Legislature(1999 - 2000)
04/12/2000 02:03 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE April 12, 2000 2:03 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 Representative Mary Kapsner MEMBERS ABSENT All members present 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 nonbank vessels and trains; and providing for an effective date." - HEARD AND HELD 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 3/21/00 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) 3/27/00 2746 (S) REFERRED TO RULES 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 4/03/00 2831 (H) REFERRED TO RESOURCES 4/12/00 (H) RES AT 1:45 PM CAPITOL 124 WITNESS REGISTER SENATOR DRUE PEARCE Alaska State Legislature Capitol Building, Room 111 Juneau, Alaska 99801 POSITION STATEMENT: Testified as the sponsor of SB 273. ED PAGE, Captain United States Coast Guard P.O. Box 25517 Juneau, Alaska 99802 POSITION STATEMENT: Answered questions with regard to SB 273. 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 SB 273. ACTION NARRATIVE TAPE 00-33, SIDE A Number 0001 CO-CHAIR MASEK called the House Resources Standing Committee meeting to order at 2:03 p.m. Members present at the call to order were Representatives Hudson, Masek, Cowdery, Harris, Morgan, Barnes, Whitaker, Joule and Kapsner. SB 273 - OIL SPILL RESPONSE; NONTANK VESSELS & RR CO-CHAIR MASEK announced that the one item of business was 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." Number 0125 SENATOR DRUE PEARCE, Alaska State Legislature, sponsor of SB 273, explained the bill as follows: Alaska arguably has the world's best oil spill prevention and response program, mostly, unfortunately, as a result of the Exxon Valdez accident. However, our current program is limited to vessels that carry oil as cargo (tank vessels) and onshore oil facilities such as oil wells, pipelines, refineries and tank farms. Specifically, nontank vessels covered by this bill are defined as self-propelled watercraft of 400 or greater gross registered tons. These vessels would include larger fishing and processing vessels, cargo and cruiseships and public vessels engaged in commerce, such as all but one of the Alaska state ferries. SB 273 requires these vessels to provide a response plan that would allow for the cleanup of a spill as quickly as possible with minimum damage to the environment. The legislation also requires vessel operators to provide proof of financial ability to respond to damages resulting from a spill. Alaska is the only state on the West Coast of our country that has not extended their contingency plan [C-plan] and financial responsibility laws to include nontank vessels. In light of recent spills from these vessels in our waters, and from the railroad on our land, I believe it's time to strengthen our oil spill laws and include these vessels. This bill provides a heightened awareness of prevention and response readiness, and I hope will help reduce and at least control the number and consequences of oil spills in the future. The railroad is also included in the bill. Just since the introduction of SB 273, there have been three incidents involving vessels in or near Alaskan waters. The fishing vessel [F/V] American Star went aground in Unimak Pass. The crew was airlifted off by the [U.S.] Coast Guard. The vessel rolled in the surf and remains on the rock. The M/V [motor vessel] Pacsun, which is a log vessel, went aground in Icy Bay. After several days, it was successfully refloated; however, SERVS [Special Escort Response Vessel System] had to dispatch one of their large tugs as well as response equipment to assist in this effort. Most recently in nearby Prince Rupert, the cargo vessel [M/V] Bovec went aground, and it's our understanding that it remains aground. We have also had a number of experiences in our state of vessels operating without pilots aboard, and I believe that there are marine pilots online and present here today to talk about some of those. I believe you also have a packet in your file that documents, including Coast Guard documentation, some of the concerns about vessels in our waters that have had movement that have been of concern. Of course, we all know the [M/V] Kuroshima grounded out near Dutch Harbor. It spread 39,000 gallons of bunker fuel back in November of 1997. The M/V Jacha, operated in heavy ice floes, ustained both bow and propeller damage. Despite heavy damage, the vessel was loaded and failed to report the incident to the U.S. Coast Guard. I believe that was in Togiak. The Coast Guard believes there was a possible oil spill, and the Coast Guard has concluded that the vessel master and officers were aware of the problems. That same ship, along with the motor vessel Mononok and the Mabah, on February 17 of just this year, 2000, operated in state waters and anchored without a pilot onboard during a trip that should have had a pilot. SENATOR PEARCE emphasized that ships known to be in Alaskan waters probably had a spill that was not reported - in waters that have some of the most precious fishing resources of the state. They have also been moving without a pilot onboard in what