Legislature(2001 - 2002)

02/12/2001 01:30 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                       February 12, 2001                                                                                        
                           1:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Beverly Masek, Co-Chair                                                                                          
Representative Drew Scalzi, Co-Chair                                                                                            
Representative Hugh Fate, Vice Chair                                                                                            
Representative Joe Green                                                                                                        
Representative Mike Chenault                                                                                                    
Representative Gary Stevens                                                                                                     
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Lesil McGuire                                                                                                    
Representative Mary Kapsner                                                                                                     
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 61                                                                                                               
"An Act  authorizing the commissioner  of fish and game  to award                                                               
grants  for  habitat  restoration or  enhancement  projects;  and                                                               
providing for an effective date."                                                                                               
     - MOVED HB 61 OUT OF COMMITTEE                                                                                             
HOUSE BILL NO. 55                                                                                                               
"An Act regarding oil discharge  prevention and cleanup involving                                                               
self-propelled  nontank vessels  exceeding  400 gross  registered                                                               
tonnage  and  railroad  tank  cars  and  related  facilities  and                                                               
operations and  requiring preparation  and implementation  of oil                                                               
discharge  contingency  plans  for   those  nontank  vessels  and                                                               
railroad tank cars; amending the  definition of 'response action'                                                               
that  relates  to releases  or  threatened  releases of  oil  and                                                               
thereby amending  the duties and  liabilities of  response action                                                               
contractors;  authorizing  compliance  verification  for  nontank                                                               
vessels  and for  trains and  related facilities  and operations;                                                               
and providing for an effective date."                                                                                           
     - MOVED CSHB 55(TRA) OUT OF COMMITTEE                                                                                      
PREVIOUS ACTION                                                                                                               
BILL: HB 61                                                                                                                   
SHORT TITLE:HABITAT RESTORATION/ENHANCEMENT GRANTS                                                                              
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
01/16/01     0093       (H)        READ THE FIRST TIME -                                                                        
01/16/01     0093       (H)        FSH, RES, FIN                                                                                
01/16/01     0093       (H)        FN 1: ZERO(DFG)                                                                              
01/16/01     0093       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
02/05/01                (H)        FSH AT 5:00 PM CAPITOL 124                                                                   
02/05/01                (H)        Moved Out of Committee                                                                       
02/05/01                (H)        MINUTE(FSH)                                                                                  
02/07/01     0261       (H)        FSH RPT 6DP 1NR                                                                              
02/07/01     0261       (H)        DP: KAPSNER, KERTTULA,                                                                       
                                   STEVENS, WILSON,                                                                             
02/07/01     0261       (H)        SCALZI, DYSON; NR: COGHILL                                                                   
02/07/01     0261       (H)        FN1: ZERO(DFG)                                                                               
02/12/01                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
BILL: HB 55                                                                                                                   
SHORT TITLE:OIL DISCH PREVENTION: NONTANK VESSELS/RR                                                                            
SPONSOR(S): RLS BY REQUEST                                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
01/12/01     0070       (H)        READ THE FIRST TIME -                                                                        
01/12/01     0071       (H)        TRA, RES, FIN                                                                                
01/23/01                (H)        TRA AT 1:30 PM CAPITOL 17                                                                    
01/23/01                (H)        Heard & Held                                                                                 
01/25/01                (H)        TRA AT 1:00 PM CAPITOL 17                                                                    
01/25/01                (H)        Heard & Held                                                                                 
01/25/01                (H)        MINUTE(TRA)                                                                                  
02/01/01                (H)        TRA AT 1:00 PM CAPITOL 17                                                                    
02/01/01                (H)        Heard & Held                                                                                 
02/01/01                (H)        MINUTE(TRA)                                                                                  
02/06/01                (H)        TRA AT 1:30 PM CAPITOL 17                                                                    
02/06/01                (H)        Moved CSHB 55(TRA) Out of                                                                    
02/06/01                (H)        MINUTE(TRA)                                                                                  
02/07/01     0257       (H)        TRA RPT CS(TRA) 4DP 1AM                                                                      
02/07/01     0258       (H)        DP: KAPSNER, KOOKESH, SCALZI,                                                                
02/07/01     0258       (H)        AM: KOHRING                                                                                  
02/07/01     0258       (H)        FN1: (DOT)                                                                                   
02/07/01     0258       (H)        FN2: (DEC)                                                                                   
02/12/01                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
KEN TAYLOR, Director                                                                                                            
Habitat and Restoration Division                                                                                                
Alaska Department of Fish and Game (ADF&G)                                                                                      
PO Box 25526                                                                                                                    
Juneau, Alaska 99802-5526                                                                                                       
POSITION STATEMENT:  Spoke in support of HB 61.                                                                                 
LARRY DIETRICK, Director                                                                                                        
Division of Spill Prevention and Response                                                                                       
Alaska Department of Environmental Conservation                                                                                 
410 Willoughby                                                                                                                  
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified in support of HB 55.                                                                             
BRIAN ROGERS                                                                                                                    
Information Insights, Inc.                                                                                                      
751 Old Richardson Highway, Suite 235                                                                                           
Fairbanks, Alaska  99701                                                                                                        
POSITION STATEMENT:  Testified in support of HB 55.                                                                             
BRECK TOSTEVIN, Assistant Attorney General                                                                                      
Environmental Section                                                                                                           
Civil Division (Anchorage)                                                                                                      
Alaska Department of Law                                                                                                        
1031 West Fourth Avenue, Suite 200                                                                                              
Anchorage, Alaska  99501-1994                                                                                                   
POSITION STATEMENT:  Spoke in support of HB 55.                                                                                 
PAUL FUHS, Task Force Member                                                                                                    
1635 Sitka #301                                                                                                                 
Anchorage, Alaska  99501                                                                                                        
POSITION STATEMENT:  Spoke in support of HB 55.                                                                                 
ACTION NARRATIVE                                                                                                              
TAPE 01-10, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIR  BEVERLY  MASEK  called  the  House  Resources  Standing                                                               
Committee meeting  to order at 1:30  pm.  Members present  at the                                                               
call to  order were Representatives  Masek, Scalzi,  Fate, Green,                                                               
Chenault, Stevens, and Kerttula.                                                                                                
HB  61 - HABITAT RESTORATION/ENHANCEMENT GRANTS                                                                               
CO-CHAIR MASEK  announced that  the first  order of  business was                                                               
HOUSE BILL NO.  61, "An Act authorizing the  commissioner of fish                                                               
and game to  award grants for habitat  restoration or enhancement                                                               
projects; and providing for an effective date."                                                                                 
Number 0134                                                                                                                     
KEN TAYLOR,  Director, Habitat  and Restoration  Division, Alaska                                                               
Department of Fish  and Game (ADF&G), explained  that the purpose                                                               
of  HB  61 is  to  provide  the  commissioner of  ADF&G  granting                                                               
authority  for  federal  receipts  for  habitat  and  restoration                                                               
projects  only.    He  emphasized that  the  bill  restricts  the                                                               
commissioner  from  using any  funds  from  federal aid,  Dingle-                                                               
Johnson/Wallop-Breaux or  Pitman Robertson funds.   He  said that                                                               
most  of  the  funds  would  come  from  the  excise  taxes  that                                                               
sportsmen  pay for  hunting  and fishing  sports  equipment.   He                                                               
explained  that  ADF&G is  asking  for  this "limited"  authority                                                               
because  they have  experienced  difficulty in  making grants  to                                                               
private landowners, "particularly on  the Kenai," for restoration                                                               
projects.  He told the House Resources Standing Committee:                                                                      
     Since 1995,  we've had  a 50/50  cost-share restoration                                                                    
     program  with  landowners  along the  Kenai  River,  to                                                                    
     restore  and  stabilize  stream banks  that  have  been                                                                    
     trampled by a  lot of fishing use. In  order to conduct                                                                    
     this program,  we've had to  take the funding  that was                                                                    
     appropriated  by  the  legislature  through  [SB  183],                                                                    
     which  were  EVOS  [Exxon Valdez  Oil  Spill]  criminal                                                                    
     settlement  funds,  and  funnel it  through  a  federal                                                                    
     agency  so that  they  could actually  do the  granting                                                                    
     necessary  to  the  private individuals  that  own  the                                                                    
     land.    In doing  so,  the  federal agencies  take  11                                                                    
     percent of the  funding right off the top.   This is an                                                                    
     administratively  cumbersome process  and  we feel  the                                                                    
     public  would be  best served  if we  could make  these                                                                    
     grants directly to those individuals.                                                                                      
MR.  TAYLOR pointed  out  that HB  61 is  identical  to the  bill                                                               
passed by  the House last year,  which went to the  Senate at the                                                               
end  of session,  but "ran  out of  time before  it passed."   He                                                               
encouraged the  House Resources Standing Committee  to support HB                                                               
61.  He addressed a  concern expressed during the House Fisheries                                                               
Committee meetings  regarding that the  grants might be  used for                                                               
other purposes  or be  granted to  "some nonprofit  whose motives                                                               
weren't necessarily pure."  Mr. Taylor's response to that was:                                                                  
     Since  1995,  we've had  186  grants  applied for,  180                                                                    
     projects that  were approved - and  we've completed 170                                                                    
     of  them  -  and  if anyone  on  [the  House  Resources                                                                    
     Standing Committee]  is interested,  I did  hastily put                                                                    
     together  a list  of  all those  projects  - who  those                                                                    
