Legislature(1993 - 1994)
03/24/1993 08:00 AM House RES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 24, 1993
8:00 a.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Bill Hudson, Vice Chairman
Representative Con Bunde
Representative Pat Carney
Representative John Davies
Representative Joe Green
Representative Jeannette James
Representative Eldon Mulder
Representative David Finkelstein
MEMBERS ABSENT
None
OTHER LEGISLATORS PRESENT
Representative Kay Brown
Representative Cliff Davidson
Representative Gary Davis
Senator Jay Kerttula
COMMITTEE CALENDAR
*HB 232: "An Act relating to a bow hunting tag and bow
hunting safety; and providing for an effective
date."
MOVED OUT OF COMMITTEE WITH A DO PASS
RECOMMENDATION
*HB 238: "An Act relating to the oil and hazardous
substance release response fund, repealing the oil
and hazardous substance municipal impact
assistance program and the authority in law by
which marine highway vessels may be designed and
constructed to aid in oil and hazardous substance
spill cleanup in state marine water using money in
the oil and hazardous substance release response
fund, amending requirements relating to the
revision of state and regional master prevention
and contingency plans, altering requirements
applicable to liens for recovery of state
expenditures related to oil or hazardous
substances, relating to a restoration standard in
certain state environmental laws, modifying
definitions of related terms, amending the manner
or computing the amounts required for the
suspension and reimposition of the oil
conservation surcharge, relating to fees to be
charged and collected by the Department of
Environmental Conservation, and annulling a
regulation related to costs for certain site
restorations."
HEARD AND HELD IN COMMITTEE FOR FURTHER
CONSIDERATION
(* first public hearing)
WITNESS REGISTER
Representative Con Bunde
Alaska State Legislature
State Capitol, Room 112
Juneau, Alaska 99801-1182
Phone: 465-4843
Position Statement: Prime Sponsor of HB 232
Steve Peterson, Senior Staff Biologist
Division of Wildlife Conservation
Alaska Department of Fish and Game
P.O. Box 25526
Juneau, Alaska 99801
Phone: 465-6195
Position Statement: Explained fiscal impact of HB 232 to the
department
Ken Vorisek
Golden North Archery Association
Alaskan Bow Hunters Association
P.O. Box 70254
Fairbanks, Alaska 99707
Phone: 479-3075
Position Statement: Supported HB 232
Dan Haskins, Bow Hunter
P.O. Box 157
Anchor Point, Alaska 99556
Phone: 235-2502
Position Statement: Deemed HB 232 unsatisfactory
Stan Parkerson
Golden North Archery Association
1441 Ivan's Alley
Fairbanks, Alaska 99701
Phone: 455-6056
Position Statement: Supported HB 232
Representative Joe Green
Chair, House Special Committee on Oil and Gas
Alaska State Capitol, Room 114
Juneau, Alaska 99801-1182
Phone: 465-4931
Position Statement: Presented sponsor statement and
explained the effect of HB 238
Janice Adair
Assistant Commissioner
Department of Environmental Conservation (DEC)
410 Willoughby Ave. Suite 105
Juneau, Alaska 99801-1795
Phone: 465-5010
Position Statement: Testified on DEC expenditures from spill
response fund
Senator Jay Kerttula
Alaska State Capitol, Room 427
Juneau, Alaska 99801-1182
Phone: 465-6600
Position Statement: Concurred with Ms. Adair's summary of
the intent of 1989 oil and hazardous
substance release response fund
legislation
Craig Tillery
Assistant Attorney General
Department of Law
1031 W 4th, Suite 200
Anchorage, Alaska 99501-1994
Phone: 269-5100
Position Statement: Testified on legal implications of HB
238
Representative Cliff Davidson
Alaska State Legislature
State Capitol, Room 400
Juneau, Alaska 99801-1182
Phone: 465-2487
Position Statement: Asked questions related to HB 238
John Ringstad
Associate Director of Government Affairs
British Petroleum
119-1/2 2nd Street
Juneau, Alaska 99801
Phone: 463-5262
Position Statement: Supported HB 238
PREVIOUS ACTION
BILL: HB 232
SHORT TITLE: BOW HUNTING STAMP & BOW HUNTING SAFETY
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) BUNDE
TITLE: "An Act relating to a bow hunting tag and bow hunting
safety; and providing for an effective date."
JRN-DATE JRN-PG ACTION
03/16/93 663 (H) READ THE FIRST TIME/REFERRAL(S)
03/16/93 663 (H) RESOURCES, FINANCE
03/24/93 (H) RES AT 08:00 AM CAPITOL 124
BILL: HB 238
SHORT TITLE: OIL/HAZARDOUS SUBS. RELEASE RESPONSE FUND
BILL VERSION:
SPONSOR(S): SPECIAL COMMITTEE ON OIL AND GAS
TITLE: "An Act relating to the oil and hazardous substance
release response fund, repealing the oil and hazardous
substance municipal impact assistance program and the
authority in law by which marine highway vessels may be
designed and constructed to aid in oil and hazardous
substance spill cleanup in state marine water using money in
the oil and hazardous substance release response fund,
amending requirements relating to the revision of state and
regional master prevention and contingency plans, altering
requirements applicable to liens for recovery of state
expenditures related to oil or hazardous substances,
relating to a restoration standard in certain state
environmental laws, modifying definitions of related terms,
amending the manner of computing the amounts required for
the suspension and reimposition of the oil conservation
surcharge, relating to fees to be charged and collected by
the Department of Environmental Conservation, and annulling
a regulation related to costs for certain site
restorations."
