02/06/2001 01:35 PM House TRA
| Audio | Topic |
|---|
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 6, 2001
1:35 p.m.
MEMBERS PRESENT
Representative Vic Kohring, Chair
Representative Drew Scalzi
Representative Peggy Wilson
Representative Mary Kapsner
Representative Albert Kookesh
MEMBERS ABSENT
Representative Beverly Masek, Vice Chair
Representative Scott Ogan
COMMITTEE CALENDAR
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
HOUSE BILL NO. 39
"An Act relating to registration of motor vehicles, to operating
a motor vehicle, aircraft, or watercraft while intoxicated, and
to driving with a cancelled, suspended, or revoked driver's
license; relating to duties of the division of alcoholism and
drug abuse regarding driving-while-intoxicated offenses; and
providing for an effective date."
- BILL HEARING POSTPONED
PREVIOUS ACTION
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 -
REFERRALS
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
MINUTES(TRA)
01/25/01 (H) TRA AT 1:00 PM CAPITOL 17
01/25/01 (H) Heard & Held
MINUTES(TRA)
02/01/01 (H) TRA AT 1:00 PM CAPITOL 17
02/01/01 (H) Heard & Held
MINUTES(TRA)
02/06/01 (H) TRA AT 1:30 PM CAPITOL 17
WITNESS REGISTER
LARRY DIETRICK, Director
Division of Spill Prevention and Response
Department of Environmental Conservation
410 Willoughby Street, Suite 105
Juneau, Alaska 99801-1795
POSITION STATEMENT: Provided information on potential fiscal
impacts of HB 55 on the Spill Response Fund.
GEORGE CAPACCI, Captain and General Manager
Marine Highway System
Department of Transportation and Public Facilities (DOT&PF)
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Provided information on fiscal note from
DOT&PF.
ACTION NARRATIVE
TAPE 01-11, SIDE A
Number 0001
CHAIRMAN VIC KOHRING called the House Transportation Standing
Committee meeting to order at 1:35 p.m.
HB 55-OIL DISCH PREVENTION: NONTANK VESSELS/RR
CHAIR KOHRING announced that the committee would continue
discussion of 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."
CHAIR KOHRING recalled that at the end of the previous committee
meeting, there had been concern that enactment of HB 55 might
draw down the Spill Response Fund and divert funds from existing
programs [including those] associated with tank replacement.
Number 0154
LARRY DIETRICK, Director, Division of Spill Prevention and
Response, Department of Environmental Conservation (DEC), came
forward. He provided a brief overview of the Spill Response
Fund, established by the legislature in 1986. A significant
amendment was made in 1990, following the [Exxon Valdez oil]
spill, when the legislature imposed a nickel-a-barrel surcharge
[on all crude oil produced in Alaska]. In 1994, the legislature
split the nickel into a two-cent and a three-cent account. He
referred to a graph of the two resulting funds.
MR. DIETRICK referred the left side of the graph, where the two-
cent account was depicted. Revenue in that account is subject
to appropriation by the legislature into what is called the
Response Account. That account is intended [to deal with] a
large, catastrophic oil spill. The account is allowed to
accumulate up to a balance of $50 million. When that amount has
been reached, the tax shuts off. The $50 million Response
Account has been full since shortly after the nickel was split
in 1994, and the tax has been shut off since that time. When
the balance is drawn down below $50 million, the tax
automatically turns back on, as determined on a quarterly basis
by the Department of Revenue. Use of this account is reserved
for imminent and substantial events. The account is used very
conservatively and very seldom. There are controls in the
statutes that govern access to the account; for example, any
time the DEC taps the account, that agency must advise both the
legislature and the governor's office in writing within 120
hours of how much is being withdrawn and for what purpose.