     grants went  to over the last  six years.  And  I think                                                                    
     you'll   see  that   this  program   has  been   highly                                                                    
     legitimate,  it goes  to landowners  that have  habitat                                                                    
     that  needs repair.   The  landowner  pays 50  percent.                                                                    
     [ADF&G]  has  been  covering 50  percent  through  this                                                                    
     cost-share  program,   and  occasionally  if   we  find                                                                    
     outside money  from some other  federal agency  that we                                                                    
     can put in there as well.                                                                                                  
Number 0599                                                                                                                     
MR. TAYLOR,  in response  to a question  by Co-Chair  Masek, said                                                               
that he didn't  think it would ever be the  case that there would                                                               
be grants awarded  in habitat and restoration in order  to stop a                                                               
development project,  such as a  lodge.  He said  such activities                                                               
are  almost always  done  on  private land  and  the habitat  and                                                               
restoration  grants  given out  in  the  past  have been  to  aid                                                               
development on  a particular piece  of private land, not  to stop                                                               
development on someone else's land.                                                                                             
Number 0645                                                                                                                     
REPRESENTATIVE GREEN  asked if ADF&G  worked in  conjunction with                                                               
the Kenai River Sport[fishing] Association (KRSA).                                                                              
MR.  TAYLOR  said yes.    He  listed  several groups  that  ADF&G                                                               
"coordinates" and "cooperates" with,  including KRSA, Kenai Youth                                                               
Conservation Corp, and the Alaska Fly Fisherman's Association.                                                                  
Number 0708                                                                                                                     
REPRESENTATIVE GREEN  asked if [those  agencies listed  above] do                                                               
[habitat  restoration] on  public land  versus ADF&G  [restoring]                                                               
private land.                                                                                                                   
MR. TAYLOR replied that ADF&G  has been involved in many projects                                                               
along the  Kenai River, public as  well as private projects.   He                                                               
cited the  EVOS small-parcel  purchases along  the Kenai  and the                                                             
Kenai Borough properties  as two examples of  ADF&G's public land                                                               
restoration involvement.                                                                                                        
Number 0776                                                                                                                     
REPRESENTATIVE GREEN  inquired as to whether  the landowners come                                                               
to [ADF&G] for assistance, or does [ADF&G] come to them.                                                                        
MR.  TAYLOR answered  that  when the  landowners  found out  that                                                               
funding was  available, they  approached ADF&G.   He  referred to                                                               
page 2 of the handout in  the bill packet, stating that it should                                                               
actually  follow  the  last  page,  which  is  titled,  "Decision                                                               
Matrix."   He discussed  the categories  listed on  the "Decision                                                               
Matrix" that  are used  to rate an  applicant and  prioritize the                                                               
Number 0873                                                                                                                     
REPRESENTATIVE GREEN  asked if the  Decision Matrix  had anything                                                               
to do with the amount of money that was awarded.                                                                                
MR. TAYLOR  replied yes.   He approximated  that ADF&G  was given                                                               
about $1.5  million - appropriated  by the legislature  six years                                                               
ago through  SB 183 - that  they have been awarding  each year to                                                               
REPRESENTATIVE GREEN  referred to  the Decision Matrix  and asked                                                               
Mr.  Taylor if  the varying  amounts awarded  were determined  by                                                               
[ADF&G], by the application, or through an evaluation.                                                                          
MR. TAYLOR answered that the  amount awarded is "determined by an                                                               
evaluation  of  the project:    The  cost  benefits of  what  the                                                               
applicant has proposed versus what  we think would be the return.                                                               
And you'll  find one of the  factors that we used  for ranking is                                                               
reasonable project cost."                                                                                                       
REPRESENTATIVE GREEN clarified his question as follows:                                                                         
     If I  were a landowner down  there, and I came  in with                                                                    
     (indisc.)... $12,000,  or heavens, $19,000,  would your                                                                    
     group say, "Well Green, you  wanting $19,000 to do what                                                                    
     you  said, we've  gone through  this matrix,  and yeah,                                                                    
     you qualify,  but it's not  $19,000, it's  only $8,500.                                                                    
     And so  we'll match you  on $8,500, we're not  going to                                                                    
     match you  on $19,000."   And so  you get  your $9,500,                                                                    
     and that just  about does it, and I don't  have to come                                                                    
     up with anything.                                                                                                          
MR. TAYLOR replied as follows:                                                                                                  
     I have  not been  through this particular  process with                                                                    
     our  staff  on  the  Kenai, and  I  can't  answer  your                                                                    
     question.   But I suspect  that the way things  work is                                                                    
     that they  have a  pretty good  idea, depending  on how                                                                    
     many  feet  of  river   frontage  you're  going  to  be                                                                    
     restoring,  what techniques  you're  going to  use.   I                                                                    
     know that  our staff has  a very good estimate  of what                                                                    
     it's going  to cost  per (indisc.) ...  per 10  feet of                                                                    
     riverbank  restoration,  depending  on  the  technique.                                                                    
     So,  while an  applicant may  come in  asking for  more                                                                    
     than what it might cost,  they're not likely to get all                                                                    
     of it  paid for  through this.   I  think ...  we match                                                                    
     dollar  for dollar,  and if  we have  a project  that's                                                                    
     $20,000, and it only  costs $15,000, the applicant will                                                                    
     pay $7,500, and the state will pay $7,500.                                                                                 
Number 1065                                                                                                                     
REPRESENTATIVE  GREEN asked  if  this  [habitat restoration]  has                                                               
been done on other "sports rivers."                                                                                             
MR.  TAYLOR said  that so  far the  efforts of  the program  have                                                               
primarily focused  on the Kenai  River, but there have  been some                                                               
smaller  federal grants  used to  try to  "expand this  effort to                                                               
some of the  streams in the Matanuska Valley."   He remarked, "It                                                               
isn't anything that's not a  50/50 cost-share program set up like                                                               
this."  Mr. Taylor  added that it is the hope  of ADF&G to expand                                                               
the program to benefit other parts of the state.                                                                                
Number 1150                                                                                                                     
MR.  TAYLOR,  answering  a  question  by  Representative  Scalzi,                                                               
stated the following:                                                                                                           
     Last year  the bill  allowed for the  municipalities to                                                                    
     have a tax  break for restoration, it  gave the private                                                                    
     landowners  a potential  tax break.   The  original law                                                                    
     was specific to the Kenai  [River], and now that's been                                                                    
     expanded statewide.   So other municipalities,  if they                                                                    
     choose to, can provide for  a tax break for restoration                                                                    
CO-CHAIR  SCALZI  asked  if  the  50/50 match  was  part  of  the                                                               
original legislation.                                                                                                           
MR. TAYLOR answered that it  wasn't part of that legislation, but                                                               
was a  "companion piece."   He said that more  private landowners                                                               
get involved in  restoration if a tax break is  made available to                                                               
them, and  the current  state statutes are  such that  only Kenai                                                               
residents can get a tax break.                                                                                                  
Number 1230                                                                                                                     
CO-CHAIR  MASEK   stated  for  the  record   that  Representative                                                               
Kerttula was present.  She  referred to an earlier statement made                                                               
by Mr. Taylor  regarding a legislator who  had expressed concerns                                                               
over delegated funds being spent  for ill purposes, and asked him                                                               
to expound on that remark.                                                                                                      
MR.   TAYLOR  explained   that   the  original   bill  gave   the                                                               
commissioner  [of ADF&G]  "broad granting  authority" of  federal                                                               
and  state funds,  with no  specified purpose.   Therefore,  many                                                               
legislators were  concerned about  letting the state  grant money                                                               
that  was not  earmarked for  a certain  purpose.   Subsequently,                                                               
ADF&G "narrowed  the scope" on  federal and state  funds spending                                                               
in habitat  restoration.   Although there  was concern  that this                                                               
type of program  could be misused in the future,  the language of                                                               
the bill  was structured to  prevent its  misuse.  He  offered to                                                               
work on  the language  with any  legislator still  concerned with                                                               
CO-CHAIR MASEK  referred to  page 1,  lines 5-6,  regarding grant                                                               
authority, and stated that the wording needed "fine tuning."                                                                    
MR. TAYLOR  directed Co-Chair Masek's attention  to the remainder                                                               
of the language in Section 1 of the bill.  He read:                                                                             
     [The  commissioner]  may   award  grants  from  federal                                                                    
     funds,  other than  funds  received  under the  federal                                                                    
     Pittman-Robertson   and   Dingell-Johnson/Wallop-Breaux                                                                    
He stated, "In other words, federal  funds that are not a part of                                                               
our continuing  appropriation from Congress, that  are the excise                                                               
taxes on sporting goods."                                                                                                       
MR.  TAYLOR explained  that those  funds could  only be  used for                                                               
habitat restoration  or enhancement projects.   He mentioned that                                                               
there is big movement in the  Western United States right now for                                                               
Congress to provide more funding  for salmon habitat restoration,                                                               
because  of   the  endangered  species   issue  in   the  Pacific                                                               
Northwest.   Mr.  Taylor said  that,  theoretically, if  Congress                                                               
provides those  funds, ADF&G  would come  to the  legislature and                                                               
request a capital  project.  The money appropriated  would not be                                                               
part of ADF&G's regular operating  budget.  The legislature would                                                               
examine  ADF&G's outline,  determine  whether or  not to  provide                                                               
those funds,  specify the use of  the funds, and ensure  that the                                                               
funds were used appropriately.                                                                                                  
