)(title am)
represents many new challenges for the PRAC. He appreciates the
committee's consideration of the amendment today that addresses
those issues. In that regard, the PRACs can continue to think
creatively in assisting the newly regulated operators. The
board, he said, has met over the last couple of days to discuss
the implications of CSSB 273(RLS)(title am), and has conceptually
begun to look at accepting new members, which means being able to
provide seasonal and trip coverage for some operators. It also
means considering providing coverage for non-member operators on
a limited service, and working to provide a fee structure that
provides competent service coverage to a variety of operators.
Once those operators join the organization, there will be a
better understanding of their needs. Mr. Butler noted that he
can provide additional information to the committee regarding the
fee schedule.
CO-CHAIR HUDSON asked Mr. Butler to provide information in
relation to the overall types of equipment and response actions
around the state.
Number 0168
MR. BUTLER indicated he would do so. He noted that Chadux is
organized by its members to try to manage the cost of compliance.
In that regard, they have acquired specialized capital equipment
such as skimming devices and booms, and have developed a network
of contractors developed through a series of exercises and
drills.
Number 0025
REPRESENTATIVE BARNES asked Mr. Butler how much new equipment
will be required as new members are acquired.
TAPE 00-36, SIDE A
MR. BUTLER related his understanding that through the work group
process - if SB 273 passes - the acquisition of that equipment
may be structured in such a way that maximizes the use for barge
operators as well as ensuring its availability for nontank
vessels. Therefore, the planned acquisition of capital equipment
and expansion doesn't anticipate the need for additional
equipment, to his understanding from the current information.
Number 0080
CO-CHAIR HUDSON asked whether there would be a recurrent
reduction on an overall basis to the tanker vessels currently
under contract with Chadux, if all of the nontank vessels are
added.
MR. BUTLER addressed the question of whether current members will
realize a lower cost if additional people join the organization
as a result of this bill's passage. He said he believes that it
possible. He also believes that the cost rate that has been
prepared today may decrease. He explained that the members set
the rate, and the different classifications as there are
different planning standards. However, the overall objective
with all the members is to keep their costs down. Therefore, the
administrative cost of the organization may decrease some and,
hopefully, that will be reflected in the rates of nontank vessels
if a number of nontank vessels join.
CO-CHAIR MASEK recalled [testimony] that the equipment would be
located in Anchorage and the C130 would deploy it to remote
areas. She asked whether a C130 could land in remote areas such
as Hooper Bay or Good News Bay. She further asked, "Will DEC
guarantee that only this is required to meet spill response
requirements in rural Alaska?"
Number 0237
MR. DIETRICK specified that the "backbone system" that would be
built upon is the one envisioned for the nontank vessels.
Therefore, those hubs are logistically located at spots that can
be flown into and out of. He indicated the hub system is
designed so that equipment can be expedited from Anchorage to a
hub that serves a certain geographic shoreline of the state - the
site from which the response is launched. In further response to
Co-Chair Masek, Mr. Dietrick clarified that the equipment
placement is located at these hubs. He noted, "The analysis for
that has been the subject of discussions of the alternative
compliance for the existing regulating community, our existing
fuel barges." He informed the committee that there have been
lengthy discussions and a multi-year process, as well as two
rounds discussing how best to respond in rural Alaska. This
framework is the result of that process and is [felt to be] the
most efficient way to launch a response in the remote areas of
the state.
CO-CHAIR MASEK asked whose control that would be under.
MR. DIETRICK answered that the hub system is currently being put
together by the Alaskan Petroleum Distributors; for the most
part, Chadux is their agent in this. In regard to who is in
charge of the deployment of the equipment, Mr. Dietrick explained
that the deployment of the equipment would occur through the
respective cooperative with which it is signed up. He indicated
that it seems, logically, that operators in Southeast would sign
up with SEAPRO, whereas operators going around Western Alaska
would probably sign up with Chadux. However, "the door is open
on that" in order that fleet operators can have the option to
develop new cooperatives or their own cooperatives.
CO-CHAIR MASEK asked whether ship personnel, as under OPA 90,
[will have] mandatory annual training.
MR. DIETRICK answered that "we" haven't reached that detail yet.
However, the general discussions through the work groups have led
him to believe that the onboard requirements would be the current
international and federal requirements. At the last committee
hearing, he noted, there was discussion regarding stepping over
the line of the Coast Guard. Therefore, he surmised that the
state would likely adopt those as the mandatory [training]
requirements, and any others would be recommended requirements.
