Legislature(1999 - 2000)
04/17/2000 04:15 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE April 17, 2000 4:15 p.m. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Robin Taylor, Vice Chairman Senator Pete Kelly Senator Jerry Mackie Senator Lyda Green Senator Georgianna Lincoln MEMBERS ABSENT Senator Sean Parnell COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 304(FIN) am "An Act relating to issuance and sale of revenue bonds to fund drinking water projects, to the Alaska clean water fund, to creation of an Alaska clean water administrative fund and an Alaska drinking water administrative fund, to fees to be charged in connection with loans made from the Alaska clean water fund and the Alaska drinking water fund, and to clarification of the character and permissible uses of the Alaska drinking water fund; amending Rule 3, Alaska Rules of Civil Procedure; and providing for an effective date." -MOVED SCS CSHB 304(RES) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 432(FIN) "An Act extending the termination date of the Board of Storage Tank Assistance; expanding the authority of the board to issue recommendations concerning cleanup decisions; relating to the eligibility of certain nonprofit entities for financial assistance under the tank cleanup grant program and the tank upgrading and closure program; and providing for an effective date." -HEARD AND HELD SENATE BILL NO. 308 "An Act relating to certain passenger vessels operating in the marine waters of the state." -HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 304 - See Resources minutes dated 4/10/00. HB 432 - No previous Senate action. SB 308 - No previous Senate action. WITNESS REGISTER Ms. Juli Lucky Staff to Senator Halford Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Explained changes made to SCS CSHB 304(RES) Ms. Lorali Meier Staff to the House Resources Committee Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for the sponsor of HB 432 Mr. John Barnett PO Box 240651 Douglas, AK 99824 POSITION STATEMENT: Answered questions regarding the Storage Tank Assistance Program Representative Beth Kerttula Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 371, House version of SB 308 Mr. Jim Hayden Storage Tank Program Manager Department of Environmental Conservation 400 Willoughby St. Juneau, AK 99801-1795 POSITION STATEMENT: Answered questions regarding SB 308 Captain George Capacci Alaska Marine Highway Department of Transportation and Public Facilities 3132 Channel Drive Juneau, AK 99801 POSITION STATEMENT: Answered questions regarding SB 308 Mr. Robert Reges Ruddy, Bradley, Kolkhorst and Reges 8800 Glacier Highway Juneau, AK 99801 POSITION STATEMENT: Supports SB 308 Mr. John Hansen, President North West Cruise Ship Association Main Floor, 1111 W. Hastings Street Vancouver, BC V6E213 POSITION STATEMENT: Believes SB 308 is unnecessary Mr. Gershon Cohen Earth Island Institute Haines, AK POSITION STATEMENT: Supports SB 308 ACTION NARRATIVE TAPE 00-27, SIDE A Number 001 CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 4:15 p.m. Present were Senators Pete Kelly, Green, Taylor, Lincoln and Chairman Halford. The first order of business to come before the committee was HB 304. HB 304-CLEAN WATER FUND/DRINKING WATER FUND CHAIRMAN HALFORD announced that a committee substitute (CS) was prepared for HB 304. The CS includes changes on page 7 and 11. MS. JULI LUCKY, staff to the Senate Resources Committee, explained that in the proposed CS (Version M) language was added to page 7, lines 21 and 22 to allow DEC to have a set percentage of the market rate index for that class of borrowers. That change addresses a desire expressed by committee members at the April 10 meeting that different loan rates apply to municipalities and private utilities. This change will still provide a savings for all borrowers. She added that if the market rate index for private utilities was eight percent, the fund would charge them 75 percent of that market rate index. SENATOR TAYLOR moved to adopt the CS as the working version of the committee. There being no objection, the motion carried. There being no further testimony or questions, SENATOR TAYLOR moved SCS CSHB 304(RES) from committee with individual recommendations. There being no objection, the motion carried. HB 432-BOARD OF STORAGE TANK ASSISTANCE MS. LORALI MEIER, staff to the House Resources Committee, sponsor of HB 432, explained the measure as follows. HB 432 extends the termination date of the Board of Storage Tank Assistance to 2003 and it expands the Board's authority. The extension of the Board is necessary because many sites are in the process of being cleaned up and most underground storage tank owners believe they need the Board to mediate between themselves and the Department of Environmental Conservation (DEC). The authority that is being expanded is not a binding authority, it simply provides a forum for all involved parties to sit down at the table. It allows the Board to review a dispute on a cleanup decision. When