MR. DIETRICK then called attention to the right side of the
graph, where the three-cent surcharge was depicted. The three-
cent surcharge goes into the account that one hears about the
most, the Prevention Account. That account is intended to be
used for activities listed in a box lower on the page. This
Prevention Account is used for the state's preparedness costs,
including contingency plan reviews, response preparedness and
training, restoration activities, the storage tank assistance
fund, matching federal funds, and a host of other things. These
are listed in the statute as the allowed uses of the Prevention
Account, and it is the account that is tapped for operating
budget requirements or capital improvement budget requirements.
Number 0517
REPRESENTATIVE WILSON sought clarification about the automatic
shut-off of the two-cent surcharge when the Response Account
reaches $50 million, and the resumption of that surcharge when
the balance falls below the cap.
Number 0538
MR. DIETRICK explained that the money in the $50 million account
is pooled with other money and invested to earn a certain rate
of return. There is an investment policy that seeks to generate
a rate of return that is sustainable and yet conservative. Mr.
Dietrick said there recently had been meetings to discuss
whether it would be possible to invest the money more
aggressively without risking it. That did not appear to be
possible because the principal may be needed on an emergency
basis. The investment account is generating an average of about
5 percent through conservative, government-type instruments.
The interest is appropriated into the Prevention Account on an
annual basis.
CHAIR KOHRING called attention to a projection sheet in the
packet. He asked Mr. Dietrick to go over it and give the
committee an idea of what the Spill Response Fund is going to
look like in future years.
MR. DIETRICK noted that the sheet, prepared by the Legislative
Finance Division, shows fiscal years 2002, 2003, and 2004. The
left column shows the balance in the two-cent, or $50 million
account, with a balance of $51,276.500 projected through the
three years. Unless the state needs to use it, that amount
should "continue to be parked there and generate interest," he
said.
MR. DIETRICK explained that the next column shows the Prevention
Account, broken down into the Prevention Mitigation Account and
the Prevention Surcharge Account. He referred back to the graph
as he explained that the Surcharge Account is the account in
which the 3-cent surcharge is deposited and held. The
Prevention Mitigation Account is a separate account where all
penalties, cost recovery, program receipts, federal funds, and
other revenues are kept. The projections show the amount that
will be generated by each of these accounts, which are the
sources of appropriations into the Prevention Mitigation
Account. The $5,379,000 [income] shown in that account is a
three-year average for the fiscal years 1998, 1999, 2000 -- the
average of the amount of money that has been cost-recovered and
brought back into the Prevention Mitigation Account. The same
number has been used to project that revenue stream in future
years. The number on the right side, the Surcharge Account, the
$9,300,000 number, is the actual amount that is generated by the
three-cent surcharge on the production of crude oil. For 2003,
that number jumps up to $9,800,000 and in 2004, to $9,900,000.
MR. DIETRICK explained that those projections are based on the
revenue forecasts that the committee had at the last meeting:
Department of Revenue figures that project what the actual flow
will be for those years. Adding those two together, and then
adding in a carry-forward from the prior year, yields the
estimated balance of $27,726,000 for the beginning of 2002. He
explained briefly how the balance is calculated: "You take the
balance in the checkbook (of the Prevention Account) on June 30,
the end of the fiscal year. Add to it the projected revenues
for the next fiscal year, and then deduct from it the projected
expenditures. That's all this sheet is doing." The resulting
balance is $4,744,000 on June 30, 2002.
Number 0907
REPRESENTATIVE WILSON asked where Mr. Dietrick was getting the
$27 million figure, which she did not see on the handouts.
MR. DIETRICK asked if the fiscal year 2002 sheets were in the
committee packets, and committee staff said they were not; the
information had not been provided.
MR. DIETRICK then answered Representative Wilson's question,
saying the carry-forward balance from the prior fiscal year
[which the Legislative Finance Division had calculated on
another sheet] was $27 million. That figure was brought forward
onto this sheet.
REPRESENTATIVE WILSON asked, "So this number here is the
beginning balance from fiscal year 2002, and that should be $27
[million]...?"
MR. DIETRICK said that was correct. He remarked, "This is good
because what we are engaged in here is long-term fiscal planning
for the response fund."