CO-CHAIR MASEK asked if that training would be in addition to OPA
90 training.
MR. DIETRICK responded that any training that would be in
addition to what is required at the international or federal
level would be recommended additional training.
Number 0550
CO-CHAIR MASEK asked: Will each vessel have a separate C-plan,
or will the response contractor develop one plan that applies to
all of its members, as is the case with the State of Washington?
MR. DIETRICK noted that, here again, the door has been left open
for individual plans, fleet plans or operating under a "plan by
rule." He identified the latter as probably being the most
simple under this [legislation]; there would be a four-part plan:
First would be the onboard response plan for which the Ship On-
Board, Preparedness, and Emergency Prevention (SOPEP) plan under
federal and international law could be substituted. Second would
be to provide for the response capability (indisc.) the
membership of the cooperative. Third would be the prevention
requirements, both mandatory and recommended, which would be the
function of the rule making and which would be an affidavit
attesting that those requirements have been met. Fourth would be
a certificate of financial responsibility. Therefore, the
individual C-plan would be, perhaps, a few pages for which the
hope is to have a rapid approval process in order to turn this
around in a five-to-ten-day time frame. That has been the
indication of the conceptual discussions thus far in order to
keep the administrative burden down.
CO-CHAIR MASEK asked: Does the current OPA 90 certificate of
responsibility qualify under CSSB 273(RLS)(title am) or will a
separate certificate will be required?
MR. DIETRICK answered that a separate state certificate would be
required. He informed the committee that the federal certificate
is merely a certificate issued back to the operator saying that
the operator has met the federal requirement for financial
responsibility. The same insurance package submitted to the
federal government for the federal certificate can also be
submitted to the state; that can be accepted, but the state would
issue a separate certificate.
CO-CHAIR MASEK commented that this is going to create a fairly
substantial financial impact for the rural areas that have little
vessel traffic.
MR. DIETRICK reiterated that the response system for the remote
rural areas in Alaska will be based out of the hubs that Mr.
Butler mentioned. He noted a number of [hubs] will be completed
shortly, and all of them will be completed by the effective date
of CSSB 273(RLS)(title am). He explained, "That is the basis in
the rural area; it's a logistical hub from which response would
be launched with both aircraft and/or vessels."
Number 0812
REPRESENTATIVE BARNES pointed out that Co-Chair Masek's initial
question regarding the use of C130s was not answered by Mr.
Dietrick. Representative Barnes noted that she is very familiar
with C130s and the type of runway they require. She informed the
committee that in most areas in rural Alaska, there is no way a
C130 could land. Surmising that [the response] would have to
occur via boat, she asked what size of boat would be required,
whether those boats would be available, and whether they would
have to be purchased in order to move the equipment from the
discharge to the hub.
MR. DIETRICK requested that Mr. Butler help [answer] this. He
said he could not recall if Chadux, regarding the "resupply" from
Anchorage to the hub, is using the C130 or other aircraft.
However, he informed the committee that typically from the hub
areas or any areas in the state for significant spills, the
vessels that would be relied upon are so-called vessels of
opportunity. He believes that there are 4,000-plus fishing
vessels registered in Alaska with the Commercial Fisheries Entry
Commission. Therefore, the local vessels are the first source of
support for the response.
CO-CHAIR HUDSON related his understanding that the prior question
was in regard to transporting the heavy equipment such as
skimmers, booms, and so forth to these areas where a C130 could
not land. He said he did not think the committee wanted to try
to digest the whole plan, but was pointing out that there are
some very serious questions about whether this could be put
together, particularly for nonpersistent spills. Persistent
spills are one thing, he said, because the spill remains long
enough for one to get to it and maybe pick up some of it.
However, with nonpersistent spills such as diesel, there is just
a limited period of opportunity, [after which] no matter what one
uses, there is nothing to pick up.
CO-CHAIR MASEK asked how vessels of opportunity meet Chadux's
personnel training requirements.
Number 1071
MR. BUTLER said Chadux has established a contractor network
involving a vessel-of-opportunity program in which vessels can be
prequalified to participate. They are typically involved in
training and are available on a prescribed basis to provide
lifting capability via water.