Number 1595                                                                                                                     
CO-CHAIR MASEK  asked if there  were any further questions.   She                                                               
closed public testimony, and opened up committee discussion.                                                                    
REPRESENTATIVE  FATE  made  a  motion   to  move  HB  61  out  of                                                               
committee.  There being no objection,  HB 61 was moved out of the                                                               
House Resources Standing Committee.                                                                                             
CO-CHAIR MASEK  called an at-ease at  1:52 p.m. in order  for the                                                               
sound equipment to be checked.   The committee came back to order                                                               
at 1:57 p.m.                                                                                                                    
HB  55 - OIL DISCH PREVENTION: NONTANK VESSELS/RR                                                                             
CO-CHAIR MASEK  announced that the  next order of  business would                                                               
be HOUSE BILL NO. 55,  "An Act regarding oil discharge prevention                                                               
and  cleanup involving  self-propelled nontank  vessels exceeding                                                               
400 gross registered  tonnage and railroad tank  cars and related                                                               
facilities   and  operations   and   requiring  preparation   and                                                               
implementation  of  oil  discharge contingency  plans  for  those                                                               
nontank vessels  and railroad tank cars;  amending the definition                                                               
of  'response  action' that  relates  to  releases or  threatened                                                               
releases of oil  and thereby amending the  duties and liabilities                                                               
of   response   action    contractors;   authorizing   compliance                                                               
verification  for  nontank vessels  and  for  trains and  related                                                               
facilities and operations; and providing for an effective date."                                                                
[Before the committee was CSHB 55(TRA).]                                                                                        
REPRESENTATIVE STEVENS made a motion to adopt CSHB 55(TRA)                                                                      
[although that was already before the committee].                                                                               
Number 1844                                                                                                                     
CO-CHAIR MASEK  pointed out that  a new fiscal note  submitted by                                                               
Mary Siroky clarifies that the  funds will come from "470 monies"                                                               
and  have no  impact on  the budget.   She  also made  note of  a                                                               
letter from  The Boat  Company of Washington,  D.C., which  is in                                                               
the bill  packet.  She  introduced Paul Fuhs and  Larry Dietrick,                                                               
together at the witness table.                                                                                                  
LARRY  DIETRICK,  Director,  Division  of  Spill  Prevention  and                                                               
Response, Department of  Environmental Conservation, testified on                                                               
behalf  of Commissioner  Brown, who  was  the chair  of the  task                                                               
force on  Motorized Oil  Transport.   He said  Commissioner Brown                                                               
served on  the Steering Committee  of the task force,  along with                                                               
Representative  Kott  and  Senator   Pearce.    "The  task  force                                                               
included a 23 member cross-section  of the maritime industry, the                                                               
Alaska  Railroad, and  other interested  parties.   He  mentioned                                                               
that Brian  Rogers (facilitator of  the task force)  was standing                                                               
by  on   teleconference  to  answer  questions.     Mr.  Dietrick                                                               
paraphrased his written testimony.  He stated:                                                                                  
     The goal of this legislation  is simple.  It's designed                                                                    
     to  protect  Alaska's   renewable  resources  and  keep                                                                    
     Alaska's waters  the cleanest and most  pristine in the                                                                    
     world  by  including  large  sea-going  marine  nontank                                                                    
     vessels and the Alaska  Railroad in Alaska's safety net                                                                    
     for oil spill prevention and  response.  In May of last                                                                    
     year the  Twenty First  Legislature debated  and passed                                                                    
     Senate  Bill 273  and Senate  Concurrent Resolution  1,                                                                    
     which  commissioned the  task  force  on Motorized  Oil                                                                    
     Transport to work  out the details of  how to implement                                                                    
     oil spill  contingency plans  and achieve  the response                                                                    
     planning  standard  in a  way  that  was acceptable  to                                                                    
     those  who  would be  affected.    The task  force  has                                                                    
     completed  the work  directed  by  the legislature  and                                                                    
     achieved   unanimous   consensus  on   legislation   to                                                                    
     accomplish that.   The  consensus legislation,  as [the                                                                    
     House  Resources Standing  Committee has]  just adopted                                                                    
     is  CSHB 55[(TRA)],  which was  developed  by the  task                                                                    
     force  and is  predicated on  no further  amendments by                                                                    
     its members.                                                                                                               
     To  be  more  detailed, although  the  requirement  for                                                                    
     financial responsibility  was made effective  last year                                                                    
     in  SB   273,  the   requirement  to  have   oil  spill                                                                    
     contingency  plans  and   meet  the  response  planning                                                                    
     standard was not.  Instead  the legislature, through SB                                                                    
     273  and   SCR  1,  commissioned  the   task  force  to                                                                    
     determine  how  to   implement  the  response  planning                                                                    
     standards  and  provide opportunities  for  streamlined                                                                    
     oil spill contingency plans.   Those standards were set                                                                    
     by the  legislature in  SB 273  as the  containment and                                                                    
     control of 15 percent of  the maximum oil capacity of a                                                                    
     nontank vessel  or train, within  48 hours  and cleanup                                                                    
     of  the discharge  within the  shortest possible  time,                                                                    
     consistent with  minimizing damage to  the environment.                                                                    
     Nontank vessels  were also defined  in SB 273  as self-                                                                    
     propelled vessels  over 400  gross tons,  not including                                                                    
     tank vessels, oil barges, or public vessels.                                                                               
     SCR  [1] specified  23  members of  the  task force  on                                                                    
     Motorized  Oil  Transport.     This  served  to  insure                                                                    
     diversity of viewpoints  and adequate representation of                                                                    
     all  groups  to be  regulated.    The members  included                                                                    
     representatives   from  the   U.S.  Coast   Guard,  the                                                                    
     Department   [of   Environmental   Conservation],   the                                                                    
     [Alaska]  Railroad,  spill response  cooperatives,  the                                                                    
     shipping  industry, spot  charter  groups, the  fishing                                                                    
     industry,  the  Regional Citizens'  Advisory  Councils,                                                                    
     and representatives  from [the] crude oil  industry and                                                                    
     the refined  oil distributors  and transporters.   Many                                                                    
     more  persons who  were  not appointed  representatives                                                                    
     attended the work group sessions  and formal task force                                                                    
     The  task  force held  eleven  formal  meetings over  a                                                                    
     five-month period  in which the members  worked through                                                                    
     legal and  technical issues on  prevention, contingency                                                                    
     plans,   and  response   planning  standards.     Three                                                                    
     workgroups were  created to  address specific  areas of                                                                    
     The recommendations  of the  task force  are practical.                                                                    
     They meet the  requirements the legislature established                                                                    
     in   last  year's   bill  and   include  implementation                                                                    
     measures that  use a  market-based economy  approach to                                                                    
     keep  costs down.   The  recommendations  are based  on                                                                    
     Alaska's  existing  oil spill  response  infrastructure                                                                    
     and  provide   maximum  flexibility  for   meeting  the                                                                    
     requirements.  The  work of the task  force has already                                                                    
     fostered private sector  initiatives that significantly                                                                    
     increase the resources that will  be brought to bear on                                                                    
     a spill.   Alliances  between ship  agents, stevedoring                                                                    
     companies  and  spill  response  cooperatives  are  now                                                                    
     being explored to meet response  needs and a new Marine                                                                    
     Exchange that covers all of Alaska is being created.                                                                       
     The members of the  task force were extremely attentive                                                                    
     to the proceedings and  assimilated a tremendous amount                                                                    
     of information during their tenure.   All meetings were                                                                    
     very  well  attended  and the  level  of  dialogue  was                                                                    
     frank,  constructive, and  productive.   After  careful                                                                    
     and thorough  consideration of  all ideas  and requests                                                                    
     brought before them,  they achieved unanimous consensus                                                                    
     to  support 31  recommendations  that  are included  in                                                                    
     your report in your packet.                                                                                                
     The  task force  also exhaustively  reviewed the  legal                                                                    
     issues  and   meticulously  identified   what  elements                                                                    
     should be  contained in regulation  and what  should be                                                                    
     contained in  statute.  There's  a table  that outlines                                                                    
     this in  the report.  The  bill you have before  you is                                                                    
     the end result  of this detailed process and  it is the                                                                    
     task force's recommendation that  it be adopted without                                                                    
     amendment,  recognizing  that  the  legal  nuances  and                                                                    
     details have all been agreed  to and an enormous amount                                                                    
     of effort has gone into its formation.                                                                                     
     Overall, the bill is simple  and straightforward in its                                                                    
     approach.   It  fundamentally makes  SB 273,  passed by                                                                    
     the  legislature last  year, effective  while including                                                                    
     enabling language to  support regulations detailing how                                                                    
     it  will  be  implemented.     These  regulations  have                                                                    
     effectively  been  negotiated  through the  task  force                                                                    
     proceedings, and  will be  drafted consistent  with the                                                                    
     recommendations contained in the report.                                                                                   
     The     cooperation     between     industry,     state                                                                    
     representatives,     and    lawmakers     to    develop                                                                    
     recommendations  that  are  practical,  reasonable  and                                                                    
     economic is  a tribute ...  to the task  force members.                                                                    
     The  work  provides  a foundation  for  enhanced  spill                                                                    
     prevention and  response preparedness  thereby ensuring                                                                    
     that  our state  resources and  economy are  adequately                                                                    