the Board, DEC and the tank owner can sit down together to focus on the final decision letter, most of the issues are easily remedied. The fiscal note reflects the cost of staff travel and the cost of the executive administration. CHAIRMAN HALFORD asked if the March 30, 1999 sunset date in the original legislation had a one-year extension date which is what the Board is operating under now. MS. MEIER said that is correct. CHAIRMAN HALFORD asked who requested the expansion of the authority to non-profit entities. MS. MEIER replied that amendment was introduced by Representative Mulder in the House Finance Committee. That amendment only affects one non-profit entity which she believes is a church. Number 475 MR. JOHN BARNETT, a private contractor serving in a support role to the Board of Storage Tank Assistance, pointed out that the Senate Resources Committee proposed changing the program from a grant program to a loan program last year. The Board rewrote its regulations under the new guidelines and converted it to a loan program. Those regulations recently went into effect. A number of sites have applied for loans. The same authorities were listed under the loan statutes to provide for appeals or dispute mediation with the Board of Storage Tank Assistance. Being the first year of the loan program, tank owners have requested that the Board be in place to mediate eligible cost disputes related to loans. A number of tank owners have received "no further action" letters from DEC and they have asked for a forum for dispute resolution. The tank owners agreed to pay a registration fee that should provide for the Board. SENATOR TAYLOR noted the amendment made on the House side provides for a grant, not a loan. MR. BARNETT explained that a few non-profits were on the original grant list. Under the revised eligibility requirements that evolved out of SB 128, most organizations became ineligible. The amendment allows one non-profit to remain in the grant program. A grant program still exists but it is limited to entities with assets of under $1 million. Originally there were about 300 applicants on the grant list; now there are about 60. CHAIRMAN HALFORD asked at what point in time this program will cease. MR. BARNETT said the total demand went from about $50 million to under $10 million. The program received about $5 million in the capital budget last year so the list is short and the program is close to finishing. The upgrade and closure program has been completed at this time. The only projects underway are clean-ups and they take some time. CHAIRMAN HALFORD asked if any one is getting State money to upgrade private tanks. Number 696 MR. BARNETT said two names remain on the list and will be funded this year. They were eligible under the revised eligibility requirements. CHAIRMAN HALFORD asked for a copy of the list. MR. BARNETT replied that since the regulations were signed only a few days ago, he does not have a finite list of all entities still applying for loans. He said two facilities on the Kenai Peninsula owned by the same entity are awaiting final upgrade and closure grants. He noted that those facilities have been shut down because of contamination so the owner has no cash flow. CHAIRMAN HALFORD remarked their total net worth is less than $250,000 and that is the last of the grants. MR. BARNETT said that is correct. CHAIRMAN HALFORD asked if the next set of grants will be for clean-up. MR. BARNETT said that is correct. CHAIRMAN HALFORD asked if DEC also has a tank clean-up grant program. MR. JIM HAYDEN, DEC, provided Chairman Halford with a list of the names of the grantees. CHAIRMAN HALFORD asked if the House amendment adds only one applicant. MR. BARNETT said yes and that applicant was on the list for years but would have been removed because of the new eligibility requirements. CHAIRMAN HALFORD asked what amount the grant will be for. MR. BARNETT answered the amount will be $7,000. There being no further testimony, SENATOR MACKIE moved CSHB 432(FIN) from committee with individual recommendations. SENATOR TAYLOR said, "My only concern is that we may be entering into something that looks like it's just special legislation, something that we may be criticized for, and I want to make certain that we're not being - moving half the bill at this point when it's just to provide a $7,000 grant to one individual. I realize it's a diminimus amount but I'm not concerned about that. I'm just concerned about the legal aspects of it." CHAIRMAN HALFORD stated he would hold the bill while Senator Taylor looks into that matter. SB 308-MARINE PASSENGER VESSELS CHAIRMAN HALFORD informed committee members that SB 308 is very similar to, if not identical to, HB 371, introduced by Representative Kerttula. He asked Representative Kerttula and Ms. Lucky present the bill. REPRESENTATIVE BETH KERTTULA, District 3, said as a resident of a community that is affected by the cruise ship industry she thanks the committee for introducing the legislation. She sees SB 308 as a