JRN-DATE JRN-PG ACTION
03/19/93 707 (H) READ THE FIRST TIME/REFERRAL(S)
03/19/93 708 (H) RESOURCES, STATE AFFAIRS
03/24/93 (H) RES AT 08:00 AM CAPITOL 124
ACTION NARRATIVE
TAPE 93-35, SIDE A
Number 000
The House Resources Committee was called to order by
Chairman Bill Williams at 8:10 a.m. All members were
present at the call to order.
CHAIRMAN BILL WILLIAMS announced that the committee had
heard HB 213 at its previous meeting, on Monday, March 22.
He said that the requested amendments on that bill were
still pending and the bill would not be heard again at this
meeting. On the agenda for the meeting, he said, were HB
232 and HB 238. He noted that the meeting was being held by
teleconference, with sites in Anchorage, Fairbanks,
Glennallen, Haines, Kodiak, Seward, Ketchikan, Sitka,
Valdez, Cordova, Whittier, Seldovia, and Kenai/Soldotna. He
opened the meeting to testimony on HB 232.
HB 232: BOW HUNTING STAMP & BOW HUNTING SAFETY
Number 071
REPRESENTATIVE CON BUNDE, PRIME SPONSOR OF HB 232, explained
that the bill had been introduced at the request of the
Alaskan Bow Hunters Association. The intention was to
impose fees upon the hunters to help support good management
of game resources. Representative Bunde, a bow hunter
himself, stressed the importance of education in the sport
because of the skill level involved. He noted the need for
proficiency in bow hunting because of the precision needed
to shoot effectively and not just wound the prey. The bill
sponsors education programs through a $7 tag fee, he said.
Number 100
REPRESENTATIVE BUNDE compared the program to the duck stamp
program, and said the proceeds would contribute to wildlife
management and enhancement in addition to education.
Number 152
REPRESENTATIVE ELDON MULDER asked about the estimated costs
of educational programs.
Number 154
REPRESENTATIVE BUNDE replied that there is currently an
education program funded through general funds, and the
revenues from the $7 fee proposed in HB 232 would supplement
those expenditures. He noted that in FY 93, $45,000 had
been budgeted for the bow hunting education program. He
also noted that there are several areas in the state set
aside for bow-hunting only, and in these areas, bow hunters
have imposed self-regulations that require hunters to have
completed a bow-hunting safety course.
Number 211
STEVE PETERSON, SENIOR STAFF BIOLOGIST WITH THE DEPARTMENT
OF FISH AND GAME (ADF&G), DIVISION OF WILDLIFE CONSERVATION,
told the committee he was testifying on behalf of Dave
Kelleyhouse, who was attending the Board of Game meeting in
Anchorage. Mr. Peterson said his primary function at the
ADF&G was federal aid work, associated with hunter
education. House Bill 232, he explained, imposes a bow
hunting fee over and above current hunting license fees. He
said the intent was to raise additional revenue for hunter
education and safety courses. Regarding the ADF&G fiscal
note, he said it was based on an estimated 5,000 tags sold
each year.
MR. PETERSON said this figure was based on the number of
individuals who have gone through a bow hunting course
required for bow hunting in areas designated exclusively for
that use. He commented that bow hunters may be able to
justify proposals to the Board of Game requesting
establishment of additional bow only hunting areas or
seasons as a result of the additional fee. He stressed the
importance of ethics in bow hunting and said educational
programs are a good way to ensure sound practices.
Number 301
REPRESENTATIVE BUNDE referred to incidents where
inexperienced bow hunters have caused damage to the public
perception of bow hunters when they go out without knowing
how to shoot and arrows are shot aimlessly, sometimes
hitting animals but not killing them. He explained that the
course teaches the complexities of the sport.
Number 318
CHAIRMAN WILLIAMS announced that testimony would be taken
from teleconference sites.
KEN VORISEK, GOLDEN NORTH ARCHERY ASSOCIATION AND ALASKAN
BOW HUNTERS ASSOCIATION, testified by teleconference from
Fairbanks in strong support of HB 232. He noted that an
advantage of the bill would be that it would result in more
accurate documentation of the numbers of bow hunters in
Alaska, in addition to its primary purposes of expanding
hunter education programs and supplementing the funding for
game management.
Number 360
DAN HASKINS, BOW HUNTER, testified by teleconference from
Homer. He called HB 232 unsatisfactory because he felt
there would be no guarantee that the additional revenues the
bow hunting stamp fee brought in would be used specifically
for the intended purposes. He felt the income generated
might be absorbed into the state's general fund and not be
used specifically for bow hunting safety and game
management. He said he would support the stamp if the
monies were deposited in a fund to be used for those
purposes only.
Number 373
REPRESENTATIVE BUNDE responded to Mr. Haskins' remarks, and
explained that in his conversations with the ADF&G, it was
understood that the income would be used for the intended
purposes, but because of constitutional provisions, the
income could not be placed in a dedicated fund. They would
instead be considered focussed on bow hunting education.
Number 396
STAN PARKERSON, GOLDEN NORTH ARCHERY ASSOCIATION, testified
by teleconference from Fairbanks. He said his association
had about 300 members. The association's board members, he
said, had voted to support the program proposed in HB 232.
He explained that Alaska has taken a different approach to
game management than other states. Alaska does not look at
the number of recreational hours generated by the resource
as other states do, he said. Bow hunting can be a source of
additional recreational hours, he said, and the support
shown for HB 232 is an indication that the bow hunters are
willing to pay for that opportunity.
CHAIRMAN WILLIAMS asked for further testimony, and heard
none.
Number 410
VICE CHAIRMAN BILL HUDSON made a MOTION to move HB 232 from
committee with the ADF&G fiscal note with individual
recommendations, and asked unanimous consent.
