Legislature(1993 - 1994)

02/07/1994 04:41 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                   SENATE RESOURCES COMMITTEE                                  
                        February 7, 1994                                       
                           4:41 P.M.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Senator Mike Miller, Chairman                                                 
 Senator Loren Leman, Vice Chairman                                            
 Senator Steve Frank                                                           
 Senator Drue Pearce                                                           
 Senator Fred Zharoff                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Al Adams                                                              
 Senator Dave Donley                                                           
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 CS FOR HOUSE JOINT RESOLUTION NO. 49(RES)                                     
 Requesting the United States Department of the Interior to adopt              
 regulations that give a narrow interpretation to certain                      
 definitions under the Oil Pollution Act of 1990 relating to                   
 evidence of financial responsibility that must be shown by offshore           
 facilities.                                                                   
                                                                               
 SENATE BILL NO. 215                                                           
 "An Act relating to and redesignating the oil and hazardous                   
 substance release response fund and to its use in the event of a              
 disaster emergency; repealing 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; amending the authority to contract to provide           
 personnel to respond to a release or threatened release of oil or             
 a hazardous substance and to contract to conduct spill related                
 research; reassigning responsibility for the oil and hazardous                
 substance response corps and for the emergency response depots to             
 the Department of Environmental Conservation, and for the operation           
 of the state emergency response commission and its attendant                  
 responsibilities for the local emergency planning commissions to              
 the Department of Military and Veterans' Affairs; and modifying               
 definitions of terms relating to the preceding provisions;                    
 terminating the nickel-per-barrel oil conservation surcharge;                 
 levying and collecting two new oil surcharges; and providing for              
 the suspension and reimposition of one of the new surcharges; and             
 providing for an effective date."                                             
                                                                               
  PREVIOUS ACTION                                                              
 SB 215 - See Resources minutes dated 11/19/93, 1/19/94, and                   
   2/7/94.                                                                     
                                                                               
 HJR 49 - See Resources minutes dated 2/7/94.                                  
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Jeff Logan, Legislative Assistant                                             
 c/o Representative Joe Green                                                  
 Capitol Building                                                              
 Juneau, Ak. 99801-1182                                                        
  POSITION STATEMENT:   Commented on HJR 49.                                   
                                                                               
 Mead Treadwell, Deputy Commissioner                                           
 Department of Environmental Conservation                                      
 410 Willoughby, Suite 105                                                     
 Juneau, Alaska 99801-1795                                                     
  POSITION STATEMENT:   Supported HJR 49.                                      
                                                                               
 Krista Rogerson                                                               
 P.O. Box 1386                                                                 
 Valdez, Ak. 99686                                                             
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Becky Gay, Executive Director                                                 
 Resource Development Council                                                  
 121 Fireweed, Suite 250                                                       
 Anchorage, Ak. 99503                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Sheri Schlotfeldt, President                                                  
 Ak. State Chamber of Commerce                                                 
 217 2nd Ave., Suite 201                                                       
 Anchorage, Ak. 99502                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Norma Calvert                                                                 
 Marathon Oil                                                                  
 3201 C St.                                                                    
 Anchorage, Ak. 99519                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Patty Ginsberg                                                                
 Prince William Sound RCAC                                                     
 750 W 2nd Ave., #100                                                          
 Anchorage, Ak. 99501                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Tom Lakosh                                                                    
 P.O. Box 100648                                                               
 Anchorage, Ak. 99510                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
 Ken Freeman                                                                   
 7604 Snow View Dr.                                                            
 Anchorage, Ak. 99507                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Judy Brady, Executive Director                                                
 Alaskan Oil and Gas Association (AOGA)                                        
 721 W. Fireweed                                                               
 Anchorage, Ak. 99502                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Walt Parker, Chairman                                                         
 Hazardous Substance Spill Technology Review Council                           
 3724 Campbell Loop Rd.                                                        
 Anchorage, Ak. 99504                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Mike Macy                                                                     
 Wave Riders                                                                   
 308 G St.                                                                     
 Anchorage, Ak. 99501                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Sue Libenson                                                                  
 824 O Place                                                                   
 Anchorage, Ak. 99501                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Paul Headlee                                                                  
 Tanana Chief's Conference                                                     
 122 First Ave.                                                                
 Fairbanks, Ak. 99701                                                          
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Mike O'Maera                                                                  
 P.O. Box 1125                                                                 
 Homer, Ak. 99603                                                              
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Mary McBurney, Executive Director                                             
 Cordova District Fishermen United                                             
 P.O. Box 939                                                                  
 Cordova, Ak. 99574                                                            
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
 Walt Furnace, General Manager                                                 
 Alaska Support Industry Alliance                                              
 4220 B St.                                                                    
 Anchorage, Ak. 99503                                                          
  POSITION STATEMENT:   Supported SB 215.                                      
                                                                               