small but very important step for the State. SB 308 is a right- to-know bill. REPRESENTATIVE KERTTULA said she introduced the House legislation because last December she attended a meeting with the cruise ship industry, community representatives, and DEC officials and learned that there are very large gaps in the reporting requirements on this industry. SB 308 does three things: it requires companies to register in Alaska; it requires them to gather information about air and water emissions; and it requires them to report that information to the State. It does not require any additional permitting. Penalties would be imposed only if reports are lacking or false. Representative Kerttula remarked that she cannot think of any other industry that has such an impact on communities in the State and profits heavily that is not required to provide information of this type. This industry operates under foreign flags which causes some of the problems that she tried to address in the registration system. Industry members have been meeting with Department of Environmental Conservation (DEC) officials in an effort to come up with ways to go forward with reporting compliance and have made headway, but the astonishing fact is that large gaps remain in which DEC simply does not know what the cruise ship industry is doing. SB 308 will fill that hole and provide information. If the State finds from the information that no problems exist, both parties will be on a level playing field. REPRESENTATIVE KERTTULA pointed out that the General Accounting Office (GAO) recently issued a report and the Environmental Protection Agency (EPA) has announced that it is taking cruise ship emission problems very seriously. Although it appears that all agencies are moving in the same direction, this legislation provides an Alaskan solution and can be enacted before federal statutes are put in place that may preempt Alaska. She asked committee members to consider a change to the legislation. SB 308 asks the industry to report a type of emission; it has been suggested to her that the bill ask for information on the composition of the waste stream instead. Number 1197 SENATOR TAYLOR asked if any of the ports in Southeast Alaska have pumping stations for the cruise ships. REPRESENTATIVE KERTTULA said she does not believe so but that possibility is being discussed. She added the bill exempts vessels from the reporting requirements that are not off-loading or emitting. MR. MIKE CONWAY, DEC, verified that no pumping stations for cruise ships exist in Southeast Alaska as most treatment plants in Southeast are not designed for those volumes. CHAIRMAN HALFORD commented that he has heard that most cruise ships have better treatment systems than some of the communities they would off-load to. SENATOR TAYLOR asked, if that is so, how the cruise ships would be violating the Clean Water Act by discharging emissions that are cleaner. REPRESENTATIVE KERTTULA said the lack of information about exactly what is being discharged is part of the problem. She was told that some of the ships' systems are better than the communities' but the State does not have the baseline information to determine whether that is true. She said once the information is received, many arguments may simply come off of the table because the communities will know the facts. Number 1303 CHAIRMAN HALFORD asked if a large passenger vessel is defined as over 300 tons. REPRESENTATIVE KERTTULA indicated the definition is on page 6, line 20. She noted the definition was recrafted a couple of times. A large passenger vessel is defined as one of 300 gross registered tons or greater, engaged in carrying passengers for hire, excluding vessels without berths or overnight accommodations and non-commercial vessels, warships, or vessels operated by the State. This definition was tailored to include truly large ships involved in passenger trade. She has since received correspondence from some vessel owners who suggested focussing on passengers rather than weight, but she based the definition on Coast Guard regulations. State vessels, foreign government vessels and warships are excluded. CHAIRMAN HALFORD said he knows the intent of the bill is to target the cruise ships, but he questioned why a lower weight was not used so that 100 percent of the cruise ships are included. Number 1416 MR. CONWAY responded that the working group's intent was to exclude the day boats because they generate much less waste. CHAIRMAN HALFORD said he was just wondering what the standard below the Coast Guard's is because the Committee discussed another bill and learned that 300 tons depends on design factors such as accommodations, how decks are set up and other things. MR. CONWAY said, as a retired Coast Guard Marine Safety Officer, he is familiar with that issue but regarding this bill the working group was concerned with passengers and their routines. CHAIRMAN HALFORD remarked that the 300 ton weight limit was increased to 400 tons in another bill but, in this case, there