     protected for future generations.   In the end the task                                                                    
     force has successfully completed  the work requested by                                                                    
     the legislature and has  produced, through consensus, a                                                                    
     report,  CSHB  55  and recommendations  for  rulemaking                                                                    
     that  outline an  acceptable means  by which  they will                                                                    
     participate in  the state's  oil spill  safety net.   I                                                                    
     was very pleased  to have been a part  of this process.                                                                    
     And   speaking  on   behalf  of   the  Department   [of                                                                    
     Environmental Conservation], we  support the passage of                                                                    
     [HB 55] and offer  our assistance as your deliberations                                                                    
     move forward.                                                                                                              
     I would  also like to acknowledge  the significant time                                                                    
     and  costs  invested  by   the  individual  task  force                                                                    
     members to participate in the  process.  The task force                                                                    
     recommendations  are in  the interest  of all  Alaskans                                                                    
     and will  help protect  Alaska's natural  resources and                                                                    
     make our  spill response  programs perhaps some  of the                                                                    
     best in the world.                                                                                                         
Number 2264                                                                                                                     
MR.  DIETRICK  introduced  the following  three  people:    Brian                                                               
Rogers, the  task force  facilitator; Paul  Fuhs, the  task force                                                               
Marine Technical Support Contractor;  and Mr. Breck Tostevin, the                                                               
Assistant Attorney General assigned to this legislation.                                                                        
BRIAN ROGERS, Information Insights,  and Facilitator for the task                                                               
force,  testified  via teleconference.    He  explained that  the                                                               
purpose of  the task  force was  to discover a  means to  use the                                                               
pre-existing legislation.   The 23 members  reached consensus and                                                               
unanimous decision  on 31 recommendations,  most of which  do not                                                               
require statutory change, but act  as guidance to the legislative                                                               
process.  He continued:                                                                                                         
     [HB] 55,  as before  you, contains the  minimum changes                                                                    
     necessary   to   activate  the   contingency   planning                                                                    
     process,  to limit  liability for  certain participants                                                                    
     in the process, and  to enable adoption of regulations.                                                                    
     The recommendations of the task  force were to follow a                                                                    
     market-based  approach,  allowing   several  means  for                                                                    
     alternative  compliance,  and  to allow  the  regulated                                                                    
     industry to phase in implementation  in order to spread                                                                    
     out the cost.   The legislation before  you, I believe,                                                                    
     shows   that   negotiated   rule-making   between   the                                                                    
     regulators and  the regulated  community can  work when                                                                    
     you  have the  involvement of  industry in  determining                                                                    
     the rules.  Most of  the provisions of this legislation                                                                    
     and  of  the  recommendations  of the  task  force  are                                                                    
     already  required  in  all  of  the  other  west  coast                                                                    
     states.  The goals of the  task force were to develop a                                                                    
     scheme  for implementing  SB  273  that was  realistic,                                                                    
     effective,  economically  feasible,  and flexible.    I                                                                    
     believe the  recommendations that the  group developed,                                                                    
     in fact, do that.                                                                                                          
MR. ROGERS  outlined the recommendations  of the task force.   He                                                               
said  it recommended  that a  vessel demonstrate  its ability  to                                                               
control a spill by being  equipped with sufficient booms to reach                                                               
three times the length of the  vessel.  The vessel must also have                                                               
a  means of  deploying those  booms.   Furthermore,  in order  to                                                               
demonstrate its ability  to clean up, the  task force recommended                                                               
that  the  vessel either  have  a  skimmer  in  the area  of  its                                                               
operations, or  the ability to get  one to the spill  area within                                                               
24 hours  of a spill.   The task force also  recommended allowing                                                               
alternative  methods of  calculating  fuel volume  that would  be                                                               
subject to the response-planning standard.   Mr. Rogers specified                                                               
the  c-plans required  of  this  industry as  the  following:   a                                                               
statement  of  financial  responsibility; the  designation  of  a                                                               
qualified  individual who  can make  decisions on  behalf of  the                                                               
vessel owner; a  response action plan for  the vessel, consisting                                                               
of initial  notification procedures; a  contract with a  PRAC who                                                               
could respond to a spill;  a contract with an infinite management                                                               
team contractor who could manage  the incident; and a requirement                                                               
that  the vessel  meet international  maritime  standards set  by                                                               
treaty and federal law.                                                                                                         
MR. ROGERS  described alternative methods of  compliance, stating                                                               
that the vessel  owner can have some combination  of contract and                                                               
equivalent   resources,  and   choose  to   demonstrate  to   the                                                               
department  that they  have those  equivalent  resources and  the                                                               
ability to respond to a spill.  Mr. Rogers continued:                                                                           
     The recommendations  allow use of fleet  plans covering                                                                    
     multiple vessel[s]  and of a generic  plan developed by                                                                    
     a  response  plan  facilitator   [RPF]  that  could  be                                                                    
     activated,  for  example,  when a  spot-charter  vessel                                                                    
     comes into Alaska  waters on short notice.   That would                                                                    
     allow that  plan to be  adopted rapidly and  not impede                                                                    
     the work  of the  vessel.  The  recommendations include                                                                    
     tight timeframes  for review by DEC  and provisions for                                                                    
     drills  and  verification  by   DEC.    The  prevention                                                                    
     recommendations are all voluntary,  but do provide some                                                                    
     recognition for those vessels that  go above and beyond                                                                    
     the basic compliance requirement.                                                                                          
     Finally, in the  area of the Alaska  Railroad, the task                                                                    
     force  endorses  the  Alaska Railroad's  risk  analysis                                                                    
     process, and  recommended that the railroad  go through                                                                    
     the standard   [contingency  plan] process  required of                                                                    
     other regulated industry.                                                                                                  
MR.  ROGERS detailed  the  section by  section  analysis of  CSHB                                                               
55(TRA) as follows:                                                                                                             
     Section  1,  beginning on  page  1,  line 10,  ...  was                                                                    
     originally a letter of intent,  recommended by the task                                                                    
     force.   The Transportation  Committee adopted  it into                                                                    
     the legislation,  basically to set some  parameters for                                                                    
     the adoption by  DEC of regulations that  they would be                                                                    
     in  line with  the recommendations  of the  task force.                                                                    
     Sections 2 through  4 ... limit the  civil liability of                                                                    
     oil  spill response  action  contractors, covering  the                                                                    
     new oil  discharge prevention and contingency  plan for                                                                    
     nontank vessels and railroad cars.                                                                                         
     Section 5 expands the definition  of response action to                                                                    
     contractors  doing  infinite management  team  services                                                                    
     and  [RPF]  services.   This  [is]  a fairly  important                                                                    
     section in  order that the  regulated industry  will be                                                                    
     able  to contract  with  individuals  to provide  these                                                                    
     Section  6 amends  last year's  legislation to  make it                                                                    
     identical to  the tank vessel legislation  adopted some                                                                    
     years  ago, so  that we  don't have  slightly different                                                                    
     definitions between the two.                                                                                               
     Section  7   extends  the  existing   innocent  passage                                                                    
     exemptions [in AS 46.04.055(c)] to nontank vessels.                                                                        
     Section 8  is the  primary section of  the bill  on the                                                                    
     contingency  planning and  sets  forth the  contingency                                                                    
     planning process  for nontank  vessels.   The sectional                                                                    
     analysis  ... goes  through those  details.   I can  do                                                                    
     that if there are questions.                                                                                               
     Finally,   Section  9   authorizes   DEC   to  do   its                                                                    
     verification process.                                                                                                      
     Section  10  requires  [that the]  lieutenant  governor                                                                    
     certify  to the  Revisor  [of  Statutes] the  effective                                                                    
     date of the regulation.                                                                                                    
     Section 11 is the effective date clause.                                                                                   
MR. ROGERS stated that the task force recommends that the House                                                                 
Resources Standing Committee adopt this legislation "as it now                                                                  
Number 2659                                                                                                                     
REPRESENTATIVE  STEVENS asked  how [vessel]  owners prove  to DEC                                                               
that  they  are  adequately  covered by  insurance  or  have  the                                                               
financial means to cover the cost of an oil spill.                                                                              
MR. ROGERS replied:                                                                                                             
     The  financial responsibility  section  of last  year's                                                                    
     bill  actually  went  into   effect  last  September  1                                                                    
     [2000].   It requires  a filing  with DEC  that vessels                                                                    
     began making  late in  August of  last year  that shows                                                                    
     that they have the financial  wherewithal to clean up a                                                                    
     spill.  And  I think Larry Dietrick  can detail exactly                                                                    
     what   those  requirements   are,  in   terms  of   the                                                                    
     documentation.    In  terms   of  needing  this  year's                                                                    
     legislation,  ...   a  contract  in  force   is  what's                                                                    
     required and  that, tied  with last  year's legislation                                                                    
     and the  financial responsibility,  I think,  gives the                                                                    
     state  sufficient  documentation  that,  in  fact,  the                                                                    