she considers an unsafe unsafe manner. For example, in January, the M/V Cherry Star moved without a required pilot aboard, and the Coast Guard sent a letter expressing grave concern over the movement of that ship. SENATOR PEARCE noted that when first introduced, the bill was consistent with Coast Guard and state requirements at 300 gross tons; however, that was raised to 400 gross tons in the Senate Resources Committee, through an amendment proposed by Senator Taylor. Senator Pearce restated that the following are covered: cruiseships, Alaska state ferries, large fishing and processing vessels, and cargo ships. Government-owned and operated vessels, if not engaged in commerce, would be exempt; that would include the university vessel, but the ferries that are over 400 gross tons would be covered, as would the the railroad, which has oil transportation and tanker cars. She stated: Nontanker vessels frequently carry more volume than those carrying fuel as cargo. They're not currently required to have a system and equipment in place to prevent or respond to spills. And while cargo ships usually have their cargo in a double hull, oftentimes the area between the outer hull and the double hull is the area that is used as the actual fuel tank. So, if those ships go on the rocks, while the cargo may not be at risk to be spilled - whatever that cargo might be - the fuel from the ship is [at risk]. So, when we talk about the safety of a double-hulled cargo vessel, it may not be safe in terms of you're just one hull away, in terms of your fuel, from the rocks. At present, these vessels are not required to show us, the state, that they have the ability to finance a cleanup effort and any damages resulting from the spill or [to] pay the fines that are already in law. And nontanker vessels, unfortunately, have had a significant spill history in our waters. We included the railroad because they've had three derailments since 1992 and three spills in the last four months; the largest of those was 167,000 gallons. It's my understanding from the railroad ... today that their cleanup costs - for the spills that they're still presently working on, to try to keep the fuel from getting to the Susitna River - are running in the 13 to 14 million dollar range, but that's just of the costs that they know of to date. Specifically, under the bill, nontank vessels and the railroad would have to have a oil discharge, ... prevention and contingency plan that would be submitted to the Department of Environmental Conservation [DEC], consistent with current requirements of tankers and oil facilities except the planning standard is much lower. Tankers and all fuel barges [and] tank farms throughout the state presently have to meet the standards that are already in statute; those were set back in 1990. Those include being able to contain, control and clean up 15 percent of a spill to a maximum of 300,000 barrels in 72 hours. The planning standard in this bill, for the nontanker vessels, takes a step back from that. It says you have to show that you can have equipment available - it doesn't have to be onboard, but equipment available - to contain and control 15 percent of your maximum volume in 48 hours. There is not a cleanup requirement as we have for the present tanker vessels, whether they be our crude oil tankers or the fuel barges that bring fuel to villages and communities throughout the state, whether it's on the river system or in our ocean waters. There are presently five nonprofit cooperatives in the state that have been formed as a response to the original bill back in 1990. Some of those existed before that bill because requirements were already in place. We came in and strengthened the requirements, but it's not as though tankers didn't have requirements before 1989; we just found out that they weren't working very well. We also under this bill provide that the ships show - the owners show - that they have financial responsibility or the ability to pay for a cleanup of a spill, and that's based on their maximum volume, carrying capacity, of their actual vessel. And, under the bill, we allow that DEC could inspect ... whatever prevention equipment that might be required; and I think that Larry Dietrick can speak more specifically to this, but it sounds as though, maximum, we're probably talking about ... what the [U.S.] Coast Guard appears to be headed toward in their requirements anyway, which is ... a portable pump onboard so that you can handle pumping, off-loading, or even pumping amongst tanks in the vessel, and also some sort of a towing package so that they could get the ships under tow if necessary. ... Larry [Dietrick] can speak more closely to this, but it is not our expectation nor our intent to have to carry any sort of booming or those sorts of materials onboard the nontanker vessels. And, in fact, with the exception of the barges that are pulled by tugs, present standards do not require booms be carried on the actual tanker vessels that you see moving around the big tankers, because there is no way they could deploy it. So, DEC would be allowed to inspect, just to make