 Tim Robertson                                                                 
 P.O. Box 175                                                                  
 Seldovia, Ak. 99663                                                           
  POSITION STATEMENT:   Opposed SB 215.                                        
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 94-6, SIDE A                                                            
                                                                               
 Number 001                                                                    
 CHAIRMAN MILLER called the Resources Committee meeting to order at            
 4:41 p.m. and announced  HJR 49  (FED REGS UNDER OIL POLLUTION ACT OF    OF   
 1990) to be up for consideration.                                             
                                                                               
 JEFF LOGAN, Legislative Assistant, House Oil and Gas Committee,               
 said the sponsor had a schedule conflict and asked him to testify             
 on behalf of the bill.  He said the terms "navigable waters,                  
 offshore facility, and responsible party" were defined in a very              
 broad manner in the regulations for OPA '90.  CSHJR 49 requests the           
 MMS to reinterpret and narrow these definitions.                              
                                                                               
 MR. LOGAN said it's important to deal with this resolution quickly,           
 because the MMS has scheduled a hearing on the regulations in                 
 Anchorage for February 16 and they would like it to be a part of              
 the public record.  He explained that this resolution asks the MMS            
 for specific action.  SJR 40 asks Congress for specific action.  He           
 thought the resolutions compliment each other.                                
                                                                               
 MEAD TREADWELL, Deputy Commissioner, Department of Environmental              
 Conservation, said the administration supports this resolution and            
 feels it's complimentary to SJR 40 which passed the Senate today.             
                                                                               
 Number 95                                                                     
                                                                               
 SENATOR PEARCE moved to pass HJR 49 from Committee with individual            
 recommendations.  There were no objections and it was so ordered.             
 SENATOR MILLER announced  SB 215  (OIL/HAZARDOUS SUBS. RELEASE                
 RESPONSE FUND) to be up for consideration and to receive public               
 testimony.                                                                    
                                                                               
 KRISTA ROGERSON, Valdez, opposed SB 215 and supported testimony               
 submitted by the RCAC.                                                        
                                                                               
 BECKY GAY, Executive Director, Resource Development Council,                  
 supported a strong emergency fund as stated in the original                   
 legislation.  It's imperative that the 470 Fund be allowed to                 
 accumulate to $50 million level, the original intent, she said.               
 They think the .02/.03 split gives clear direction and a spending             
 cap for addressing noncatastrophic spills.  It would allow the Fund           
 to reach the $50 million level slower than the original allocation,           
 but much sooner than the current deficit accumulation practice                
 which will never get there.  There is no incentive for state                  
 agencies to ever let the Fund get to the $50 million level, because           
 there are so many areas to spend the money.  She suggested using              
 general fund monies and oil spill settlement money.                           
                                                                               
 She supported SB 215 as written.                                              
                                                                               
 Number 220                                                                    
                                                                               
 SHERI SCHLOTFELDT, President, Ak. State Chamber of Commerce,                  
 testified that they are concerned that the money that has been                
 appropriated to the Fund has been used for purposes other than                
 intended in the original legislation.  It is not fair public policy           
 to make the oil industry pay for other industry spills.                       
                                                                               
 MS. SCHLOTFELDT recommended capping the Fund and using the money              
 for the original purpose.  She supported SB 215.                              
                                                                               