Number 0977
MR. DIETRICK continued that the fiscal note reflects the "out"
years and the impact the $141,000 [cost of HB 55], will have on
the fund's balance. The percentage of the [entire] Surcharge
Account is relatively low, and, therefore, DEC thinks it is
sustainable over time.
Number 1003
CHAIR KOHRING told Mr. Dietrick, "You're throwing a lot of
numbers around here and I appreciate that," but asked if it
could be put more simply for his benefit, perhaps roughly
"guestimating" from a percentage perspective what the impact of
the fiscal note on that fund would be.
MR. DIETRICK said using the $141,000 and comparing that amount
with the revenue stream from the Surcharge Account, the impact
would be somewhere between 1 percent and 2 percent. If one adds
in the Mitigation Account and the other interest streams, it
would be reduced even further.
CHAIR KOHRING observed, "Nevertheless, it is a pretty good chunk
of money .... We're talking as much as a third [of a million
dollars] at its highest point in the evolution of this
legislation [HB 55]." He said he was not recommending that HB
55 be changed before sending it out of committee, but that he
would suggest to the full Finance Committee a reduction in DEC's
overall budget to accommodate the additional monies being spent
for HB 55. He said he would draft a recommendation from
himself, would show it the members of the House Transportation
Standing Committee, and that anyone who concurred would be
welcome to sign on. He thinks it would be prudent to maintain a
no-increased-budget philosophy with any new legislation. He
said, "Having had the DEC budget in the past, I feel that there
are some areas in DEC that we can reduce to offset the increased
expenditure of this legislation [HB 55], so I am going to ...
make that recommendation" to the Finance Committee to consider.
Number 1123
REPRESENTATIVE KOOKESH said he wanted to make sure Chair Kohring
emphasized that the recommendation was his own, not that of the
House Transportation Standing Committee. Representative Kookesh
did not agree with it. He said:
I think DEC has suffered enormously at the hands of
the legislature, and there's a lot of areas in Alaska
now that DEC can't even address because of the lack of
funds. I appreciate your consideration and I
appreciate seeing it [Chair Kohring's recommendation],
but I'm not supportive of it. I think that this
legislation [HB 55] is exactly what that fund was
intended to address .... One percent is a very small
amount of impact on that fund, and I think that we're
doing the right thing and we ought to go forward.
CHAIR KOHRING promised to make it very clear that the memorandum
was just from himself (and any other members who wished to sign
the memo), and not from the [Transportation] committee.
Number 1172
REPRESENTATIVE SCALZI referred to the list of activities that
are funded by the three-cent surcharge, including cost recovery,
state and regional master plans, response, and others.
Regarding the impact of the $141,000 [cost of HB 55], out of all
the things that are listed, which did Mr. Dietrick think would
be "the most likely hit?"
MR. DIETRICK recalled that the legislature two years ago had
passed SB 128, which dramatically changed the financial
assistance program for the underground storage tank program,
putting caps on the amount of grants and loans that would be
made available by the state. He said DOT&PF has now completed
the upgrade and closure portion of that -- a ten-year item to
get the leaky underground storage tanks pulled out -- so the
upgrade and closure work is essentially completed, and the
cleanups remain to be done. He anticipated that the amount of
work is going to be reduced because the program has been scaled
back by the legislature.
MR. DIETRICK also noted that the state has been paying $1.6
million a year out of the Response Fund to the aboveground fuel
storage tank problem in rural Alaska. When the problem first
occurred and threatened to stop fuel deliveries, this
expenditure was [intended as] seed money to get the rural
aboveground fuel storage tank program fixed. Now, the TAPL
[Trans-Alaska Pipeline Liability] Fund is injecting $20 million
a year into that program, so that is another area where
potentially the Response Fund expenditure could be throttled
back. Still another one is the Response Fund used for cleanup
of contamination and leaky tanks at state-owned facilities, "and
we like to think we're making progress on that and we'll get
over that hump and we'll not have to spend so much money in the
future on that. So those are some of the areas where as part of
long-term fiscal planning, there could be some potential shifts
or changes," Mr. Dietrick said.