CHAIRMAN WILLIAMS asked if there were any objections.
Hearing none, the MOTION PASSED.
Number 423
CHAIRMAN WILLIAMS announced the committee would next take up
HB 238.
HB 238: OIL/HAZARDOUS SUBS. RELEASE RESPONSE FUND
CHAIRMAN WILLIAMS explained that there had been a large
number of persons who responded to the announcement of a
teleconference hearing on HB 238. Because of the complexity
and public interest in the bill, he announced that the
committee would take as much time as needed to hear all
public testimony, and that the bill would not be moved at
this meeting. He explained that the bill had been sponsored
by the House Special Committee on Oil and Gas, and would be
summarized by the chair of that committee, Representative
Joe Green. He noted for the record that Representative
Cliff Davidson was in attendance at the meeting, as well.
Number 438
REPRESENTATIVE JOE GREEN, spoke as the CHAIRMAN OF THE
SPONSORING COMMITTEE, THE HOUSE SPECIAL COMMITTEE ON OIL AND
GAS. He stated that HB 238 was not about the oil industry,
but rather was about fiscal responsibility and
accountability. He noted that the date of this meeting was
the fourth anniversary of the Exxon Valdez oil spill. He
called the response to the spill a series of bureaucratic
bumbling, indecision and lack of coordination. He said
there had been no cohesive plan backed up by equipment,
technology and personnel to carry it out. Also lacking was
a readily available, accessible fund that could be used by
the Department of Environmental Conservation (DEC) to
respond to a spill.
Number 460
REPRESENTATIVE GREEN said the spill had sparked legislation
in 1989 that initiated a spill response fund. One of the
bills imposed an assessment of five cents per barrel on the
oil industry to generate a fund. He explained that at the
time the fund was established, it was to have a cap of $50
million. However, he said that the oil industry had already
paid in excess of $80 million into the fund, which had also
been added to by general funds in almost the same amount.
He referred to a House Research report in members' packets
that showed the amount currently in the fund could be almost
as high as $23 million, or as low as $100,000, depending
upon how the figures are interpreted.
REPRESENTATIVE GREEN questioned how the money had been
spent, and said that the DEC's records are insufficient to
account for expenditures from the fund. He acknowledged
that some of the funds had been spent cleaning oil and
hazardous waste, and stated that the DEC is obligated by
statute to recover those expenditures from the spiller. He
read from a letter from the Alaska Environmental Lobby
written in response to HB 470, enacted in 1986, which called
for clear direction to the state to pursue reimbursement
from parties responsible for spills.
REPRESENTATIVE GREEN told the committee that a 1991 DEC
internal audit showed the DEC had recovered just over half
of the money spent on spills. He then referred to the most
recent DEC report, which states "full cost recovery of the
majority of incidents has not occurred." One of the causes
for poor rates of recovery, he said, relates to poor
documentation of expenses when the Department of Law goes to
court to try to recover.
Number 509
REPRESENTATIVE GREEN also complained of poor tracking of
money from the fund that is transferred to other
departments. He referred to a recent DEC Finance
Subcommittee meeting, where he said the director of the
Division of Spill Prevention and Response told the
subcommittee, "We've created a public trough, but we watch
it closely." Representative Green said it was not watched
closely enough. He then referred to a report from a
governor's task force on organizational efficiency, and
quoted, "The liberal use of the fund appears to be driving
up total state spending with little concern for efficiency."
REPRESENTATIVE GREEN related again the $80 million
contribution of the oil industry to the fund, and said that
was not the extent of the industry's financial commitment.
He noted that Alyeska Pipeline Service Company had invested
in an inventory of spill response equipment and trained
personnel. He pointed out that the world's largest
accumulation of spill response equipment is in place in
Prince William Sound, as well as a work force of hundreds.
Number 546
REPRESENTATIVE GREEN referred to Alaska Clean Seas, a
consortium of oil producers, and said the group has an
inventory of over 70 miles of response booms. He also
pointed to the great steaming capacity of the industry. In
addition, he said that approximately $14.5 million was being
spent on response equipment and storage facilities in
strategic locations to respond to spills in Prince William
Sound or the North Slope. He referred to 1989 legislation
that called for the fund to finance response depots in other
parts of the state. He said that these have not been
established. He said HB 238 or something like it must be
passed this year to respond to these problems.
Number 570
REPRESENTATIVE GREEN said the response fund had turned into
a trough, and "when you pull the critters who have become
dependent on a trough away from that trough, they squeal."
He suggested that if the state did not learn from history,
it would be doomed to repeat it. If another spill occurred
in Alaskan waters, he hoped that the fund would not be found
empty because of unauthorized extravagances. House Bill 238
was submitted, he said, to prevent further pirating and
possible legal action for improper administration of the
fund.
Number 580
REPRESENTATIVE DAVID FINKELSTEIN objected for the record to
the remarks made by Representative Green referring to
certain parties as "squealing." Representative Finkelstein
said that members of the public are trying to work together
to find solutions to the oil spill threats faced by Alaska.
He called Representative Green's remark rude.
Number 586
JANICE ADAIR, ASSISTANT COMMISSIONER OF THE DEPARTMENT OF
ENVIRONMENTAL CONSERVATION (DEC), told the committee there
seemed to be a great amount of misinformation surrounding
the use of the spill response fund. She explained that at
the time of the Exxon Valdez oil spill in 1989, the
legislature took quick action in passing a number of bills.
Three of particular importance were SB 260, SB 261, and SB
264. The DEC's Division of Spill Response was established
by SB 264, she said, and SB 261 mandated the preparation,
review and revision of state and regional master plans for
oil contingencies, and directed the restoration of the
environment after a release.