 Number 241                                                                    
                                                                               
 NORMA CALVERT, Marathon Oil, supported the position developed by              
 the Alaska Oil and Gas Association (AOGA).  They believe SB 215               
 will reestablish focus on the original intent of the 470 Fund.                
                                                                               
 Number 281                                                                    
                                                                               
 PATTY GINSBERG, Prince William Sound RCAC, strongly opposed SB 215.           
 She said there is money set aside right now at the state and                  
 federal level to respond to an emergency spill.  We have much to              
 lose, because the public's exposure to oil and gas spill impacts              
 would increase dramatically.  SB 215 alarmingly discounts the                 
 seriousness of spills defined as less than catastrophic.  It is               
 insufficient to support the state's spill prevention and response             
 program.                                                                      
                                                                               
 MS. GINSBERG said the catastrophic oil spill reserve is redundant.            
 The federal Oil Pollution Act established a $1 billion fund.  She             
 said there are no reserves set aside for the more common huge                 
 spills of less than 100,000 barrels or for prevention.                        
                                                                               
 Passing SB 215 would cripple DEC's ability to prevent and respond             
 to spills.                                                                    
                                                                               
 TOM LAKOSH, Anchorage, resident, opposed SB 215 and said that it              
 would be an imposition on the Department of Law and on Department             
 of Environmental Conservation.  An ounce of prevention is worth a             
 pound of cure.  This is a demonstrative attempt by the industry to            
 prevent the public from protecting themselves.                                
                                                                               
 Number 406                                                                    
                                                                               
 SENATOR PEARCE said she thought the RCAC did a study on tractor               
 tugs and that it was inconclusive.  MR. LAKOSH responded that the             
 second part of the study hadn't been concluded, but they are                  
 assessing the need for at least two tractor tugs and a salvage tug            
 to respond to open water oil spills.  All the vessels might be                
 required for the Alyeska marine terminal lease renewal as well as             
 under the OPA '90 open seas response.                                         
                                                                               
 SENATOR PEARCE asked if the study is not complete, how can anyone             
 know what equipment is necessary?  MR. LAKOSH answered many studies           
 have shown tractor tugs are required for this type of traffic.                
 Salvage tugs are necessary in the open seas.                                  
                                                                               
 Number 422                                                                    
                                                                               
 KEN FREEMAN, Anchorage resident, supported SB 215.  He said it was            
 imperative that the 470 Fund be allowed to accumulate $50 million             
 to assure that funding is available if another spill ever occurs.             
                                                                               
 JUDY BRADY, Executive Director, Alaskan Oil and Gas Association               
 (AOGA), said the 470 Fund currently does not fulfill the purpose              
 for which it was originally created.  It is clear that the Fund was           
 never intended to fund one third of the DEC's operating budget.               
                                                                               
 She said there is a lot of confusion about what the balance in the            
 470 Fund really is and it is necessary to clarify some of the                 
 confusion.                                                                    
                                                                               
 AOGA strongly supported SB 215.  It would provide $50 million for             
 the emergency fund originally envisioned in 1989 undiluted by other           
 environment related expenditures.  They think the balance of money            
 in the oil reserve account should be transferred to the new                   
 account.  They support the permanent .02 per barrel tax that would            
 go into a separate account insuring a permanent source of funding             
 for state prevention and preparedness programs while oil is being             
 produced in Alaska.  This would provide some sort of certainty for            
 the industry and for Alaskans.                                                
                                                                               
 Number 550                                                                    
                                                                               
 WALT PARKER, Chairman, Hazardous Substance Spill Technology Review            
 Council, opposed SB 215.  It would not provide the flexibility that           
 is needed over the next few years in working out what remains to be           
 done on a prevention and response program which will serve Alaska             
 for the next several decades.                                                 
                                                                               
 Number 576                                                                    
                                                                               
 MIKE MACY, Co-author of the Alaska Master Plan for Oil and                    
 Hazardous Substance Spills, testified on behalf of the Alaska Wave            
 Riders.                                                                       
                                                                               
  TAPE 94-6, SIDE B                                                            
 Number 580                                                                    
                                                                               