sure that the equipment was onboard as required and the response contractors do go through drills. And those would continue to be allowed as they are already happening around the state. The bill not only allows but actually requires DEC to adopt alternative ways to achieve equivalent levels of spill prevention and response in place of certain C- plan requirements if there are areas where those requirements cannot be met. Mr. Dietrick can give you a more specific example, but under the present law and the requirement for fuel barges to go to some of the remote areas of the state, their present requirements are, under the present law, that they would have to show that they could actually clean up a spill in 72 hours. It's apparent to everyone concerned that in our remote waters that is not going to be possible, so DEC has already used an alternative compliance and has allowed the fuel carriers in those remote areas of the state to adopt lower planning standards, because we all understand that there are some events that you are just not going to be able to plan for, and to try to get equipment that would actually clean up, within 72 hours, a spill to every port in the state or along all the coastline of the state is impossible. This bill has even lower standards, so the requirements in terms of equipment that's already out in the remote areas - there's equipment in Nome, there's equipment sitting in Bethel, there's equipment in Naknek, I believe, in Dillingham, there's equipment in Unalaska - we would not expect to see more equipment be required because of this spill; it's already out there. Financial responsibility: the vessel operators and owners and the railroad would be required to show that they can respond and clean up a major spill to the tune of 300 dollars per barrel of persistent oil or 100 dollars per barrel of nonpersistent. We use the Coast Guard definitions of persistent versus nonpersistent. After much discussion on the Senate side, everybody agreed that those ... [were] the ... definitions to use. We have complied with Coast Guard standards that are already in place, wherever possible, to make it easy for everybody to understand how to comply, and so they understand the terms. And, Representative Hudson, you would probably understand those certainly better than I. The new law, we made changes on the Senate side ... to have compliance and have the laws take effect so that we would have an opportunity at the legislative level to look at what the draft regulations next year and then a second time of the following years. So, for the moment, in this bill, September 1, 2000, would be when we would have to have proof of financial responsibility, but the actual date for the contingency plans to go into effect has been pushed back to April 1, 2002, so that's two years out. I know that we have some of the pilots online, as I mentioned, to discuss the realities in our state of some of the ships that we see coming and going. ... We have excluded deck barges by defining nontanker vessels as vessels that are self-propelled. We have raised the gross tonnage threshold from 300 to 400 gross tons. We have removed the existing direct action clause that's in present law to allow P & I [Protection & Indemnity] clubs to participate in the financial responsibility section of the bill. We've also extended the effective date to April 1, as I mentioned; that will allow additional time for industry to participate in the process, as well as providing legislative oversight during the process of drawing up the [regulations] and getting compliance. We have proposed liability language that you have in your packet, ... liability language that will allow the co-ops ... to have an umbrella response in the response plan that they have, being an umbrella response that everybody can use as that portion of their plan that would then limit the liability of the other members of the nonprofit co-op. ... In response to request by the industry, we specifically would like to see language that requires that tramp vessels making one-time calls have to be allowed to come into our waters under an umbrella plan and costs must be reasonable. Now, that is not anything new. At present, Tesoro brings ... tramp vessels into Cook Inlet, as do the oil companies, as have, in the past, other companies that have been bringing fuel either in or out of our waters, particularly jet fuel. We also support the language that would say that it's not our intent that we force nontank vessel owners to join any particular PRAC [Primary Response Action Contractor]. These response contractors that have [sprung up around the state have done so in response to the present laws that are in place. They include Alaska Clean Sea; SERVS, which is the one primarily for the Valdez oil terminal of Alyeska, along with Chadux [Alaska Chadux Corporation]; CISPRI [Cook Inlet Spill Prevention Response Incorporated], which is the Cook Inlet response contractor that has grown up because of the petroleum tankers and the jet fuel handling in Cook Inlet; and then in Southeast Alaska you have SEAPRO [Southeast Alaska Prevention Response