MR. BUTLER turned to the questions about aircraft. He said that
as stated a couple of times, Chadux keeps a fairly large
inventory of equipment that is commonly referred to as the "fly-
away," but it is not limited to flying away on C130s. It
certainly can be loaded on a C130 and lifted to a location, but
it is set up to assist the barge operators who have had to plan
for just these scenarios. Much of the equipment can be broken
down into aircraft as small as 206s or certainly moved by
helicopter. An example of when that system was put to the test
involved a nonregulated barge that ran aground about 18 to 20
miles south of Togiak right after a herring season. Aircraft
lifted the equipment to Dillingham, the equipment was broken
down, and the heavy stuff was moved by a vessel that had been
pre-identified. Other equipment was brought into Togiak, and the
two met at the site and were able to accomplish the recovery of
the nonpersistent product, which had begun to leak from the
barge.
MR. BUTLER said that was the first time that a multiple layer of
logistical support was tested in real life, in terms of breaking
it from large aircraft to small aircraft and to vessels of
opportunity. The Western hubs are going to depend upon using
locals as much as possible, and Chadux is going to be developing
a training program to work with locals; therefore, the local
people are going to be the ones who are best prepared to help
utilize and get that equipment moving in the field. Additional
support can come out of Anchorage, if and when needed. The
process also will involve training the people in whose
communities this equipment resides to use it to the best
advantage until help can come in.
Number 1257
MR. CARTER emphasized that this is not reinventing the wheel. He
emphasized, "We currently have vessels hauling far greater fuel
than the vessels we're trying to include in the safety net." He
said those vessels are now operating in remote areas that include
Western Alaska. Also, the hubs currently exist. The system
currently in place is something that the DEC and the industry
have developed to the degree possible. He concluded, "We are not
asking anything in addition to that."
CO-CHAIR MASEK asked Mr. Dietrick about possible confusion and
errors by ship personnel that might be caused by inconsistency of
reporting requirements under SB 273 and OPA [90].
MR. DIETRICK stated that CSSB 273(RLS)(title am) does not impose
any new reporting requirements. The requirements for reporting
spills, under which all vessels are now operating, all exist in
state and federal law. This bill will not change those and,
therefore, should not cause any confusion.
REPRESENTATIVE BARNES asked Co-Chair Hudson if he could answer a
question for her. "We can request information from the Coast
Guard," she said, "but when we had the captain from the Coast
Guard here testifying, in his testimony he referred to the recent
Intertanko decision by the U.S. Supreme Court and said the
decision may have implications for this bill." She asked exactly
what that court case is about and how it impacts this
legislation. She suggested it might be pertinent to obtain an
opinion from the Office of the Attorney General on that issue.
Number 1421
CO-CHAIR HUDSON noted that Captain Page was the gentleman who had
testified, and he said that was a good question. He mentioned an
inspection provision within this bill in case the state finds
that other agencies, such as the federal agencies, are not
providing adequate inspections. "That already exists for the
terminals and for tankers and things of that nature," he
explained, "and so now we're adding the nontank vessels that the
state could actually inspect." He told Representative Barnes
that he thinks Captain Page was referring to the U.S. Supreme
Court [opinion] that says the Coast Guard has the national
responsibility for vessel standards and for the assurance of
compliance with vessel standards. He concluded, "I wouldn't want
to see anything in here that tried to impose or even suppose that
the State of Alaska would have on board, its own staff, people
who would supplant the professionals in the Coast Guard as
relates to these vessels, and I would want that record firmly
established."
MR. CARTER said that both [Legislative Legal Services] and the
Office of the Attorney General have looked at the Supreme Court
decision. He briefly outlined the Intertanko decision:
Washington State was requiring what the federal government and
the courts determined to be inappropriate requirements for
vessels operating in that state's waters; for example, that state
required crew training and drug inspections of the crew. He
asked Mr. Tostevin to explain further.
BRECK TOSTEVIN, Assistant Attorney General, Environmental
Section, Civil Division (Anchorage), Department of Law, testified
by teleconference. He said the Intertanko decision involved
Washington State oil prevention regulations, which specified the
type of equipment that had to be on the oil tanker, the training
for the tanker crew, and the casualty reporting requirements that
applied to the tankers. The Supreme Court found that those
requirements went into areas that are the sole regulatory
province of the United States Coast Guard.