MS. ADAIR explained that SB 260 was the funding source for
those activities, and created the nickel a barrel oil
surcharge account. She related that throughout the
testimony on those three bills (the minutes for which she
had supplied to the committee), it was very clear the
legislature intended for the nickel a barrel to fund the DEC
programs that relate to spill response. Within the
statutory provisions of the response fund in Title 46, she
said, there is a list of activities for which the fund can
be used. All uses of the fund, she said, require
legislative appropriation except when there is an emergency
where the DEC has to take a first response activity.
MS. ADAIR said the DEC was absolutely not able to go into
the fund to use it however they wanted to. She said the DEC
spends hours going over the uses of the fund in excruciating
detail with the DEC finance subcommittee, including what
other agencies get money from the fund and what they would
do with it. In previous years, she said, money was
appropriated directly from the fund to different agencies,
without the DEC's knowledge of where or how the monies were
being spent. Since that time, Ms. Adair explained, the DEC
and its finance subcommittee have worked with the Office of
Management and Budget to run all of the expenditures from
the fund through the DEC in the form of Reimbursable
Services Agreements (RSA's).
MS. ADAIR clarified that the balance remaining in the fund
is just over $23 million. She said this figure is not in
dispute, contrary to Representative Green's statements, and
that there is no subterfuge involved.
Number 635
MS. ADAIR related that the figure of $100,000 that
Representative Green had mentioned is the difference between
all of the appropriations out of the fund and all of the
appropriations into the fund. The spill reserve is an
appropriation out of the fund, and so the amount left over
after the legislature appropriates the money for use by the
DEC for spill-related activities according to the laws
passed by the legislature. There is an amount, she said,
that is called the Spill Reserve, which is appropriated to
give the DEC access to funds for emergency first response.
It has been used, she said, although not very often, because
the Contaminated Sites Program deals with contaminated sites
as they come up, and the Spill Reserve is available in case
of an emergency.
MS. ADAIR said she had provided the committee with a break
down of the funding of the spill reserve, which she said
shows how over the past several years it has gone from $5
million to $23 million in FY 93, and is expected to be more
than $25 million in FY 94, based on the DEC's proposal for
expenditures from the fund for FY 94. Any amount not
expended for the requested activities, she said, would go to
the spill reserve.
Number 660
MS. ADAIR stated that HB 238 does more than just change what
the spill reserve fund can be used for. She said it was
important to recognize that one of the reasons the
legislature wanted a funding source for the spill program
was to ensure there would always be money available to the
state to properly implement those programs. She said the
DEC is typically at the top of everyone's list for general
funds' budget cuts. It was one of the reasons cited for the
fact that the DEC had not done as good a job as hoped in
reviewing contingency plans and making sure the capabilities
exist to respond to a spill.
MS. ADAIR explained that the legislature, in establishing
the fund, had wanted to ensure that no matter what else was
going on with state finances on a year to year basis, there
would always be money available for spill programs.
MS. ADAIR, in describing the effect of HB 238, said it also
changes the definition of containment and clean-up to remove
the requirement that the polluter restore the environment.
She said she had asked Craig Tillery of the Department of
Law where clean-up ends and restoration begins. Under the
provisions of HB 238, she said, the state can no longer
require a polluter to restore the environment. She raised
the question of where the line between clean-up and
restoration is drawn. Mr. Tillery's response, she said, was
that it is an arbitrary line.
MS. ADAIR cautioned the result of not requiring restoration
when there is no clear definition of the difference between
clean-up and restoration, is that a polluter who does not
want to repay the state can argue that an activity was not
clean-up, but was instead restoration of the environment.
House Bill 238 will create tremendous ambiguity, she said,
as well as the fact that prevention and clean-up is a term
that is used throughout the state pollution statutes and the
fundamental change would make Alaska the only state in the
nation that did not require a polluter to restore the
environment. She called this a significant policy change.
MS. ADAIR explained that another major change in HB 238 is
the way the $50 million cap is calculated. She presented
the committee with a flow chart of the response fund. There
are two funds within the general fund, she explained, that
are appropriated into the response fund each year. One is
the Oil Surcharge Account (where the five cent a barrel
surcharge goes), and the other is the Mitigation Account,
where monies the state receives from fines, penalties,
settlements, and cost recoveries are accounted for. This
Mitigation Account, she said, receives monies from a variety
of sources, not just oil companies.
MS. ADAIR continued her explanation, and said both the Oil
Surcharge and Mitigation accounts are appropriated on an
annual basis into the Spill Response Fund. Under current
law, she said, only the amount attributable to the oil
surcharge account is counted toward the $50 million cap.
TAPE 93-35, SIDE B
Number 000
MS. ADAIR said that under HB 238, all the money going in or
coming out, including the mitigation account, would go
against the $50 million cap. The DEC would no longer be
able to use the fund to generate the money that goes into
the mitigation account, she explained. The fund would no
longer be able to be used to pay legal expenses to seek
reimbursement, fines, or penalties. The fund could not be
used to clean up or restore the environment. The cap would
get the benefit of money that comes from the general fund,
and from other funding sources, she said, under HB 238.
Number 059
MS. ADAIR concurred with Representative Green's statements
that the oil industry, through the oil surcharge account,
had paid about $80 million into the account. The total fund
balance, adding up all the appropriations that have gone
into the fund, she said, was just over $161 million. The
oil industry had paid just about half of that, and Exxon had
paid in $30 million in program receipts in 1989-1990. The
balance of the money in the fund had come from the general
fund, she said. Money being repaid to the state now through
the mitigation account, she noted, could be either
mitigation income or the surcharge.