Organization], which is also primarily because fuel, of course, is, as all of you are painfully aware and so are we when we are down here -- all the fuel in this area of the state has to be brought in, and it's waterborne. Those are already in place; it's not our intent to tell any entity that they have to join any specific one of those. We think that there is competition amongst them and, as has been mentioned in our work sessions, some of the folks in the industry may decide that they would rather form their own co-ops and have their own response contractors .... Number 1560 REPRESENTATIVE COWDERY requested confirmation that they were addressing primarily water vessels and the railroad. SENATOR PEARCE answered that he was correct. REPRESENTATIVE COWDERY asked whether it includes trucks that deliver fuel to service stations or to private residences. SENATOR PEARCE responded no. Number 1595 REPRESENTATIVE BARNES referred to the fiscal notes, which she totaled up to $731,507. She noted that there was no fiscal note in the committee packet for the railroad. She asked Senator Pearce to address how SB 273 interacts with the Oil Pollution Act of 1990 (OPA 90); she said under that law there were considerable burdens placed on all the people that would fall under this bill. SENATOR PEARCE explained that OPA 90 only covered the oil tankers; therefore, the ships brought in under SB 273 are not under OPA 90 requirements. Number 1667 REPRESENTATIVE BARNES referred to a letter in the committee packet from the Alaska Steamship Association (ASA), and read: ASA offers the following comments relative to SB 273. Many of the member companies (cargo, container and cruise) in ASA operate nontank vessels, and thus we are directly impacted by the proposed legislation. Our members also provide maritime transportation services to the Alaskan timber, mining, and fishing industries. Our specific concerns are the additional financial burden this bill places on us, over and above what we already bear under existing federal statute; [it] is not clear and may be substantial. REPRESENTATIVE BARNES commented that obviously the non-oil tanker vessels do fall under the federal Act because according to the ASA they are already paying under the federal statute. She continued to read from the letter" The practical impact of this bill is that we will be forced to join the only statewide co-op in place at this time, Chadux; to our knowledge, Chadux does not have the equipment that may be required to respond to spills of the persistent oils that many of our cargo vessels carry as bunkers. REPRESENTATIVE BARNES asked why the ASA is saying that they fall under OPA 90, when Senator Pearce says they don't. She also asked what the impact is on timber, mining and fishing in the state. SENATOR PEARCE responded that the railroad should have provided a fiscal note, which would show that the cost would be to the railroad, not to the general fund. It does not go through the state's budget, because they are not under the Executive Budget Act. Second, OPA 90 does not cover ships, but that does not mean that the U.S. Coast Guard does not have requirements for ships in terms of response capabilities and costs. She does not think that the ASA letter is dealing with OPA 90 requirements, Senator Pearce said. She indicated it is true that there is only one statewide co-op at this time, but that does not mean that they have to join that one. REPRESENTATIVE BARNES said she is very aware of how the railroad is funded and that they do not fall under the Executive Budget Act; however, the railroad is a state asset that is continually having to turn to the federal government to upgrade their equipment. This will have an impact of some nature, and she thinks they should be privy to that. In addition, it seems to her that there is considerable impact to the state budget from the fiscal notes that she has totaled up. More important is what the impact is going to be on the Red Dog Mine, Greens Creek Mine and basically any mining operation that moves in and out of the state, because it is very difficult for these entities to compete in the world market. So any additional cost in transmitting the ore has a tremendous impact on them. She indicated that her main concern is that under SB 273 everything that moves in and out of the state on the water, with regard to resource development, is affected. She wondered what the economic impact will be on all those industries. Number 1973 SENATOR PEARCE indicated someone from Chadux was online and would be willing to talk about the estimated costs. REPRESENTATIVE BARNES stated that she wants any testimony from Chadux or any other entity that collects money from these companies in writing so that she can analyze it on a case-by-case basis. She said she resents the railroad or anybody else giving her a zero fiscal note. She added: It says SB 273 will create no fiscal impact to the state general fund. I know that; I'm not an idiot. I want a correct fiscal note from the railroad that clearly lays out what it's going to cost, and never mind the general fund. The railroad is an asset of the state, and