is nothing in the cruise traffic that low because a 1,000 ton ship is still a fairly small cruise ship. REPRESENTATIVE KERTTULA agreed and pointed out the tonnage of the big cruise ships is in the range of 30,000 tons. Number 1527 SENATOR TAYLOR asked whether a pump station is used by the State ferries. CAPTAIN GEORGE CAPACCI, General Manager of the Alaska Marine Highway System, informed committee members that the vessels of the Alaska Marine Highway System have treatment systems on board, therefore the ferries do not pump offshore. Those systems are inspected regularly. CHAIRMAN HALFORD noted that because the Marine Highway is a State entity, the information is readily available. SENATOR MACKIE asked how the emission standards for a municipality compare to those of a cruise ship. CAPTAIN CAPACCI said from what he understands the effluent that is pumped out around the neighborhoods is not treated at all. The effluent from the Marine Highway system is treated and meets all federal standards. SENATOR LINCOLN noted the penalty in the bill is $50 per day for each day of non-compliance, which does not provide an incentive to comply. REPRESENTATIVE KERTTULA agreed the penalty is minimal but said because it is an administrative one, it can be put in place easily. Another section of the bill places in the DEC statutes a provision regarding civil liability. Those penalties could be much higher and include compensation for environmental damage. The fine could be $10,000 per day with a civil penalty of $500 to $100,000. SENATOR LINCOLN asked if $50 is the standard amount for an administrative penalty and whether the other penalties are a significant amount. REPRESENTATIVE KERTTULA replied it is more than the State has now. The companies have been fined amounts in the millions; in 1994, the total amount in Alaska was $6.5 million. She noted that although the penalty is not huge it is better than what the State has now. Number 1718 SENATOR LINCOLN asked if the main purpose of the bill is to provide baseline information from which the State can determine whether to assess penalties. REPRESENTATIVE KERTTULA said that is correct but added she does not believe the penalties are the most important part of the bill to her or the communities. They are more concerned that the cruise industry is paying attention and the bill is an effort to continue the industry's cooperation with DEC and to point out that the Legislature takes this seriously. When necessary, the State would seek penalties but that is not the focus of the bill. MR. CONWAY asked to qualify a statement made earlier. He pointed out that communities in Southeast Alaska must have primary treatment so they are not discharging directly. The facilities are permitted, so DEC has data on the quality of the primary treatment. He stated that some Southeast Alaska communities have waivers for secondary treatment because of the expense. DEC knows the quality of the discharge in those communities. Black water, or sewage, is treated with marine sanitation devices (MSD). MSDs use 1970's technology so when the Coast Guard inspects them, it is not looking at the quality. The working group is seeking information to determine the quality from MSDs and whether a problem exists. Through the working group process, the industry has begun to cooperate. SENATOR MACKIE asked if industry officials have provided all of the requested information. MR. CONWAY said the group is working on that and by mid-May it should have agreements made on what information will be gathered and provided. This will be a cooperative effort with the Coast Guard so, being the lead agency for the ships, it has taken the lead on water discharge. The cruise ship industry claims it is in compliance with all requirements and that it is willing to provide information so the Coast Guard should have its report completed in the next month. CHAIRMAN HALFORD commented that the number of people on any of the bigger ships equals the size of the fifth or sixth largest community in Southeast. MR. ROBERT REGES, an environmental attorney, said he was testifying in favor of SB 308 on his own behalf. He informed committee members he is a member of a non-profit corporation of citizens named Cruise Control that advocates responsible tourism. SB 308 does two things: it levels the playing field with Alaska based businesses and other foreign businesses that come to Alaska to do work and it contains "show me" provisions. Regarding the registration requirement of the first section of the bill, MR. REGES said it is balanced by the penalty of not being able to use Alaska's courts. The Legislature has similarly required other businesses, such as banks, insurance companies and other companies that come to Alaska to do business to register and get bonded and insured. If a company is not registered first, it cannot avail itself of Alaska's courts. As a former employee of the Department of Law, he recounted one of several bad experiences with cruise vessels. DEC's one standard for air