     financial wherewithal is there.                                                                                            
Number 2730                                                                                                                     
REPRESENTATIVE  GREEN  asked why  the  task  force came  up  with                                                               
recommendation number 31  [on page 29 of the  task force report],                                                               
which  indicates that  the "471"  fund  should be  used to  cover                                                               
costs rather than charging the applicant.                                                                                       
MR.  ROGERS   replied  that  the   task  force   recognizes  that                                                               
implementing this legislation will  impose costs on the regulated                                                               
industry, through  the requirement  of the  following:   the boom                                                               
that would be required within  180 days after the regulations are                                                               
adopted; the skimmer that will  be needed to deal with persistent                                                               
oil spills, which  probably "can be transported by  air;" and the                                                               
contract with the oil spill co-op, or equivalent resources.                                                                     
MR. ROGERS  recognized that  the prevention  aspect of  the "470"                                                               
fund was designed specifically for  prevention of oil spills.  He                                                               
said that  the task force  members - which included,  in addition                                                               
to members  of the regulated  industry, folks from  the petroleum                                                               
distributors,  transporters, and  two oil  producers -  felt that                                                               
using funding from the "470"  fund for oil spill prevention would                                                               
be appropriate, since that fund  was originally laid out for that                                                               
purpose.   He  added that  using  "470" monies  helps spread  out                                                               
total  costs, stating  that attempting  to pass  this legislation                                                               
through [ADF&G's] general fund would prove more problematic.                                                                    
Number 2850                                                                                                                     
REPRESENTATIVE  GREEN made  brief mention  of the  "bloodletting"                                                               
which  resulted in  "the two-  and three-cent  split" during  the                                                               
creation  of the  "470" fund.   He  asked if  the "470"  fund was                                                               
created primarily for the oil industry.                                                                                         
BRECK   TOSTEVIN,  Assistant   Attorney  General,   Environmental                                                               
Section,   Civil  Division   (Anchorage),   Department  of   Law,                                                               
testifying  via  teleconference answered  Representative  Green's                                                               
question with the following statement:                                                                                          
     In 1994,  as you  know, the fund  was divided  into two                                                                    
     accounts:     a  response  account  and   a  prevention                                                                    
     account.    And  one  of the  uses  of  the  prevention                                                                    
     account was to fund DEC's review of contingency plans.                                                                     
MR.  TOSTEVIN,  in  further  response  to  Representative  Green,                                                               
clarified  that  the contingency  plans  were  regarding the  oil                                                               
Number 2918                                                                                                                     
REPRESENTATIVE  GREEN returned  to  the subject  of  the two  and                                                               
three-cent split in order to  demonstrate that there may be costs                                                               
unrelated  to the  industry that  pays.   He pointed  out that  a                                                               
significant amount of the "470"  fund was appropriated to pay for                                                               
the  Kennicott  ferry,  which  was  intended  to  be  used  as  a                                                               
communications center  and spill equipment carrier  during an oil                                                               
spill; however, the Kennicott has not been used as such.                                                                        
TAPE 01-10, SIDE B                                                                                                              
Number 2961                                                                                                                     
REPRESENTATIVE  GREEN expressed  concern  about  the fairness  of                                                               
allowing the  railroad and as  many as  900 vessels to  be exempt                                                               
from paying a  portion of the c-plan review.   Although the major                                                               
oil companies  have agreed  to pay that  cost, he  questioned the                                                               
fairness of  that plan,  and compared it  to charging  one person                                                               
for  another person's  use of  a park.  He asked  if there  was a                                                               
significant number of "oil people" involved in the task force.                                                                  
PAUL  FUHS,  Task Force  Member,  testified  in support  of  CSHB                                                               
55(TRA).   He said he  has served  as a Marine  Technical Advisor                                                               
and  a liaison  to the  [oil] industry  for the  task force.   He                                                               
replied  to Representative  Green's question  with the  following                                                               
     The industry  didn't ask for  this regulation,  but yet                                                                    
     was willing to go along with  it last year and say, "OK                                                                    
     we'll accept  that we know  other states are  doing it,                                                                    
     and  it's a  responsible thing  to  do."   Some of  the                                                                    
     larger vessels  are carrying quite  a bit of  oil, some                                                                    
     of  it persistent  oil; it  can really  cause a  lot of                                                                    
     environmental damage.   So ... they said,  "Let us have                                                                    
     this task  force and  work through it,  so that  we can                                                                    
     try to find efficiencies."                                                                                                 
     Well,  DEC's first  fiscal note  was $585,000  on this.                                                                    
     And through the efficiencies  we found through the task                                                                    
     force and  through private sector  solutions to  try to                                                                    
     pick up  almost all of  this through creation of  a new                                                                    
     marine exchange [and] use of  vessel agent, DEC's long-                                                                    
     term fiscal note is down  to $141,000 on this.  There's                                                                    
     a  couple years  where  there's a  surge  of all  these                                                                    
     plans coming in,  where they're going to  need a couple                                                                    
     of temporary  employees, so the industry  will bear the                                                                    
     brunt of the cost of this.   And when we looked at it -                                                                    
     the  problems with  the general  fund  and attempts  to                                                                    
     reduce  there, issues  there -  what we  looked at  was                                                                    
     what   was  a   possible  funding   source  where   the                                                                    
     government  could partner  with industry  on this.   So                                                                    
     the  "470"  fund  was established  to  look  at  marine                                                                    
     pollution issues.                                                                                                          
     Now, [the "470" fund has] been  used for a lot of other                                                                    
     things.   And, Representative Green, I  was around when                                                                    
     we went through this battle,  and [I] remember a lot of                                                                    
     this,  and there  were  attempts to  use  the fund  for                                                                    
     other than  prevention and response. When  we talked to                                                                    
     the oil  industry people about  this, their view  of it                                                                    
     was, "Well,  when we  split the two  cents off,  and at                                                                    
     least we've  capped that, it's  at 50 million  and that                                                                    
     tax will stop."  They  figure they're going to pay that                                                                    
     three cents forever.   What really drives  them wild is                                                                    
     when you go and try to  use it for something that's not                                                                    
     really  pollution  prevention   and  response.    [CSHB                                                                    
     55(TRA)]  ... meets  that requirement.   And  so that's                                                                    
     why ...  if we didn't  spend this money, it's  not like                                                                    
     it's  going  to save  them  (indisc..)  three cents  or                                                                    
     they're going to  get it back, or  something like that.                                                                    
     At least this is  within prevention and response, which                                                                    
     the fund is meant for.                                                                                                     
     So, I think  that was the overall logic of  it, kind of                                                                    
     a cost-sharing  and partnership with industry  on this.                                                                    
     They're going to  by far bear the brunt of  the cost of                                                                    
     it.   And we  tried to  hold the cost  down as  much as                                                                    
     possible,  knowing  that  ...  issues  of  even  adding                                                                    
     additional employees,  even if they're paid  for by the                                                                    
     "470" fund or user fees, was  going to be an issue with                                                                    
     some people  in the  legislature.   So, the  task force                                                                    
     did its very best to hold  those costs down and come up                                                                    
     with some kind  of a partnership that could  work.  And                                                                    
     believe  me, this  will improve  the safety  net.   The                                                                    
     fact that  if you have  an incident, you don't  have to                                                                    
     wait for your insurance company,  or them to call their                                                                    
     lawyers  or   negotiate  with  somebody,  as   soon  as                                                                    
     something  happens somebody  immediately  goes out  the                                                                    
     door  to  respond  to  it.     This  is  a  significant                                                                    
     improvement  in what  we  have now  for  some of  these                                                                    
     large vessels.  So, that  was kind of the overall logic                                                                    
     of it, when the task force  came to it; there was quite                                                                    
     a bit of discussion about this.                                                                                            
Number 2759                                                                                                                     
REPRESENTATIVE GREEN stated that he  agreed with the concept, but                                                               
did not  agree with  the oil  companies paying  the brunt  of the                                                               
costs.  He said that the  number of ships after the initial surge                                                               
would be 169, with a cost of  $141,000 a year.  That's an average                                                               
cost of $1,000  per ship a year.  Representative  Green said that                                                               
he found  it "preposterous"  that profit-making  vessels couldn't                                                               
pay that amount  of money to review a c-plan.   He specified that                                                               
it was not that the oil companies  are not able to pay; it was an                                                               
issue of  fairness to all involved.   He said, "Those  people who                                                               
are subject to spill should be paying equally."                                                                                 
MR.  DIETRICK replied  that BP  and  Tesoro representatives  were                                                               
     among those on the task force, and that their attendance                                                                   
was excellent.   He  said that  they were  part of  the decision-                                                               
making process and  "agreed with the approach,  knowing full well                                                               
that  they're the  three-cent contributor  to all  of this."   In                                                               
regard to  the fairness  issue, Mr. Dietrick  admitted,   "a very                                                               
large percentage  of the  contingency plans that  come in  to the                                                               
department  right  now  are  already  from  people  who  are  not                                                               
contributing to that  three-cent surcharge, they're piggy-backing                                                               
on the crude oil surcharge."                                                                                                    
MR. DIETRICK referred to a previous comment by Representative                                                                   
Green concerning the Kennicott ferry, with the following                                                                        