please, in the future, don't give me a zero fiscal note expecting me to look at it like I'm some kind of an idiot. Number 2104 CO-CHAIR HUDSON wondered about the relationship of vessels that would be affected by SB 273 to not only OPA 90 but perhaps other federal maritime requirements of the U.S. Coast Guard. He invited Captain Ed Page of the U.S. Coast Guard to come before the committee. REPRESENTATIVE BARNES requested that Commissioner Michele Brown from the Department of Environmental Conservation come before the committee. CO-CHAIR HUDSON indicated that Commissioner Brown had been invited. SENATOR PEARCE explained that Commissioner Brown was in transit to Anchorage from a meeting in Philadelphia, where she was working on getting Cominco's air quality permits. Number 2200 CO-CHAIR HUDSON requested clarification that OPA 90 relates to bulk oil transport and the associated maritime requirements surrounding that. CAPTAIN ED PAGE, United States Coast Guard, replied that OPA 90 predominantly focused on oil tankers in the wake of the Exxon Valdez incident; however, it also had some influence on nontank vessels, although he thinks there is some confusion as to how much. It was certainly not to the level envisioned by Senator Pearce's bill, he said, with respect to the pollution response caches of equipment; however, OPA 90 further raised the liability, and the certificate of financial responsibility had to be carried by non-petroleum vessels. CAPTAIN PAGE said there is a suite of regulations to deal with prevention, and there is also regulation to deal with prevention and response for tank vessels. However, Senator Pearce is discussing the non-petroleum vessels with respect to requiring contingent plans and shore equipment. There is internationally an oil spill pollution emergency plan requirement that has been adopted by the IMO for vessels over 400 gross tons, which has some information on how to respond to a spill. It is essentially a two- or three- page document. CAPTAIN PAGE informed members that Senator Pearce's bill is looking at something more comprehensive with respect to spill response. It is an area that the U.S. Coast Guard, other than through the liability of provisions, has not specifically addressed. He added that, as addressed previously, OPA 90 does have some application to it. The only area he would have concern would be with the inspection provisions of prevention measures that now requires equipment on vessels; it was referenced in the ASA letter regarding the U.S. Supreme Court Intertanko case, with respect to carrying equipment being beyond the purview of the U.S. Coast Guard. CO-CHAIR HUDSON reflected on the Exxon Valdez oil spill, which he said really was the aegis of significant oil spill laws in Alaska. He always took the position that a state should not statutorily, or in any other way, inject itself into actual vessel inspections, he said. He believes that vessel inspection, whether of an oil tanker or a large passenger vessel, should be left up to a specialist. He agreed that the DEC does not have the expertise to go on a vessel and determine if a particular tank is gas-free or whether there is a hardly detectable crack or metal fatigue. He noted that they do not want any of that in their statutory language. He referred to Representative Barnes' question about the relationship with OPA 90. He asked Captain Page if he would address that question. CAPTAIN PAGE indicated he does not see any real conflicts with OPA 90. In fact, the one area that is somewhat duplicative in state legislation, as far as the liability caps, is covered, and that is allowed for; Congress has specifically given the states that authority to add on or to have their own liability provisions with respect to vessels. He noted that it is one provision that he sees that exists and is acceptable. With respect to the provision of spill response equipment, that would not be addressed by OPA 90 for non-petroleum tank vessels. REPRESENTATIVE BARNES asked Captain Page if he does admit that there is some overlap in liability between the federal law and SB 273, even though the state has been given the opportunity to make laws of its own through OPA 90. Number 2453 CAPTAIN PAGE indicated that the only overlap he has concerns with, as he mentioned before, is with the inspection provisions. He commented on Senator Pearce's reference to prevention with regard to pumps onboard vessels; he said that is dangerous territory with respect to the Intertanko case because it is requiring equipment on vessels that are engaged in international trade, and that is usually considered under the purview of the U.S. Coast Guard to determine. He said that is an area he has concern with and where he would expect some overlap. SENATOR PEARCE explained that the financial responsibility requirements under OPA 90 are to the federal government, not to the state. Therefore, they have to show financial responsibility but it is for the fines under federal law, and the money that they would spend on the cleanup for a vessel could be paid back to the U.S. Coast Guard. The inspection provision follows the