MS. ADAIR said the state had used the mitigation account in
the past to fund other programs not related to the oil and
hazardous substance release response fund, because the
mitigation fund is a general fund account. It has been used
to pay for the underground storage tank program, to clean up
contaminated sites of particular concern in rural Alaska,
and to do fuel assessment related to storage facilities.
She said the fund is not restricted to clean up of oil
spills, but applies as well to releases of other hazardous
substances.
MS. ADAIR, referring to the nickel a barrel surcharge, said
she had heard it interpreted to apply only to crude oil
activities. After reading the minutes of the 1989 meetings
on the subject, she said this was absolutely not the case.
The legislative intent was very clear for the nickel a
barrel to be used for hazardous substance releases as well
as crude oil releases. There was discussion in 1989 about
refined products, she said, relating to an incident shortly
before the Exxon Valdez accident where a rail car rolled
over. The resulting release of formaldehyde required the
evacuation of the community of Moose Pass.
MS. ADAIR stated the legislature in 1989 acknowledged the
need for the state to be able to respond to and prevent the
release of hazardous substances. Some of those substances
are extremely toxic, she said.
Number 099
CHAIRMAN WILLIAMS noted that Senator Kerttula had joined the
meeting.
REPRESENTATIVE BUNDE asked for clarification of the
provision to cap the response fund at $50 million. He said
that whenever there is a pool of state money, it will
generate a number of enthusiastic users. He asked Ms. Adair
if she foresaw that the potential uses of the fund would
ever allow the fund to reach $50 million.
Number 126
MS. ADAIR said the DEC believed the fund would reach $50
million, but that there would always be appropriations out
of the fund. Under current law, she explained, the ongoing
programs in the DEC and other agencies that are related to
spill prevention and response will be funded. The nickel a
barrel contribution declines based on production, she
clarified, so if production picks up, there would be more
nickels in the fund. When SB 260 was first considered in
1989, she said, it was anticipated the nickel a barrel would
generate about $32 million per year. In fact, its highest
contribution has been $28 million, she noted.
MS. ADAIR explained that the DEC is now at the peak of
implementing the programs called for in 1989, and once fully
in place, they would go into a maintenance phase which would
allow a somewhat decreased level of funding.
REPRESENTATIVE BUNDE asked when it might be expected the
fund could reach the $50 million cap, barring any major
incident.
Number 157
MS. ADAIR said a projection on that topic had been done, and
she had been unable to find it. She told the committee that
she would provide it to them when she found it.
SENATOR JAY KERTTULA commented that Ms. Adair's summary of
the intent of the 1989 legislation was correct. He said
that he had been involved in two of the three pieces of
legislation which HB 238 now proposes to affect.
Number 163
REPRESENTATIVE JEANNETTE JAMES related a concern that she
had heard from people outside of the legislature,
surrounding the possibility of a major spill while the
response fund is short of its $50 million goal. She asked
Ms. Adair whether it was important to have a readily
available $50 million fund to be protected from any
consequences of a spill such as the one in 1989.
MS. ADAIR replied that it was very important to have a
readily available fund. Whether the balance in that fund is
$25, $50, or $75 million will depend on the circumstances,
she added. Having a fund, but no state programs through
which the response can be carried out would do no good at
all, she stated. The programs instituted after the 1989
Exxon Valdez spill, she said, that are funded by the nickel
a barrel surcharge, are intended to assure that the state
has the ability to respond. She said a result of the
hearings on the 1989 legislation was an understanding that
the state could no longer rely on industry to protect the
state.
REPRESENTATIVE JAMES questioned how the state could respond
to a spill if the programs were in place but there was
insufficient money in the fund.
Number 215
MS. ADAIR replied that if a circumstance arose where there
was no money, as happened in 1989, there were other funding
sources available, such as the budget reserve account, in
the event of a catastrophic event.
REPRESENTATIVE JAMES noted that such funds were subject to a
legislative appropriation, and we could not count on a spill
happening in the first four months of the year.
MS. ADAIR agreed that it is important to have funds
available in the event of a spill, but the amount of money
needed in the fund would vary with the circumstances. She
pointed out that there is an additional funding source
available that did not exist in 1989, which is a federal
fund created under the Oil Pollution Act of 1990. That fund
is accessible through the Coast Guard and is a one billion
dollar account.
Number 246
REPRESENTATIVE FINKELSTEIN addressed the issue of when the
fund might reach the cap of $50 million, and mentioned that
he has been a member of the DEC finance subcommittee. He
said it was his recollection that the figures on
expenditures before the full committee were approximately $2
million less than what the DEC proposed. He said other
small changes in the budget are being proposed. The lesson
taught to the state by the spill, he suggested, is "What did
we learn?" He said the state still does not have the
ability to clean up tens of millions of gallons of oil,
especially in bad weather.
REPRESENTATIVE FINKELSTEIN said that from the DEC's point of
view, preparedness and prevention are the key points to
learn, and he commented that with HB 238, the state would
seem to be going in the opposite direction.
Number 288
MS. ADAIR agreed with Representative Finkelstein that
prevention was the linchpin, and that was why research had
been authorized and was to be funded from the release
response fund. She pointed out that oil spill response is
an evolving field and not everything is known. The
legislature had wanted to be able to keep on top of the
changes going on in the response area, she explained, while
keeping in mind that prevention was the highest priority.
Number 295
REPRESENTATIVE FINKELSTEIN requested of the Chairman that
before taking more public testimony, the sponsor might give
some explanation of the bill in detail to help the committee
understand the complex issues.
CHAIRMAN WILLIAMS replied that more testimony and questions
would be taken first, and that there would be more meetings
scheduled to address HB 238.