     ... the Kennicott  is a very unique vessel  now, and it                                                                    
     is  on  call,  as  is  all of  our  other  ferries  now                                                                    
     [through   an]  agreement   ...  with   DEC  and   [the                                                                    
     Department  of Transportation  and Public  Facilities].                                                                    
     We   can,  literally,   through   our  state   on-scene                                                                    
     coordinator,  pull any  of the  ferries  off-line on  a                                                                    
     phone-call basis, to  employ it in any kind  of a large                                                                    
     response.   It will  take a  large [spill]  to activate                                                                    
     these  vessels,   but  even  the  Kennicott   has  been                                                                    
     designed with  unique features that  would allow  it to                                                                    
     be a  commanding control platform in  remote area[s] of                                                                    
     the state.   It's the only ocean-class  vessel. ... One                                                                    
     of the  most limiting things  in keeping [a  vessel] on                                                                    
     station to  jump-start a spill was  water availability,                                                                    
     oddly  enough; it  wasn't fuel,  it wasn't  provisions.                                                                    
     And  so  [the  Kennicott]   has  its  own  water-making                                                                    
     capability, because  one of the  design factors  is for                                                                    
     it to be  able to remain on station for  up to 20 days,                                                                    
     initially,  until such  time  as replacement  resources                                                                    
     So, that was  also three-cent crude oil charge.   So, I                                                                    
     think you're  right - is  [the fact that just  the crew                                                                    
     producers are  paying this fee]  fair?  Well,  it's not                                                                    
     fair.   On the other hand,  I think ... the  task force                                                                    
     members from the crude industry  ... do see a potential                                                                    
     gain down the  road, in that these  900 nontank vessels                                                                    
     are likely to use  our response co-ops. (Indisc.) today                                                                    
     (indisc.)  over   the  last  10  years,   to  meet  the                                                                    
     requirements for  the existing regulated industry.   By                                                                    
     adding  [these]  vessels  you're  increasing  the  base                                                                    
     support of those co-ops, so  you're going to spread the                                                                    
     cost  of those  co-ops.    So, I  think  there is  some                                                                    
     potential down  the road here  that the  crude industry                                                                    
     recognizes  that   by  a   greater  sharing   in  their                                                                    
     preparedness costs  for these co-ops that  have evolved                                                                    
     over time, that they could  actually see a reduced rate                                                                    
     down the road.   That's one of  those market efficiency                                                                    
     things.   So, I think  there was  a lot of  things that                                                                    
     went into the  thinking and the discussion  here to see                                                                    
     if  there would  be some  paybacks  down the  road.   I                                                                    
     think this  approach is  unique, using  existing marine                                                                    
     infrastructure  to  solve  it.   And  we're  trying  to                                                                    
     strengthen  it  [and]  at  the   same  time  have  more                                                                    
     participants play  in it.   So,  we're hoping  that the                                                                    
     different  arrangements  that  are made  will  actually                                                                    
     result  in  a  better  safety net,  at  a  lower  cost,                                                                    
     because we  have more players.   And I  can't translate                                                                    
     that into actual  cost for you, but I  think it's those                                                                    
     kinds  of  things that  lead  them  to agree  with  the                                                                    
     concept, perhaps.                                                                                                          
Number 2483                                                                                                                     
REPRESENTATIVE  GREEN reiterated  his previously  stated concern,                                                               
by reading  recommendation number  31, which recommends  that the                                                               
nontank community  "should not  be charged  user fees  to support                                                               
the  nontank program."   He  stated that  it really  bothered him                                                               
that  the state  has  not come  to the  point  of saying  "enough                                                               
already.   There  is enough  sucking  off this  industry-supplied                                                               
money."  He  commented that Alaska is implementing  more and more                                                               
user  fees within  the  state and  to its  visitors,  so why  not                                                               
charge the vessels, instead of making the oil companies pay.                                                                    
Number 2384                                                                                                                     
MR. ROGERS  addressed Representative  Green's concerns  about the                                                               
funding  issue by  saying he  understood the  points that  he had                                                               
raised.   He commented that  he thought  that the task  force was                                                               
"looking  at a  balancing of  costs and  an attempt  to recognize                                                               
that this imposes costs on the regulated industry."                                                                             
Number 2360                                                                                                                     
MR.  FUHS  stated the  following  in  response to  Representative                                                               
Green's previous question:                                                                                                      
     "Where does it  stop?"  Where it stops is  at the three                                                                    
     cents a barrel.  The  department cannot spend more than                                                                    
     the three cents generate.   And that was established by                                                                    
     the  legislature, and  I think  the industry  looked at                                                                    
     that.  The legislature  established that three cents to                                                                    
     deal with  prevention and response issues,  and we felt                                                                    
     like,  at least  this  request did  directly relate  to                                                                    
     prevention and  response.   And I  think that's  one of                                                                    
     the  reasons  why the  industry  looked  at that  in  a                                                                    
     favorable  way.   No  one was  saying,  "Let's put  new                                                                    
     taxes on the oil industry to  pay for this."  But since                                                                    
     the fund  does exist,  established by  the legislature,                                                                    
     and it qualified,  it seemed it was  a legitimate cost-                                                                    
         sharing for a program that was prevention and                                                                          
REPRESENTATIVE GREEN  recalled what  a "bloodletting"  session it                                                               
was when the decision was being  made between the two- and three-                                                               
cent split.   He remarked  that at the  time the three  cents was                                                               
decided upon,  the state  was shipping out  over "two  million" a                                                               
day,  whereas the  amount being  shipped out  today is  under one                                                               
million, and  decreasing.  He  said "the  three cent going  in is                                                               
going to  deplete, with more and  more sucking from it,  and less                                                               
and less going in."  Representative  Green asked if we were going                                                               
to  go back  to  the industry  and  ask for  four  cents when  we                                                               
realized that we  were spending more than we thought.   He stated                                                               
that he had a problem with the  fiscal note:  "They mixed an EVOS                                                               
[Exxon Valdez  Oil Spill]  money in  there that  is going  to dry                                                               
off."  Representative Green said:                                                                                               
     I'm just concerned that we  look at the fiscal note; we                                                                    
     really  decide as  a committee  we don't  mind charging                                                                    
     one  industry to  do another  industry's business.   If                                                                    
     that's really  what we want to  do, so be it.   I'll be                                                                    
     voting against it, but just  so you know, I don't think                                                                    
     that's fair.                                                                                                               
Number 2251                                                                                                                     
CO-CHAIR SCALZI  asked if  the creation  of this  legislation was                                                               
born of  the need  to regulate  gray-water discharge  from cruise                                                               
MR.  FUHS  replied   no.    He  explained  that   the  drive  for                                                               
legislation was the result of  some cruise ships running aground,                                                               
as  well as  the M/V  Kiroshima,  the Japanese  vessel that  went                                                               
aground in Dutch Harbor.                                                                                                        
MR.  DIETRICK added  that "it  was  also the  (indisc.) on  [the]                                                               
Oregon coast,  and so all  Pacific West Coast states  and British                                                               
Columbia  have now  adopted  programs for  nontank  vessels as  a                                                               
result of a number of incidents  from each kind of vessel, up and                                                               
down the coast."                                                                                                                
CO-CHAIR SCALZI said that the  private sector, although not being                                                               
asked to  pay for  this program, would  have costs  involved with                                                               
supplies,   maintenance,  and   training.     He  asked   if  any                                                               
consideration had been given to those costs.                                                                                    
MR. FUHS  answered that  an exact  figure is  not available.   He                                                               
explained  that most  are expected  to join  a co-op,  because it                                                               
will be the  most cost-effective plan.  The co-ops  cannot give a                                                               
cost estimate  until they  know how  many people  will join.   He                                                               
said the  bill does allow  participants to meet  the requirements                                                               
themselves, but  they do not know  ahead of time how  many people                                                               
will choose  to do  that.   He mentioned a  fiscal note  from the                                                               
Alaska Marine Highway System (AMHS), and said:                                                                                  
     They've got  ten vessels: seven  in Southeast,  two out                                                                    
     West, and one  that goes in between.   And their yearly                                                                    
     fee  is  $23,500  to  cover   those  vessels  with  the                                                                    
     existing  oil  spill co-ops.    Now  they'll have  some                                                                    
     additional  training and  drills, and  they'll need  to                                                                    
     show  that  they  have   contracted  with  an  incident                                                                    
     command  co-op,  which  ... [is]  being  formed  -  the                                                                    
     Marine Exchange.   So, that  kind of gives you  a range                                                                    
     of  costs.    It's  substantial, but  it's  not  really                                                                    
     crippling,  because   of  the   way  that   we  allowed                                                                    
     streamline   contingency   plans;   that   everything's                                                                    
     streamline (indisc.).  If you're  a tanker vessel, your                                                                    
     c-plan is probably six inches  [of stacked pages] deep.                                                                    
     If  you  go  with  this streamline  model  your  c-plan                                                                    
     should be no more than two  pages long.  And that's ...                                                                    
     how we're  able to  reduce the  fiscal note  and reduce                                                                    
     the number of DEC  personnel, except to actually review                                                                    
     these c-plans.                                                                                                             
MR. FUHS,  in response to  Co-Chair Scalzi, clarified  that there                                                               
is a surcharge  for how much fuel each vessel  is carrying, which                                                               
is  based on  a risk  factor through  the co-ops;  therefore, the                                                               