MR. TOSTEVIN then addressed CSSB 273(RLS)(title am) and oil spill
contingency planning, explaining that there is separate
regulatory authority in the federal Water Pollution Control Act,
in which Congress has required contingency planning. "When
Congress did that," he said, "they specifically included some
provisions in the federal law that said that states could require
additional requirements with respect to oil discharges in state
waters, so oil discharge cleanup planning as well as oil spill
liability laws including financial responsibility for oil spills,
those areas are areas in which the state can regulate as well."
He offered the opinion that this legislation does not go beyond
into those areas that the U.S. Supreme Court found to be
preempted.
CO-CHAIR MASEK, hearing no response to her invitation to further
public testimony, announced that public testimony on SB 273 was
closed.
Number 1722
REPRESENTATIVE WHITAKER noted that testimony indicates expense
will result from this bill; a certain amount will be borne by
governmental agencies, the Alaska [Railroad Corporation], vessel
owners and, ultimately, the users. He said it comes down to the
question of what the people of Alaska would gain as a result of
this legislation.
MR. DIETRICK replied that the benefits to the state are to get a
more rapid response to containing petroleum discharge, to reduce
the impact, to mitigate the damages to the natural resources, and
to minimize the costs of spill response.
REPRESENTATIVE WHITAKER whether there would be a more rapid
response before or after [passage of the legislation].
Number 1812
MR. DIETRICK said a more rapid response with the nontank vessels
will give the state the certainty that all of these vessels now
have access to Alaska's backbone response capability, which has
been built over the last ten years. The state will know that
those vessels have direct access to it, and the call-up of those
resources, hopefully, will be from the bridge to activate that
[call-up] on immediate notice. That notice can turn on the
response network, utilizing the existing hubs and cooperative
system to immediately get resources to the scene.
Number 1847
REPRESENTATIVE WHITAKER said he understands that access to the
system is germane. However, testimony indicates access to that
system exists today. Assuming that there now is direct access,
what would be the difference between the response time before and
after SB 273?
Number 1886
MR. CARTER said he thinks what it comes down to is that right
now, there is a nontank vessel industry whose response
capabilities - and the expense - are borne by the non-crude
haulers.
REPRESENTATIVE WHITAKER interjected that he agrees regarding the
fairness factor, and that certainly weighs very heavily upon his
decision. Now, however, he is dealing with the benefit in
timeliness. He asked how much more quickly a response will take
place after [passage of] SB 273.
Number 1922
MR. CARTER replied:
The response planning standard is that we will have
them on-site, and they will contain and control a spill
of up to 15 percent within 48 hours. We've heard
testimony throughout today that we operate throughout
Alaska - all of our miles of coastline, the remote
areas- and the difficulty in reaching some of those
regions. The fact of the matter is that we are going
to have spills; ... nothing prevents that. [Senate
Bill] 273 will not prevent that. What [SB] 273 will
provide, though, is a plan of attack when we do have
those spills. Most of these people right now operate
in and out of our state. Alaska is currently the only
state that does not have a contingency plan requirement
for nontanker vessels. This law brings Alaska in line
with all of the rest of the states. Senator Pierce
finds a . . . [indisc.--coughing] some of these vessels
that operate out of Seattle are willing to pay for the
expense of being covered to protect the waters in
Seattle and around Puget Sound, but they are not
willing to pay the expense to cover the waters of
Alaska.
REPRESENTATIVE WHITAKER persisted: "That relates to the fairness
factor, and I agree with you on the fairness factor. But I still
need to know the differential in response time."
Number 2006
COMMISSIONER BROWN provided the example of the Kuroshima, a
vessel that went aground in Dutch Harbor, causing substantial
spillage:
We had a responsible ship owner who wanted to be able
to respond, and they lost several valuable days in
scrambling to find someone to come and respond. I
think there would have been an extremely good chance to
prevent some shoreline impact had we had the contracts
in place. They would have immediately known who to
call, the equipment would have been deployed, and we
would have had a difference in the outcome of that
spill.
REPRESENTATIVE WHITAKER asked how many days' difference SB 273
would have made.
COMMISSIONER BROWN estimated two days. She deferred to Mr.
Dietrick, who had been at the scene.