emissions from cruise vessels was regularly violated. One of the violators owed the State a substantial amount in penalties and did not comply with provisions in a memorandum of agreement that it signed. When the Department of Law tried to bring the company to court, it could not get a hold of them. The company's Miami office had closed and it had no other American-based office. Essentially, the Department of Law was trying to bring a Panamanian corporation with a Monrovian flag to Alaska's courts. The Department of Law would not have succeeded except for the fact that the company filed for bankruptcy so the Department was able to serve its bankruptcy lawyer in New York. Similarly, when the State went to sue Royal Caribbean, it had to go to Florida. The leveling of the playing field provision simply asks that if a company is coming to Alaska to do business, it give Alaska the name of an agent for service of process. That practice is required of many other businesses. MR. REGES explained that the "show me" provisions will require the cruise ship companies to show compliance. Those companies have been saying for the past six months that they are complying but they have not brought forth anything to the DEC working group that shows compliance. The Alaska-based entities must file a monthly report. SB 308 asks the cruise ships to do the same. The "show me" provisions are broken down into two parts: off- loading and releases. When waste is taken off of a vessel and put into a controlled treatment storage or disposal facility, it has been off-loaded. Vessels do not typically off-load their aqueous wastes but they do off-load their food waste. Much of the food waste is incinerated in Juneau. Coast Guard regulations prohibit food waste from boats that have been in international waters from being land filled. The section of the bill that pertains to off-loading requires companies to report where and when waste was off-loaded so that it can be tracked. The released wastes do not go into a controlled facility. They get discharged into the air or on to the shore. In response to an earlier question by Senator Mackie, MR. REGES said the industry has not given DEC all of the information it requested. The industry would like to come forward with information but government agencies can penalize them. For instance, a vessel cannot go into Glacier Bay unless it has a device called a continuous opacity monitor which reads the smoke that goes up the stack. From that record, a trained technician can tell whether the ship is in compliance with the State's air quality standards. DEC and the working group want that data for the past few years, not for the purpose of penalizing any company, but to help develop best available control technology. Those records may show what type of fuel burns the cleanest or what nozzles work best. The companies said they would provide that information if they are not penalized but EPA would not agree to the enforcement shield, so no information has been provided. MR. REGES said the key point of SB 308 is that it does not impose any performance standards, it simply requires cruise ship companies to tell the State what it is doing. CHAIRMAN HALFORD took teleconference testimony. MR. JOHN HANSEN, President of the Northwest Cruise Ship Association (NCA), an association of nine cruise ship lines that operate in the Pacific Northwest, made the following comments. SB 308 contains a lengthy list of records and reports to be filed by cruise ships. The bill does not state why the collection of certain data is necessary and how it will be analyzed. Although it is not stated in the bill, the real objective of SB 308 is to protect Alaska's environment. NCA agrees with that objective and is committed to protecting the high quality of the environment in Alaska. In most cases, this means that current management practices aboard ships will exceed United States regulatory requirements. The cruise lines, through the International Council of Cruise Lines (ICCL), have agreed to a voluntary set of guidelines published last December. In addition, the lines also agreed to additional practices and investments specific to Alaska operations. NCA members spent $1.3 million this year to purchase 18 oil spill response barges to be located in Southeast Alaska. NCA members are within days of signing an agreement with the existing oil spill response organization to pool resources, including the barges. MR. HANSEN clarified that NCA is interested in a voluntary compliance program which would be highly consistent with the sphere of Senator Pearce's bill, SB 273. He noted that the fleet of cruise ships operating in Alaska is young. Twelve of the 22 ships are less than five years old and four are brand new this year. The ships contain MSDs for secondary treatment. NCA understands the public's need to be assured that the cruise ships are exercising responsible environmental management and it also understands that enforcement agencies have the power to enforce under current law. TAPE 