larger vessels, container  vessels, and oar ships  will be paying                                                               
Number 2056                                                                                                                     
CO-CHAIR  SCALZI expressed  his  understanding of  Representative                                                               
Green's aforementioned concerns.   He said he  could perceive how                                                               
legislation  could  eventually  be   extended  to  cover  smaller                                                               
vessels  that would  not be  "as fiscally  strong to  handle that                                                               
kind  of thing."    He  asked if  the  task  force had  discussed                                                               
whether  or not  the Alaska  State Coast  Guard (ASCG)  should be                                                               
operating the program instead of  DEC.  Co-Chair Scalzi remarked,                                                               
"Being in  the marine industry,  I know that they're  pretty much                                                               
the  organization  that  I  find   has  the  most  efficiency  in                                                               
regulating the maritime industry."                                                                                              
MR. DIETRICK answered:                                                                                                          
     Currently, under ... OPA, the  Oil Pollution Act that's                                                                    
     passed  at the  federal  level, these  vessels are  not                                                                    
     regulated,  in  that  they're   not  required  to  have                                                                    
     contingency plans,  contracts with a  bonafide response                                                                    
     cooperative  with a  specified response  capability, et                                                                    
     cetera,  which  is  why  the  West  Coast  states  have                                                                    
     stepped in to fill that gap.                                                                                               
CO-CHAIR SCALZI said that he knew  that the ASCG was not involved                                                               
in regulating  OPA.  He  restated his question  regarding whether                                                               
or not  there had  been any  discussion in  the task  force about                                                               
contracting with the ASCG for  its services in overseeing the oil                                                               
spill prevention and restoration plan.                                                                                          
MR. DIETRICK responded:                                                                                                         
     In  terms of  what's  happening at  the federal  level,                                                                    
     that would put  the [Alaska State] Coast  Guard in that                                                                    
     position, there's been one bill  introduced to date, at                                                                    
     the federal level  [in] the last session,  that is much                                                                    
     more  stringent and  restrictive than  what the  Alaska                                                                    
     package is.  Now whether or  not that moves -- and that                                                                    
     would effectively  end [OPA] to  put the [USCG]  in the                                                                    
     business  of  regulating  these nontank  vessels  under                                                                    
     federal law.  The other point  to this is we do have an                                                                    
     operating  agreement with  the [USCG]  in Alaska.  That                                                                    
     there's a  DEC -- we  have a memorandum  agreement that                                                                    
     is very  comprehensive, that covers all  aspects of the                                                                    
     activities in  the oil spill prevention  response world                                                                    
     and how  we coordinate,  communicate, and  get together                                                                    
     on a  response.   So, we're  both operating  under that                                                                    
     agreement  and that's  what we  use  to coordinate  our                                                                    
     activities.   And  I presume  that will  continue until                                                                    
     such time as  there is something passed  at the federal                                                                    
     legislation  that  would  actually   put  them  in  the                                                                    
     driver's seat, I think.                                                                                                    
CO-CHAIR SCALZI  asked Mr. Dietrick  to reiterate  information he                                                               
had shared in an earlier  Department of Transportation and Public                                                               
Facilities meeting, regarding the effects  of the $141,000 on the                                                               
budget and the possible necessity for budget cuts.                                                                              
MR. DIETRICK said:                                                                                                              
     In  discussing  the  fiscal   note  and  the  long-term                                                                    
     viability of  the response fund  to be able  to support                                                                    
     this, we  did look at  the "out year" cost,  once we're                                                                    
     over the hump  here, of $141,000 per  year, against ...                                                                    
     projected  revenues from  the  response fund.   And  in                                                                    
     fact,  as we  discussed earlier,  [Legislative] Finance                                                                    
     has just  recently done a projection  for [fiscal years                                                                    
     2002, 2003,  and 2004] to  look at the balances  at the                                                                    
     end of  these fiscal years  to see whether or  not it's                                                                    
     supportable.   The  three-cent surcharge  on crude  oil                                                                    
     production   in   the   State   of   Alaska   generates                                                                    
     approximately $9  to $10 million  a year, on  an annual                                                                    
     basis.   That's  with  the  projected revenue  forecast                                                                    
     from   the   Department   of  Revenue,   the   farthest                                                                    
     [forecast] of  which goes out  now 'til the  year 2010.                                                                    
     The  department uses  those projections  in its  budget                                                                    
     preparation;   we    accept   those    estimates   that                                                                    
     [Department of]  Revenue makes on crude  oil production                                                                    
     and the revenues that it  will generate.  So looking at                                                                    
     the $141,000 in  the "out years" as  the long-term cost                                                                    
     of  the  state  for   conducting  this  program,  as  a                                                                    
     percentage of  the ... revenue generated  by the three-                                                                    
     cent  surcharge  of  approximately $9  to  $10  million                                                                    
     dollars a  year, roughly in that  neighborhood, this is                                                                    
     about one  and one half  percent of what  the surcharge                                                                    
     generates on  an annual  basis, at  least up  to almost                                                                    
     "What are the  other things that may be  reduced in the                                                                    
     'out years' [before] the response  fund ends?"  I think                                                                    
     that's a very good dialogue  because we need to look at                                                                    
     the response fund, and we have  been looking at it on a                                                                    
     long-term basis,  as opposed to a  one-time fiscal year                                                                    
     basis.   Some of the  other things  that we see  in the                                                                    
     future that would be reduced  from the fund will be the                                                                    
     effects of Senate Bill 128,  which was passed two years                                                                    
     ago,   which  significantly   reduced  the   net  worth                                                                    
     threshold for  parties who were eligible  for financial                                                                    
     assistance from  leaky underground  storage tanks.   So                                                                    
     the  possibilities that  the demand  to compensate,  or                                                                    
     for leaky  underground storage tanks will  be reduced I                                                                    
     think is  better.  It took  ten years for the  state to                                                                    
     meet the 1998 deadline to  remove all the leaking tanks                                                                    
     in  Alaska.   That was  a landmark  event, and  indeed,                                                                    
     Alaska hit almost 100 percent  of that on the deadline.                                                                    
     So,  all of  our  leaky underground  storage tanks,  of                                                                    
     which there  were about 7,000  in the state,  have been                                                                    
     pulled and replaced now with new up-to-date tanks.                                                                         
     So,  [with] the  financing that  the fund  provided for                                                                    
     that, we're over the hump on  that.  Now, we still have                                                                    
     sites that  have contamination left  ... for  which the                                                                    
     contamination  has  been  cleaned  up,  but  that's  an                                                                    
     example of  the kind of  thing where the demand  on the                                                                    
     fund will be going down.                                                                                                   
     Another  example  is  the  rural  above-ground  storage                                                                    
     tanks in Alaska.   The fund was initially  used back, I                                                                    
     think,  in '94,  as well.   When  the [US]  Coast Guard                                                                    
     threatened to  shut down fuel  deliveries to  the rural                                                                    
     bulk fuel [tank] farms in  Alaska, they cut a deal with                                                                    
     the state, [they]  said, "If you initiate  a program to                                                                    
     start  fixing these,  we won't  pursue our  shutdowns."                                                                    
     The response  fund was tapped  at that time  to provide                                                                    
     seed  money to  start some  repair work  at these,  and                                                                    
     it's been contributing to that over time.                                                                                  
     Last year the Trans-Alaska  Pipeline Liability Fund was                                                                    
     split, and it  ... was returned to the state.   And $20                                                                    
     million was  returned to the  state through  the Denali                                                                    
     Commission  to go  to  work  on replacing  above-ground                                                                    
     rural  storage  tank  farms.     And  $18  million  was                                                                    
     earmarked for  remediation for cleanups at  those sites                                                                    
     where  leaks  had  occurred.     So  we  now  have  two                                                                    
     significant  revenue  streams  for something  that  the                                                                    
     response fund  had provided seed money  for, which will                                                                    
     again,  I think  take  some pressure  off the  response                                                                    
     fund to do  that.  Of course, as you  know, that's [an]                                                                    
     estimate  to replace  all those  in an  excess of  $200                                                                    
     million,  so  there's no  way  that  the response  fund                                                                    
     could have  taken care of  that job at the  levels it's                                                                    
     at.   There are  those things that  I think  will cause                                                                    
     the  pressures to  be  reduced on  the  fund that  will                                                                    
     enhance ... maintaining the balance over time.                                                                             
Number 1584                                                                                                                     
CO-CHAIR MASEK read directly from page 2 of the new fiscal note,                                                                
and asked what the "newly formed Marine Exchange" is.                                                                           
MR. FUHS  answered that  it existed before  the inception  of the                                                               
task force and it served to  unite the maritime industry to serve                                                               
its best interests.  When the  task force was formed, there was a                                                               
need  for  incident  command.    Mr. Fuhs  said  that  the  spill                                                               
response  co-ops will  respond, but  the insurance  companies and                                                               
ship  owners want  a responsible  party  (RP) to  gauge what  the                                                               
right amount  of response  is and assure  that the  spending does                                                               
not  go unchecked.    He  talked about  the  capabilities of  the                                                               
tanker companies  who have their  own capabilities to  make those                                                               
decisions in-house,  versus the smaller ship  companies, for whom                                                               
"the only  reason [they] have  oil on  board is because  it makes                                                               
the ship go."   Mr. Fuhs stated that the  reason the co-op exists                                                               