requirements of SB 273, not inspecting for safety of a vessel, although under present law regarding crude oil tankers, tank farms, barges and oil field equipment, DEC has the right to go in if nobody else is doing an inspection. Therefore, that law is not being changed. They are just allowing DEC to inspect any requirements of a contingency plan and anything that the vessels have agreed to do with respect to prevention credits; DEC can inspect that they are actually doing what they said they would do, and that is what the inspection provisions in SB 273 does. It has nothing to do with inspecting for whether a vessel is seaworthy, Senator Pearce added. REPRESENTATIVE BARNES referred to an article out of the Anchorage Daily News titled "Facts Needed to Form Cruise Ship Regulations," dated March 17, 2000, in which Commissioner Michele Brown says, "Once we have accurate facts that we know are sound, we can structure management and regulatory decision making upon that foundation. The working group will make public reports on that aspect (indisc.) as well." Representative Barnes noted that Commissioner Brown also says in the article that before any legislation is developed, they need to address four specific concerns. Noting the date of the article, she suggested they had not had time to identify those concerns. Number 2766 REPRESENTATIVE HARRIS asked whether the vessels in service that are maintaining an oil spill response capability have to provide their own C-plans. SENATOR PEARCE indicated response vessels are exempt under present law. LARRY DIETRICK, Acting Director, Division of Spill Prevention & Response, Department of Environmental Conservation, stated that they have been in contact with Alyeska, and that in the negotiated rule making they would make it explicit that response vessels are exempt. REPRESENTATIVE BARNES requested clarification that even though the oil spill money was used to build the ferry [the Kennicott], it is not an "oil-sucking ferry." SENATOR PEARCE pointed out that it only provides a platform that can be used as a command center. The ferry itself is not a "skimmer," and the marine architects laughed at the idea, quite frankly. She explained that what the ferry system has done, in conjunction with DEC, is to have roll-on/roll-off containers at ports around the state. REPRESENTATIVE BARNES indicated that when the funding for the ferry was before the state, she was serving on the Finance Committee, and the way they got around using federal funds was that they were going to make it an "oil-sucking ferry." She wondered how [the state] had managed to use federal funds. SENATOR PEARCE agreed that the early discussion and utilization of money was supposedly to build a natural-response vessel, and that is not what they ended up building. TAPE 00-33, SIDE B CO-CHAIR HUDSON recalled that the ferry was built with a combination of federal highway money. What they did with the Kennicott that they did with no other vessel was take $12 million out of the nickel-a-barrel fund or one of the other oil funds. The Kennicott has the capability of hauling booming material; it also has redundant communication systems and the ability to bring onboard 100 to 150 workers who could provide a floating command center. He indicated Representative Barnes was right that it was the first time, and it was characterized beyond what it actually was. Number 2851 CO-CHAIR MASEK wondered what the process is regarding tanker vessels operating in Western Alaska and what they have to do to comply with requirements. MR. DIETRICK explained that in Western Alaska they currently have a plan in place with the non-crew operators, which was just negotiated; it provides for a hub-based system to get to the remote areas of Alaska, which allows a tiered response anywhere from Nome, Bethel, Naknek, Dillingham, Dutch Harbor, Kodiak or Cook Inlet. With any spill in the state, 80 percent of the problem is logistics, he noted, so that is what drives the response strategy. The hub-based system is designed to provide for 24-hour delivery to a scene from any one of the hubs. It is also backed up by the ability to deliver equipment from Anchorage to that hub within the same 24 hours and [to deliver] equipment from out-of-state within 72 hours. CO-CHAIR MASEK wondered how a vessel that is only in Alaska for a few days would comply with the provisions under SB 273. Number 2742 MR. DIETRICK responded that in working with the sponsors, they recognize that everyone is aiming for a streamlined process, and they envision a four-part plan: one, an onboard vessel response plan; two, the membership in a cooperative; three, negotiated prevention measures for onboard; four, financial responsibility that the ship could execute through the existing infrastructure. SENATOR PEARCE added that under the present tanker vessel law, she had mentioned Tesoro as one example of an entity that brings spot charter vessels into the state. Tesoro is the owner of the crude oil onboard and the holder of the actual plan. She believes that under SB 273, for the non-crude carriers, for the non-tanker vessels, they could build an umbrella