Number 300
REPRESENTATIVE JOHN DAVIES commented that one lesson learned
from the Exxon Valdez spill was that all the money in the
world could not have helped while the equipment and trained
personnel were lacking. Even with the "deep pockets" of a
corporation like Exxon, he said the response could not be
carried out quickly enough.
Number 318
VICE CHAIRMAN HUDSON suggested part of the problem was that
the oil surcharge account and the mitigation account funds
are commingled, and the legislature has appropriated from
the oil and hazardous substance release response fund, which
he said has had money pouring in from settlements and
repayments of past expenses. Meanwhile, he said, the nickel
a barrel surcharge continues to add to the fund. He said
the reason Alaska is more prepared today than in 1989 is
because the state has had access to the funds, and has
underwritten planning and programming, equipment and
training and other prevention activities.
VICE CHAIRMAN HUDSON said prevention is the only thing we
would have going for us in an oil spill. He wanted to see a
strong prevention program established and he believed we
were doing that. He described the problem with HB 238 is
that it seems to react to problems with the initial phases
of the spill account. There was loose handling of the
funds, he said, and how they were used. A major audit led
to the DEC tightening up control of the fund, he said, and
if anything, the legislature should now look at splitting
the mitigation and the surcharge accounts and provide for
separate accounting. Then the legislature could decide
which particular programs it wanted to fund, he added.
Number 358
VICE CHAIRMAN HUDSON said that while Prince William Sound is
in good shape in the event of a spill, he was concerned
about what would happen if a spill occurred in Southeast
Alaska waters. He mentioned the establishment of remote
site depots, and said not much has been done to further
response capability in those areas.
Number 365
SENATOR KERTTULA mentioned that funding a state ferry had
been part of that plan.
VICE CHAIRMAN HUDSON commented that a ferry could be hauling
500 passengers and 300 vehicles and the state could not just
dump them in the event of a spill, especially without remote
response depots.
Number 372
MS. ADAIR noted that the DEC had been given a special
appropriation in 1992 of $1.2 million to do a near-shore
demonstration project, looking at Southeast Alaska and lower
Cook Inlet going down toward Kodiak. She said the Request
for Proposals (RFP) would be ready to go out on that project
within the next week. She noted that there are a great many
miles of Alaskan coastline that are unprotected. The
response depot concept recognized the need to have equipment
available to move to the scene of a spill quickly.
MS. ADAIR said that in the bill that created the state's
master plan, amendments were made in Senate Finance to
require that the master plan identify where the depots
should be established. In 1989, she explained, things were
happening so fast that it wasn't known where those depots
should be or what they should consist of. Since that time,
through the master planning process, she said the state had
learned that it probably does not make sense to have booms
sitting on a dock somewhere with no one paying attention to
them.
MS. ADAIR said it would make more sense to have a standby
contract, with an organization that purchases the necessary
equipment with state help and then they would be on call in
case they were needed. That was the direction now being
taken, she said, and it has been called the "near-shore
demonstration project." She said the DEC believes that this
is the right direction to take and it was anticipated that
two of them would be operational in another year.
Number 413
REPRESENTATIVE ELDON MULDER asked Ms. Adair what percent of
the DEC's operational budget is derived from 470 funds.
MS. ADAIR responded that she would estimate approximately
one-third. In FY 94, she said, the DEC's request was $14
million, and about that same amount comes from general
funds, with another $8 million in federal funds, as well as
$3 million in program receipts.
Number 427
REPRESENTATIVE GREEN offered to hold his comments until
after further testimony and questions.
Number 436
CRAIG TILLERY, ASSISTANT ATTORNEY GENERAL, told the
committee that Ms. Adair had covered most of the financial
implications of HB 238. There were a couple of areas which
did strike him regarding the finances. He prefaced his
remarks by saying the bill is complicated and makes some
wholesale changes in definitions of things like containment
and clean-up that reverberate throughout the statutes. He
mentioned that the Department of Law recently figured out
that HB 238 would tend to gut the ability to use the
underground storage tank program assistance for restoration.
As MR. TILLERY understood the statute it would not allow the
state to use funds for cost recovery actions or for
restoration. Those kinds of actions then, would be done
through general funds, he said. He continued by saying that
once cost recoveries are made, the state would presumably
recover the cost of litigation. Those would then go into
the mitigation account, under HB 238, he said, and the
mitigation account would be used to offset the nickel a
barrel surcharge. The result would be that general funds
would go into what is now the nickel a barrel account. He
called it an anomaly.
MR. TILLERY said there had also been comments made that
there were problems with the Department of Law getting the
DEC's accounting for cost recovery. Mr. Tillery noted that
he had been working on the Exxon case since March, 1989, and
that had been a major problem with the Exxon case, so that
an independent outside accounting firm had to come in to do
the cost recovery.
MR. TILLERY noted that since that time a much better working
relationship had been established with the DEC, and a
program has been initiated to create a systematic
DEC/Department of Law cost accounting system. This would
allow the state to make the polluters pay for every cent
spent by the state.
Number 491
MR. TILLERY turned to the effect of HB 238 on the
environmental laws. At the heart of what HB 238 does, he
said, is the deletion of the restoration requirement. As he
understood the legislation, he said, it appears to say the
polluter or contingency plan holder is no longer required to
restore the environment. This would make Alaska, he said,
an anomaly in the United States. Moreover, he said, HB 238
eliminates the DEC's ability to restore the environment by
taking away that authority. It would appear to eliminate
the ability to do restoration work through the underground
storage tank systems program. This is a policy decision, he
said, that the legislature should carefully consider, of
whether it wants to take restoration out of the kinds of
activities that someone who causes pollution is required to
pay for.