REPRESENTATIVE SCALZI asked if the TAPL fund Mr. Dietrick had
motioned is the Trans-Alaska Pipeline Fund.
Number 1331
MR. DIETRICK confirmed that the Trans-Alaska Pipeline Liability
Fund is the one known as the TAPL Fund. That fund was basically
done away with when the Oil Pollution Act of 1990 was passed at
the federal level. At the time, there was a $500 million
liability fund for Prince William Sound, and they did away with
that account; the money went into a new billion-dollar oil spill
liability trust fund at the federal level. Some of the money
that had been in the Prince William Sound account was originally
the state's, and last year, it finally came back to the state,
$20 million of it through the Denali Commission to be used for
bulk fuel upgrades and $18 million through the Alaska Industrial
Development Authority to be used for remediation at the same
facilities. So those are two significant new revenues streams
to work on that problem, he concluded.
CHAIR KOHRING noted that there is an additional fiscal note from
the DOT&PF, reflecting the cost of compliance [with HB 55] for
the vessels in the state's Marine Highway System.
Number 1421
GEORGE CAPACCI, Captain and General Manager, Marine Highway
System, Department of Transportation and Public Facilities
(DOT&PF), came forward to testify. He explained that DOT&PF
already has a response system, an incident command system, and a
statement of financial responsibility. What would have to be
needed additionally under HB 55 would be contracting to have
spill equipment available for use by all the state ferries.
They would make use of the cooperative equipment that would be
stationed throughout coastal Alaska where the ferries operate.
The fiscal note is based on what it would cost if the Marine
Highway System were to sign up at the present time. In the
future, when there are expected to be more members in the
cooperative, the cost to DOT&PF would be less, so the amount in
the fiscal note is the maximum.
Number 1511
REPRESENTATIVE SCALZI asked if the contractual expenses would be
for training.
CAPTAIN CAPACCI explained that the $29,000 indicates first-year
costs for complying with HB 55. The money is not for training,
but primarily for contracting to have oil spill response
equipment available on standby for the Marine Highway System's
use.
REPRESENTATIVE SCALZI asked what the annual cost of $23,500
would be used for.
CAPTAIN CAPACCI said the higher cost in the first year is to
accommodate the initial, one-time membership or initiation fees
to join the cooperative. The annual fees are lower in the
ensuing years.
Number 1609
REPRESENTATIVE WILSON asked if the people providing the spill-
response equipment also contract with vessels other than those
in the Marine Highway System.
CAPTAIN CAPACCI said that is right, and again stated that the
cost estimates are based on the current prices the response
agencies charge to have that equipment available. If there are
more [members], as is expected, there will be more [of them] to
share those costs, and so the actual cost is expected to be
lower than is indicated in the fiscal note. But there is no way
to predict that rate right now.
Number 1654
CHAIR KOHRING said he was satisfied with the answers, even
though he did not necessarily agree with them. He noted that
the committee had identified three primary issues on which they
sought information. Those issues were regulations, dealt with
through Representative Ogan's amendment [adopted at the previous
meeting]; the personnel increase issue, which he thinks was
addressed satisfactorily; and the spill response fund and
additional fiscal note. He asked the will of the committee.
REPRESENTATIVE KOOKESH moved to report HB 55 as amended out of
committee with individual recommendations and the accompanying
fiscal notes.
Number 1724
CHAIR KOHRING noted that he has continuing concerns although he
does not want to be an obstructionist. He would prefer a more
simplistic approach. However, he noted, his concerns had been
addressed, and the industry seems to be in favor [of HB 55], as
are many members of the legislature. There being no objection,
CSHB 55(TRA) was passed out of the House Transportation Standing
Committee by unanimous consent.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:05
p.m.
| Document Name | Date/Time | Subjects |
|---|