ability so that every vessel does not have to have a plan. She noted that the oil-tankers turn around C-plan approvals in 24 hours for huge crude tankers. CO-CHAIR MASEK said in looking at some of the C-plan requirements in SB 273, she wonders how the operators and owners can develop a C-plan if the guidelines have not yet been developed. MR. DIETRICK explained that the intent with the nontank vessels would be to basically have a single plan that would be incorporated in the regulations. The four-part notification requirement that he had just discussed would be the activation of the plan. It is a plan by rule; when they negotiate the regulations, that is when the guidelines would be discussed and incorporated into the rule. Number 2541 CO-CHAIR HUDSON asked what the window of opportunity is for nonpersistent fuel cleanup. CAPTAIN PAGE answered that with regard to the refined products - the diesels - the majority of that oil within 24 hours will have dissipated and evaporated, although a fraction will remain for a few days. He explained that when they are talking about 300- to 400- foot vessels, they are moving into heavy persistent oils, such as from bulkers and cruiseships. The persistent fuel oils stay in the water a lot longer, and they have the heavier fraction of petroleum products. He indicated that low-speed diesels tend to be the choice these days because of lower cost, but they also have lower quality. Therefore, they are seeing more and more of the persistent oils. CO-CHAIR HUDSON indicated that the concern he has heard from a number of people is with the unknown factors in the negotiated regulations, for example, "Trust me, we are going to sit down and negotiate something that you'll be able to live with and that we'll do what you want to do in the legislation here." He understood why Representative Barnes wanted Commissioner Brown to come before the committee to discuss the negotiated regulation process, he added, because it looks as though that is going to be a concern. Number 2337 SENATOR PEARCE informed the committee that she was chair of the Oil & Gas Committee on the Senate side when the Exxon Valdez oil spill happened. House Bill 567, which went through the Senate, required a C-plan and had planning standards and requirements that were extreme. They fought to get standards in present law for the crude carriers and the petroleum industry that were not ridiculous and that would help to protect the waters of the state, she recalled, and thought they came up with a balance. SENATOR PEARCE indicated she finds herself in an interesting position of defending DEC, because after HB 567 was put into effect DEC tried to help the statewide fuel carriers that found themselves covered under HB 567. The area was vast, and there was no way for those entities that carry fuel to meet requirements to clean up 15 percent of their total volume, a maximum of 300,000 barrels, in 72 hours; therefore, DEC went through an alternative compliance effort. SENATOR PEARCE pointed out that those communities are able to get their fuel today at a price that is not totally outrageous because DEC set up a cascading hub-system and was willing, under alternative compliance, to back off on the absolute planning standard. She noted taht SB 273 also pushes out the effective date to April 1, 2002. The legislature will have an opportunity next year or the following year to take action to make changes. She reiterated that they have seen DEC work with the industry and come to some rational decisions. She noted that there are some costs involved, but protecting the waters of Alaska is important enough that [the legislature] should make sure that they are protected. Number 2059 REPRESENTATIVE BARNES wondered how much a company like Petro Star Inc. has to pay for being a member of SEAPRO and on each individual run they make. She indicated her real concern is what the economic impact is going to have on the state in moving goods and services. SENATOR PEARCE replied that Petro Star Inc. has to meet greater standards than those in SB 273; the latter will cost less. Petro Star Inc. is carrying fuel under the tanker-vessel law, and they have to prove they can clean up the fuel in 72 hours. REPRESENTATIVE BARNES said she understands that, but she is still trying to get an idea of what the associated cost will be on the industry in the state. She knows it is going to cost the state close to a billion dollars, she added, pointing out that she had totaled the fiscal notes to be $731,507. SENATOR PEARCE reiterated that Chadux was online. MR. DIETRICK asked the committee to consider the three associated rule makings: one, alternative compliance; two, the best available technology regulations; and, three, the efforts on the North Slope to try to get the response situation and broken ice taken out. He addressed the question of whether nontank vessels would have to carry booms and skimmers onboard, saying the answer is no because those would be served by the hub-system. [SB 273 was held over.] CO-CHAIR MASEK recessed the House Resources Standing Committee meeting at 3:15 p.m. to the call of the chair.