MR. TILLERY then said that as a lawyer, he gets worried
because HB 238 creates a difficult legal situation for the
state. By taking away the ability to use funds to restore
the environment, the bill puts the burden on the state to
decide what is clean-up and what is restoration. The courts
would be faced with a polluter coming in and saying an
activity is restoration instead of clean-up, knowing that if
something is classified as restoration they would not have
to pay for it. He noted that there had already been a
disagreement with the Coast Guard on the question of clean-
up versus restoration.
MR. TILLERY called the distinction a fuzzy area. Under the
current statutory scheme, he said, it doesn't matter because
both are required and the state recovers its costs for all
activities.
Number 533
MR. TILLERY said there is a provision in HB 238 to change
the aspects of 760(e) which refers to the recovery of costs
incurred for restoration, to "only if feasible." This takes
the burden off the polluter, he said, and puts it on the
state as to whether something is or is not feasible. This
could lead to litigation, he said, where the polluter could
start "nickel and diming us down." Strictly from a legal
perspective, he was worried about the litigation aspect and
the ambiguity of the definition of "threatened release."
These were important policy questions, he said.
MR. TILLERY also pointed out fiscal and litigation
considerations as to whether the burden should be on the
state to make the up-front decisions that could result in
litigation. He cautioned against creating ambiguities.
Number 559
REPRESENTATIVE BUNDE said that the committee seemed to agree
on the overriding goal of prevention, with clean-up second.
He referred to the summary report of Governor Hickel's
Organizational Efficiency Task Force regarding the DEC. On
page 2, marked IV-34, in response to a question about
appropriate expenditures from the fund, he quoted, "Liberal
use of the fund appears to be driving up total state
spending with little concern for efficiency." He asked Mr.
Tillery if HB 238 addresses those concerns.
Number 576
MR. TILLERY said he did not know whether the bill would make
the state more efficient at what it does. It would
eliminate some of the options the state has, he said, and he
added that he assumed that if you eliminate some spending
you would then naturally eliminate some inefficiencies. He
said that what the Department of Law and the DEC were trying
to do was tighten up cost recoveries so the state would get
its money back from polluters.
REPRESENTATIVE BUNDE referred to the "liberal use" of the
fund by the DEC, and asked Mr. Tillery whether, in his
opinion, the DEC was using the fund efficiently to achieve
the goals agreed upon.
Number 599
MR. TILLERY said the accounting problems he was referring to
were strictly related to cost recovery. He said he had not
been involved with DEC's other fiscal activities. In his
experience, he said, DEC was not an inefficient organization
in spill response and cost recovery.
Number 605
MS. ADAIR noted that the DEC's total requested expenditures
for its own operations from the response fund at the highest
point, following the Exxon Valdez spill in FY 90, was $25
million. As she stated earlier, the DEC's FY 94 request
from the fund was $24 million. She said the
characterization of the DEC as having a liberal use policy
was not accurate.
Number 626
REPRESENTATIVE FINKELSTEIN referred to the OMB efficiency
review, and said there had been a chart handed out in the
DEC finance subcommittee that showed the fact that the state
is now spending much less than previously out of the 470
funds, and that indications are that the trend will
continue. As an example, he said there are five legislators
on the DEC finance subcommittee who spent hours trying to
find any place to cut the DEC budget request. The programs
are difficult to reduce, he said.
Number 638
REPRESENTATIVE MULDER asked Mr. Tillery if it was fair to
say most of his testimony centered around the state's
ability for cost recovery in a policy call of restoration
versus clean-up.
MR. TILLERY replied that the serious policy call required is
whether to throw out the requirement that the polluter must
restore the environment. Even if the state does that, he
said, we need to ask if, by doing that, we are throwing out
both restoration and the ability to recover clean-up costs
because of the fuzziness between restoration and clean-up.
REPRESENTATIVE MULDER asked what would be accurate
definitions of clean-up and restoration.
Number 660
MR. TILLERY said that those definitions are not clear.
There are some activities that clearly fit within one or the
other category. For example, if some oil is spilled and
skimmed off the surface, that would be clean-up. If fish
were killed and are replaced, that would clearly be
restoration. He pointed out that a number of other
activities don't fit cleanly into one or the other category.
That ambiguity is one of the problems he had with the
statute, he said.
Number 670
REPRESENTATIVE MULDER suggested it would be a legitimate
policy question for the legislature to determine or clarify
those definitions, so it is clear what the polluters are
liable for.
MR. TILLERY said that if the state decides that it will not
require restoration of a polluter, then by all means the
definition should be made more clear. There is no problem
he said, the way the statute is written now. The end of
restoration is clear, but the line between clean-up and
restoration is unclear. As long as both are required, there
is not a legal problem with the definition, he explained.
REPRESENTATIVE MULDER asked Mr. Tillery to explain where
restoration ended.
Number 680
MR. TILLERY gave an example of a fish hatchery built on
Prince William Sound as evidence that restoration was
completed. In essence, he said, restoration is completed
when no further action is required to ameliorate the effects
of an oil spill.
CHAIRMAN WILLIAMS noted that Representative Gary Davis had
joined the meeting.
Number 687
REPRESENTATIVE CLIFF DAVIDSON asked Mr. Tillery, in regards
to HB 238, in terms of public policy and resource
allocation, where is the pain, who gets it, what does it
apply to, and who gets the gain.
Number 692
MR. TILLERY replied that from a legal perspective, potential
polluters benefit from HB 238 because their responsibility
is diluted.
TAPE 93-36, SIDE A
Number 000
REPRESENTATIVE DAVIES expressed concern with using general
fund dollars for restoration. He asked Mr. Tillery to
clarify statements made regarding underground storage tanks.