is so that the small companies  don't have to hire "three or four                                                               
new people" to deal with incident  command.  He said that the co-                                                               
op will use  transponders on vessels to aid in  response and that                                                               
that information would  be made available to the USCG.   He said,                                                               
"It's a  specialized facet  of this  that really  wasn't covered,                                                               
and that's  why the Marine Exchange  ... is going to  handle that                                                               
portion of it."                                                                                                                 
Number 1425                                                                                                                     
MR.  DIETRICK, in  response to  a question  from Co-Chair  Masek,                                                               
gave a summary  "of the logic behind the fiscal  note."  He noted                                                               
that the  "phase-in" time for  the bill's legislation  is "rather                                                               
extended," explaining the  reason is to allow  sufficient time to                                                               
get the  regulations in place, which  is the main goal  in fiscal                                                               
year 2002.  He said that  the following contingency plans will be                                                               
put  into  effect  in  2003  and carry  through  to  2004:    the                                                               
registration   of  the   PRAC;  the   training  activities;   the                                                               
prevention credit program; and the  electronic posting.  The peak                                                               
years of  activity will  be 2003  and 2004.   Mr.  Fuhs explained                                                               
that  the permanent,  full-time  positions are  increased by  one                                                               
until 2003.   A couple of positions were reduced  to temporary in                                                               
2003 and 2004, out of consideration  that in 2005, after the main                                                               
activity had taken  place, those positions would  no longer "stay                                                               
on  the books."   He  said  that the  task force  hopes that  the                                                               
program  will reach  its plateau  by 2005,  saying "the  industry                                                               
actually gets  a two year  period after regulations to  ... bring                                                               
the last  of the equipment on-line.   And that was  out of regard                                                               
for  them  wanting to  have  two  budget years,  essentially,  to                                                               
spread the  capitalization costs; it  was another way to  make it                                                               
affordable to the  industry."  Mr. Fuhs said that  the task force                                                               
would assess the activity workload in 2004.                                                                                     
Number 1295                                                                                                                     
CO-CHAIR MASEK pointed  out that there were at  least five people                                                               
from the petroleum industry who served  on the task force.  Among                                                               
those industries that would be  impacted by the bill, she listed:                                                               
container ships industry; noncrude; spot charter; cruise ship;                                                                  
crude industry; and seafood processing.  She asked about a                                                                      
seafood agent named Jeff Thompson (ph).                                                                                         
MR. FUHS responded:                                                                                                             
     That  is a  vessel agency,  and they're  the ones  that                                                                    
     clear all the  foreign vessels.  And  their concern was                                                                    
     over spot  charters.   You might not  know even  a week                                                                    
     before, what  vessel's going to  come for your  fish or                                                                    
     your iron  ore.  So  that's how we needed  a streamline                                                                    
     process.   They would hold a  generic contingency plan,                                                                    
     and  when that  vessel would  come in,  they'd have  to                                                                    
     sign on that  the department would turn  that around in                                                                    
     five  days.   That's  the  commitment  they've made  to                                                                    
     clear  a spot  charter  vessel, to  make  sure that  we                                                                    
     don't interfere  with commerce and  delay any  of those                                                                    
MR. FUHS, in response to a question from Co-Chair Masek, said:                                                                  
     Representative Green  raised a  very good point,  and I                                                                    
     remember all of this  when people were proposing things                                                                    
     that  really  had nothing  to  do  with prevention  and                                                                    
     response.  And  I think when we split  the nickle, that                                                                    
     was an historic  compromise.  I think  if anybody would                                                                    
     go back  and try to add  to that or change  it, I think                                                                    
     you know  where that'd  go, that  would go  straight to                                                                    
     the trashcan in  a heartbeat.  And  that's just talking                                                                    
     political reality.  ...I don't  really think it affects                                                                    
     the oil  industry that much; they  pretty much accepted                                                                    
     the  three cents  and they'd  like  it to  be used  for                                                                    
     prevention  and response.   Who  the costs  will really                                                                    
     hurt  are  our  industries   in  this  state  that  are                                                                    
     marginal  industries.    And   right  now  our  fishing                                                                    
     industry,  because the  prices  are down,  some of  the                                                                    
     stocks are down, if you  start putting additional costs                                                                    
     on to  the transportation industries, they're  going to                                                                    
     pass those  along, straight  to the  customer.   And so                                                                    
     the  fishing industry  gets a  double whamy.   Some  of                                                                    
     their  ships have  to meet  these requirements  and pay                                                                    
     that,  and  pay  higher shipping  costs  because  their                                                                    
     carriers are  also having higher costs  because of this                                                                    
     regulation.  And that's why  people were really nervous                                                                    
     about this.   The timber  industry, our costs  are down                                                                    
     and our volumes are down,  so you don't get the economy                                                                    
     to scale.   Red Dog's still chugging along  OK, but the                                                                    
     price of  gold and silver is  down.  So there  is not a                                                                    
     lot  of margin  in  these industries  to  say that  ...                                                                    
     "just write  a blank  check and you  guys are  going to                                                                    
     pay for  it."  It  would have  implications through[out                                                                    
     all] resource industries throughout  the state.  That's                                                                    
     why so much  emphasis was put on trying  to contain the                                                                    
     costs for the industry on this.                                                                                            
CO-CHAIR MASEK commented  that it seemed that the  task force and                                                               
agencies   involved  had   worked  hard   together  to   reach  a                                                               
compromise.   She said that  the plan  is flexible and  gives the                                                               
legislative  body the  power to  come  back and  make changes  if                                                               
needed.  She  stated that the issue needs to  be dealt with right                                                               
away.  She acknowledged Representative  Green's objections to the                                                               
bill.   Co-Chair Masek expressed  that she  is happy to  see that                                                               
"the private  industry is trying to  form co-ops, so that  in the                                                               
future they  can be able to  pay the fees that  are necessary and                                                               
not have to go back into the state for funding."                                                                                
Number 0902                                                                                                                     
MR. DIETRICK  stated that the  reason the task force  was created                                                               
last year was due to "the  debate about the affordability and the                                                               
marginal economics  of this  group of vessels."   The  task force                                                               
looked  at every  possible method  of keeping  the costs  down in                                                               
order to  benefit the  state "by getting  them to  participate in                                                               
the safety net, but  to do it in a way that  was affordable."  He                                                               
said the plan is sustainable by the surcharge.                                                                                  
CO-CHAIR MASEK read  the following segment of Section  8 from the                                                               
sectional  analysis  prepared  by  Breck Tostevin:    "  ...  new                                                               
provisions  requiring oil  discharge  prevention and  contingency                                                               
plans  for nontank  vessels and  railroad tank  cars transporting                                                               
oil  in  order  to  implement  the  response  planning  standards                                                               
adopted by  the Twenty First  Legislature ...  "  She  said "that                                                               
portion  there would  reflect to  a  lot of  the discussion  that                                                               
we've had  here in this  committee today."  Hearing  no questions                                                               
from those witnesses in the  room or via teleconference, Co-Chair                                                               
Masek  closed  the  meeting  to  public  comment  and  opened  up                                                               
committee discussion.                                                                                                           
Number 0713                                                                                                                     
CO-CHAIR  SCALZI stated  that,  after having  had  the chance  to                                                               
interview  members of  the industry  and  representatives of  the                                                               
task force,  he thinks the  bill should be moved  forward because                                                               
of  its  "broad support."    He  said he  had  some  of the  same                                                               
concerns  as Representative  Green regarding  funding and  future                                                               
regulatory changes  that could occur;  however, he does  not want                                                               
to "hamper" such a well-supported  bill because of something that                                                               
may happen in the future.                                                                                                       
Number 0601                                                                                                                     
CO-CHAIR SCALZI moved  that CSHB 55(TRA) be  moved from committee                                                               
with individual recommendations and  attachments.  There being no                                                               
objection,  CSHB 55(TRA)  was moved  out of  the House  Resources                                                               
Standing Committee.                                                                                                             
CO-CHAIR MASEK announced the following meetings:  a Federal Co-                                                                 
Management overview on Wednesday, February  14, 2001; and a joint                                                               
meeting  with  the   House  Special  Committee  on   Oil  &  Gas,                                                               
concerning the Alyeska Pipeline,  on Thursday, February 15, 2001.                                                               
She invited Representative Fate to introduce a topic.                                                                           
Number 0500                                                                                                                     
REPRESENTATIVE FATE referred  to the change in  1994 from village                                                               
status  to tribal  status.   He  stated that  the  topic is  very                                                               
applicable to  the House Resources  Standing Committee,  since it                                                               
is about  federal and  tribal co-management of  game, as  well as                                                               
the subsistence issue.   He recommended that  the House Resources                                                               
Standing  Committee consider  having an  overview regarding  this                                                               
CO-CHAIR  MASEK asked  if the  committee  had any  interest in  a                                                               
tribal overview.                                                                                                                
CO-CHAIR  SCALZI  suggested  incorporating   that  into  the  co-                                                               
management overview.                                                                                                            
CO-CHAIR MASEK indicated that  Co-Chair Scalzi's suggestion would                                                               
be considered.                                                                                                                  
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:05 p.m.                                                                 

Document Name Date/Time Subjects