                                                                               
  MR. MACY pointed out that the state of Alaska is facing huge                 
 revenue short falls and the oil companies still make tens of                  
 millions of dollars.  SB 215 would give them yet another tax break.           
                                                                               
 He asked why was the legislature so determined to gut the DEC.                
 Legislature has already given control of catastrophic spill                   
 response to the Department of Military and Veterans Affairs, an               
 agency with little spill response experience and no interest in the           
 responsibility for protecting Alaska's environment.                           
                                                                               
 He pointed out that spill volume is only one factor in determining            
 the seriousness of a spill.  The legislature created the 470 Fund             
 in the belief that paying for spill response preparedness is part             
 of the cost of doing oil business in Alaska.                                  
                                                                               
 SUE LIBENSON, Anchorage resident, said it is hard to grasp why the            
 legislature is considering reducing a tax that has been working and           
 which is not hampering the oil industry when the state is facing an           
 enormous budget crisis.                                                       
                                                                               
 She pointed out that the legislature failed to adopt most of the              
 recommendations of the Oil Spill Commission due to pressure from              
 the oil industry.  The 470 Fund is one of the few actions the                 
 legislature decided to take.  She said prevention is the only real            
 key.  Money is much better spent on prevention and contingency                
 planning, rather than worrying about how much money you have on               
 hand for a response.                                                          
                                                                               
 Number 512                                                                    
                                                                               
 PAUL HEADLEE, Tanana Chief's Conference, opposed SB 215 as well as            
 putting 2/5 of the 470 Fund money into a release, prevention, and             
 response account.  He said the vast majority of spills are 1,000              
 gallons or less.  470 Funds help rural villages meet their                    
 contingency plan responsibilities.                                            
                                                                               
 SB 215 appears to be a tax relief to oil companies while shifting             
 the cost to Alaska communities and the general fund.  Protecting              
 the environment would be taking a step backwards from the original            
 intent of the 470 Fund.                                                       
                                                                               
 Number 498                                                                    
                                                                               
 GAIL PARSONS, Homer resident, opposed SB 215.  DEC's ability to               
 clean up spills needs to continue to be supported by the 470 Fund.            
 Prevention is the name of the game.                                           
                                                                               
 Number 484                                                                    
                                                                               
 MIKE O'MEARA, Homer resident, opposed SB 215.  He supported the               
 testimony presented by Sue Libenson and Patty Ginsberg.                       
                                                                               
 Number 450                                                                    
                                                                               
 MARY MCBURNEY, Executive Director, Cordova District Fishermen                 
 United, supported the position of the Prince William Sound RCAC and           
 opposed SB 215. SB 215 does a great job of addressing catastrophic            
 spills.  OPA '90 and SB 215 basically insures that catastrophic               
 spills will be covered.                                                       
                                                                               
 The .02 that is left over to address the problems that need to be             
 taken care of.  About 94% of all spills are much less than 100,000            
 barrels.  She asked that the amount be raised to .05 to insure                
 there is enough money to support the state's ongoing programs for             
 prevention and response.                                                      
                                                                               
 Number 424                                                                    
                                                                               
 WALT FURNACE, General Manager, Alaska Support Industry Alliance,              
 supported SB 215.  He said the commitment in 1989 when the 470 Fund           
 was established was to set aside a fund equal to $50 million as an            
 emergency response key that could be drawn upon in case the state             
 of Alaska experienced a situation similar to the Exxon Valdez.                
 Alaska Statute 26 includes language that says the industry would              
 agree to pay a tax equal to .05 per barrel and that that tax would            
 be collected until the fund reached $50 million at which time it              
 would be suspended.                                                           
                                                                               
 Number 344                                                                    
                                                                               
 TIM ROBERTSON, Seldovia Alaska, opposed SB 215.  He owns a lodge              
 and his business depends on having clean coastal waters.  He is in            
 favored continued use of the .05 barrel tax to pay for, most                  
 importantly, prevention; second, to monitor production and                    
 transportation of oil products; and third, to establish a reserve             
 to respond to the needs of spills and contaminated spots.                     
 SENATOR MILLER thanked everyone for their participation and                   
 adjourned the meeting at 4:55 p.m.                                            
                                                                               

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