MR. TILLERY referred to AS 46.04.020, and a provision
whereby if the DEC determines that containment or clean-up
activities are inadequate, they may direct the person to
cease and take up those activities itself. As he understood
HB 238, it would change the definition of containment and
clean-up. The result would be that where previously the DEC
had the authority to undertake restoration if the polluter
was not doing it correctly, the bill would appear to take
away that authority.
Number 041
REPRESENTATIVE GREEN stated that it was not the intent of
HB 238 to allow a polluter to avoid making payments after a
spill. He had hoped to introduce the bill, raise the
concerns of people, and then go to a subcommittee and make
revisions. The intent was to shore up the problem of
determining who is responsible, get that party to pay, and
not charge a certain entity a broad scope of concerns. He
suggested that after testimony at the meeting, HB 238 be
assigned to a subcommittee to work out the problems.
Number 078
CHAIRMAN WILLIAMS stated that HB 238 presented a substantial
policy decision and the committee would have more hearings
on the bill to determine which direction to go with it.
Number 089
JOHN RINGSTAD, ASSOCIATE DIRECTOR OF GOVERNMENT AFFAIRS FOR
BRITISH PETROLEUM (BP), told the committee that when the
nickel a barrel surcharge was proposed in the 1989
legislative session, BP did not oppose it, and agreed with
the intent of assuring adequate response to spills. He said
it was BP's understanding that the surcharge would stop at
$50 million. He remarked that only $23 million had been
saved for an emergency. This year's budget proposal, he
said, was to add only $2 million to the fund. British
Petroleum, he said, supports HB 238 in its effort to return
to the original purpose of the surcharge.
Number 132
REPRESENTATIVE BUNDE asked Mr. Ringstad if he saw the $50
million cap ever being achieved, from an industry point of
view.
MR. RINGSTAD responded that it could perhaps be reached,
technically, but that realistically, it probably would not.
As an example, he remarked that with $27 million going into
the fund in 1993, only $1.6 million of that would be saved.
He explained that the trend has been that the uses of the
fund have consistently changed and increased.
Number 167
REPRESENTATIVE MULDER asked Mr. Ringstad to explain his
understanding of the original intent that the 470 funds were
to be used for.
MR. RINGSTAD replied that initially, one of the senate bills
in 1989 established the nickel a barrel surcharge, and the
others established regional and statewide contingency plans,
as well as remote depots with a corps of trained personnel.
As he recalled, the discussion at that point was that the
state would spend around $5 to $7 million a year to
accomplish those goals.
Number 185
REPRESENTATIVE MULDER commented that Ms. Adair had said one-
third of the DEC's budget comes from the spill response
fund. He asked Mr. Ringstad, in his recollection, what
percentage of the DEC's operating budget actually is done to
administer or oversee the programs related to spill
prevention and response.
MR. RINGSTAD did not know the exact percentage. He said
there were two policy issues involved: First, how much of
the responsibility rests with the crude oil producers? He
questioned whether it was the crude oil producers'
responsibility to finance the program that approves
contingency plans of the U.S. Navy, for example. The other
question, he said, was whether it was the oil producers'
responsibility to pay for activities directly related to
Prudhoe Bay. He said there were different extremes, and
also a legitimate question regarding the total expenditure
from the fund beyond those of the DEC.
MR. RINGSTAD added that every year there are a number of
requests for funding out of the fund from various agencies,
not just the DEC.
Number 225
REPRESENTATIVE FINKELSTEIN asked Mr. Ringstad, what the
general categories were of things BP feels it should or
should not be paying for.
MR. RINGSTAD said the two extremes were easier to identify,
while the middle ground was fuzzy. For example, he said it
was very clearly the oil companies' responsibility if crude
oil were spilled. A situation where a gas station has a gas
leak somewhere, he said, that is not so clearly the oil
industry's responsibility. He said that underground storage
tanks should not be the oil companies' responsibility.
Number 254
REPRESENTATIVE FINKELSTEIN asked Mr. Ringstad why, in light
of his testimony, BP would support HB 238, rather than just
go to a user-fee system. He noted that HB 238 eliminates a
variety of other uses of the 470 fund, some of which might
meet BP's criteria for what is an appropriate use of the
fund.
MR. RINGSTAD responded that Rep. Finkelstein's suggestion
does not totally accomplish the goal if all it does is add
additional money, while spending from the fund still
prevents it from reaching the $50 million cap.
REPRESENTATIVE FINKELSTEIN asked Mr. Ringstad if the fund
was properly apportioned so that the causers of costs were
the payers of costs, his concerns would be met.
MR. RINGSTAD replied that it would address a big part of his
concerns.
Number 278
REPRESENTATIVE DAVIES asked Mr. Ringstad if he could provide
a list of expenditures that he thought were inappropriate
uses of the fund since it was implemented.
MR. RINGSTAD replied that he would try to do that.
Number 286
REPRESENTATIVE WILLIAMS thanked those testifying at the
meeting and said another meeting would be set to take public
testimony on HB 238 before any action was taken on the bill.
He suggested that testimony be submitted in written form for
inclusion in members' bill packets.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced that legal opinions had been
requested on HB 201, the Mental Health Lands Trust
Settlement amendment bill, from the Attorney General (AG) as
well as from the attorneys for the settling plaintiffs. The
letter from the AG, he said, would be distributed to
committee members for their review. He announced the
Resources Committee would next meet at 8:00 a.m. on Friday,
March 26, to hear a briefing by the Water Resources Advisory
Board and to consider HB 140 and HCR 9. If amendments were
ready, he told committee members that they might also take
up HB 213, previously heard on March 22nd.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 9:55 a.m.
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