00-27, SIDE B MR. HANSEN said with that in mind, NCA entered into the environmental initiative under the leadership of Commissioner Michelle Brown of DEC. The purpose of the initiative is to gain an understanding of the waste management practices used by ships in Alaska waters and to address any environmental problems that may be identified. Working groups have been established to work on waste water and solid waste, air emissions, environmental leadership and oil spill response. A progress report is scheduled to be completed in early May. NCA supports this program as it provides a foundation for problem solving and policy making. It sees this process as an effective way to address the public question about environmental stewardship. This program is designed to be cooperative with a common objective of continuously implementing operational improvements. NCA believes that neither SB 308 nor HB 371 are entirely in step with the initiative process underway. DEC will determine whether substantial problems exist and find possible solutions. The current process is working and should be allowed to continue to its conclusion. At that point it will be possible to assess what ongoing data and reporting requirements are needed. Number 2279 MR. GERSHON COHEN, a 20 year resident of Southeast Alaska and the National Project Director on water pollution issues with the Earth Island Institute, gave the following testimony. SB 308 is one of several bills sponsored in response to the wake up call Southeast residents received last summer when they heard that cruise ships were dumping toxic waste into Alaskan waters. For the past nine months, cruise ship representatives have proclaimed their intention to adhere to all applicable pollution laws, however the key word is "applicable." The cruise ship industry is well aware that it remains exempt from key U.S. laws and regulations that otherwise govern the discharge of human waste streams. Because of these exemptions, the coastal states must take on the responsibility of monitoring illegal ship wastes into public waters. Similar measures are being considered by the California Legislature. Despite the industry's record of violations, huge gaps in the regulatory process will permit discharges to go unmonitored again this season. SB 308 will play a critical role in closing the information gap. MR. COHEN stated the average cruise ship in today's fleet is a floating city, transporting more than 5,000 passengers and crew. A typical ship generates approximately 1 million gallons of gray water during each voyage, 210,000 gallons of raw, untreated sewage, 25,000 gallons of oily bilge water, 110 gallons of photochemicals, 5 gallons of dry cleaning waste, 10 gallons of paint, and 5 gallons of expired chemicals. Under international law, cruise ships can discharge gray water tanks and untreated sewage anywhere as long as they are not tied to a dock. The State needs to identify what is being discharged and which systems in ships are better at controlling pollution. This information will help establish a baseline for future planning decisions. MR. COHEN maintained that one of the industry's goals in continuing the initiative process is to develop a self monitoring plan that it hopes will preempt a change in Alaska law or regulation. Last week the industry finally submitted its proposal. Despite repeated, clear and specific requests from the working group, the industry's proposal missed the boat. It offered to evaluate the waste streams twice per ship during the entire summer for only sewage parameters, ignoring concerns expressed about the toxics pumped into the gray water. At the end of the last meeting, the industry's representative verbally agreed to a limited amount of gray water testing for toxics. At this rate, the State will be lucky to have a monitoring protocol in place for the 2001 season. MR. COHEN thought SB 308 and HB 371 clearly and fairly initiate a process to get the cruise ship industry to play by the same rules as everyone else who does business in Alaska. The oil, mining, seafood processing and timber industries are all required to monitor and report the quantity and composition of their wastewater discharges to either a state or federal oversight agency every month. These bills simply demonstrate that both the industry and the public have needs. The industry needs Alaska as a destination. We hope they recognize that without clean air and water, Alaska will no longer be the place it sells to clients. Alaskans need clean air and clean water too, as well as an active economy. Fortunately, these needs are not incompatible. No legitimate reason remains to allow the industry to continue to circumvent the monitoring and reporting requirements performed by all other industries in Alaska. He urged committee members to pass the bill out of committee today. CHAIRMAN HALFORD thanked all participants for their testimony. He noted the committee will revisit the legislation, possibly at the next meeting. He then adjourned the meeting.