Number 2067
MR. DIETRICK said what is key to designing the system to get the
response time is the response planning standard. That standard
is to design a system to have containment/control equipment on
the scene within 48 hours. If that can be met in rural Alaska,
"we" are doing well. The cleanup, as part of the planning
standards, is to clean up in the shortest possible time. So the
standard itself that is included in the bill is, to some extent,
already taking into account the fact of Alaska's extensive
shorelines and the difficulty in getting equipment there. That
is why it is at 48 hours right now. A 48-hour response time
would be very good.
REPRESENTATIVE WHITAKER summarized: "Certainty, then, appears to
be the key word. Would you agree with that?"
MR. DIETRICK said yes, they are designing the system to provide
that certainty, within 48 hours, to have that initial capability
on the scene.
REPRESENTATIVE WHITAKER asked whether that is in contrast to the
current situation, which does not provide certainty of a 48-hour
response.
MR. DIETRICK said that is correct.
REPRESENTATIVE WHITAKER directed the same question to the
railroad, asking what is in place now and what is envisioned to
be in place after passage of SB 273.
Number 2159
MR. DIETRICK answered that the railroad is under the same
response planning standard, so the goal there is to design for a
comparable response. It is a very different situation, more akin
to the response planning that has been for the pipeline, because
there is a lineal source crossing a variety of watersheds, so the
tactics and strategy and approach for the railroad will be
different from the marine coastal routes, where there will be a
hub system. The railroad now has "a bit of a contingency plan"
and has done some preliminary work. The logistical hub approach
along the railroad will have to be designed to meet that 48-hour
requirement. There already has been discussion about whether
that can be done by having equipment with each train, by pre-
positioning gear at strategic locations at certain sidings. The
driving force in that design will be to launch a response to
achieve containment and control within 48 hours anywhere along
the length of that right-of-way.
Number 2220
COMMISSIONER BROWN called attention to the fiscal note provided
by the railroad. Because of the recent mishaps involving the
railroad, she noted, the railroad wants to have a better
contingency plan. The figures in the fiscal note are corporate
commitments they have made, independent of this bill. She said
she did not know if they had done any analyses of whether this
legislation would cause them costs incremental to what they had
already decided to invest in spill-prevention contingency plans,
because [spill prevention] will be cheaper than [spill]
responses.
Number 2256
REPRESENTATIVE COWDERY asked: If the railroad had had this in
place at the time, could they have contained the December mishap?
MR. DIETRICK said they would hope that with more preparedness and
planning, they can get on those scenes faster and do the
containment and control more rapidly once they are there. By
comparison, Tesoro had a 2,000-5,000 gallon spill last night in
Anchorage. They have a very aggressive posture now, he said, and
they literally had that taken care of with five trucks in a very
short time, avoiding huge problems. The intent here, he said, is
"to get a more aggressive initial response, try to get that
containment, so the problem does not become bigger, spread
farther, cause more damage, increase costs, et cetera."
REPRESENTATIVE COWDERY questioned whether anything could have
"solved anything" regarding the Globe Creek mishap.
Number 2352
REPRESENTATIVE BARNES asked, "Before the Exxon Valdez ran
aground, what did we do about following around fishing boats and
nontanker vessels?"
COMMISSIONER BROWN specified that [the state] has not had
requirements for those vessels, either before or since the Exxon
Valdez oil spill. After that oil spill, laws were passed to
cover the tank vessels, but they did not cover nontank vessels.
REPRESENTATIVE BARNES said she is very aware that they did not
cover the nontank vessels. She added, "It is absolutely amazing
to me that we survived without it."
CO-CHAIR HUDSON asked if there was a list or some account of the
spills that have come from these types of vessels, perhaps in the
past ten years.
COMMISSIONER BROWN said that information is available.
CO-CHAIR HUDSON suggested it would be helpful to see that
information, because he would like to know "what is happening out
there that is calling for us to put a whole new regime in place."
CO-CHAIR MASEK asked the will of the committee.
Number 2460
CO-CHAIR HUDSON said he thinks that the committee has created a
good record of some serious questions and enlightened answers,
and that the policy question for this committee is whether "we"
have adequately documented the need for this legislation. He
said he could see no constructiveness in holding SB 273 in
committee this close to adjournment [of the session].
CO-CHAIR HUDSON made a motion to move CSSB 273(RLS)(title am), as
amended, out of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, HCS CSSB
273(RES) was moved from the House Resources Standing Committee.
ADJOURNMENT
Number 2510
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:30 p.m.
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