Legislature(2003 - 2004)

02/24/2003 03:30 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                       February 24, 2003                                                                                        
                           3:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Scott Ogan, Chair                                                                                                       
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Fred Dyson                                                                                                              
Senator Ralph Seekins                                                                                                           
Senator Ben Stevens B                                                                                                           
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 69                                                                                                               
"An Act relating to regulation of shallow natural gas leasing                                                                   
and closely related energy projects; and providing for an                                                                       
effective date."                                                                                                                
     HEARD AND HELD                                                                                                             
SENATE CONCURRENT RESOLUTION NO. 3                                                                                              
Extending the termination date of the Joint Legislative Salmon                                                                  
Industry Task Force until 2005.                                                                                                 
     HEARD AND HELD - ASSIGNED TO SUBCOMMITTEE                                                                                  
CS FOR HOUSE CONCURRENT RESOLUTION NO. 6(FSH)                                                                                   
Relating to the continuation of the Joint Legislative Salmon                                                                    
Industry Task Force until 2004.                                                                                                 
     MOVED CSHCR 6(FSH) OUT OF COMMITTEE                                                                                        
SENATE BILL NO. 74                                                                                                              
"An Act extending the renewal period for oil discharge                                                                          
prevention and contingency plans; and providing for an effective                                                                
     HEARD AND HELD                                                                                                             
PREVIOUS ACTION                                                                                                               
HB 69 - No previous action to record.                                                                                           
SCR 3 - No previous action to record.                                                                                           
HCR 6 - No previous action to record.                                                                                           
SB 74 - No previous action to record.                                                                                           
WITNESS REGISTER                                                                                                              
Senator Gary Stevens                                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor of HCR 6                                                                                         
Mr. Larry Dietrick                                                                                                              
Department of Environmental Conservation                                                                                        
410 Willoughby                                                                                                                  
Juneau, AK 99801-1795                                                                                                           
POSITION STATEMENT:  Supports SB 74                                                                                           
Mr. Breck Tostevin                                                                                                              
Assistant Attorney General                                                                                                      
Department of Law                                                                                                               
1031 W 4th Ave.                                                                                                                 
Anchorage, AK 99501-1994                                                                                                        
POSITION STATEMENT: Explained the intent of Amendment 1 to SB 74                                                              
Ms. Marilyn Crockett                                                                                                            
Alaska Oil and Gas Association (AOGA)                                                                                           
121 West Fireweed Lane                                                                                                          
Anchorage, Alaska 99503                                                                                                         
POSITION STATEMENT:  Supports SB 74                                                                                           
Mr. Tadd Owens                                                                                                                  
Resource Development Council                                                                                                    
121 W. Fireweed, No. 207                                                                                                        
Anchorage, AK 99503                                                                                                             
POSITION STATEMENT:  Supports SB 74                                                                                           
ACTION NARRATIVE                                                                                                              
TAPE 03-7, SIDE A                                                                                                             
Number 0001                                                                                                                     
CHAIR SCOTT OGAN called the Senate Resources Standing Committee                                                               
meeting to order at 3:30 p.m. Senators Dyson, Wagoner, Seekins                                                                  
and Ogan were present.                                                                                                          
            HB 69-REGULATION OF SHALLOW NATURAL GAS                                                                         
CHAIR OGAN declared a conflict of  interest with HB 69 because he                                                               
is employed  as a consultant  for a  company with an  interest in                                                               
that legislation.  He assigned a  subcommittee to consider  HB 69                                                               
made up of Senators Dyson, Seekins and Lincoln.                                                                                 
SENATOR  SEEKINS informed  members  of the  Seekins' conflict  of                                                               
interest rule: no interest, no conflict.                                                                                        
        SCR  3-EXTEND JT LEG SALMON INDUSTRY TASK FORCE                                                                     
     CSHCR 6(FSH)-EXTEND JT LEG SALMON INDUSTRY TASK FORCE                                                                  
CHAIR  OGAN  explained  to  members   that  although  SCR  3  was                                                               
scheduled,  HCR 6  passed  out of  the House  on  Friday and  was                                                               
referred to  the Senate Resources  Committee earlier in  the day.                                                               
According  to  Tam  Cook,  Director of  the  Legal  and  Research                                                               
Services Division,  HCR 6 can  be heard in  place of SCR  3 since                                                               
the  two resolutions  contain  the same  subject  matter and  the                                                               
committee has  satisfied the notice  requirements. He  then asked                                                               
the sponsor to address the legislation.                                                                                         
SENATOR  GARY STEVENS,  sponsor  of  HCR 6,  told  members he  is                                                               
looking forward  to co-sponsoring  SCR 3.  He then  described the                                                               
measure as follows.                                                                                                             
HCR  6 extends  the life  of  the joint  legislative salmon  task                                                               
force  until  the   end  of  the  second  session   of  the  23rd                                                               
Legislature. This task force was  created by the 22nd Legislature                                                               
out  of concern  for Alaska's  lost  market share  of the  salmon                                                               
industry and expansion  into new markets. The  salmon industry is                                                               
an  enormous   economic  engine  that  drives   Alaska's  coastal                                                               
The  Joint  Salmon Industry  Task  Force  made enormous  progress                                                               
during the course of its meetings.  Its first meeting was held on                                                               
July 22, 2002,  at which time five  subcommittees were appointed.                                                               
Those subcommittees met over 43  times in many communities of the                                                               
state  and  Seattle.  The  task  force  received  279  proposals,                                                               
produced 13  pieces of  draft legislation,  and generated  a huge                                                               
amount  of  discussion   and  material  that  will   have  to  be                                                               
considered  in  the future.  He  hopes,  for those  reasons,  the                                                               
committee will favorably consider extending  the life of the task                                                               
force.   He  added  that the  bill  has a  zero  fiscal note.  He                                                               
pointed  out  that because  Chair  Ben  Stevens spent  the  funds                                                               
appropriated to the task force last  year wisely, it will be able                                                               
to function for at least one  more year on the remainder of those                                                               
CHAIR OGAN  asked if those  funds will have to  be reappropriated                                                               
and carried forward to the next fiscal year.                                                                                    
SENATOR GARY STEVENS said he does not believe so.                                                                               
CHAIR OGAN said he  has watched a lot of task  forces come and go                                                               
over the  last nine  years and  expressed concern  that extending                                                               
this   task  force   will  deluge   the  Legislature   with  more                                                               
legislation and requests for more  funding. He asked Senator Gary                                                               
Stevens what will come out of this extension.                                                                                   
SENATOR  GARY STEVENS  said he  cannot address  whether the  task                                                               
force will ask for more funding,  but he can say that an enormous                                                               
amount  of effort  and time  went into  the process,  made up  of                                                               
fishermen,  processors,  community  leaders and  legislators.  He                                                               
felt  very  good about  the  process.  The resultant  legislation                                                               
provides simple and  effective measures to help  the industry and                                                               
give it more  choice. However, the task force was  unable to deal                                                               
with more far reaching issues in that time frame.                                                                               
CHAIR OGAN  said he would play  the role of devil's  advocate and                                                               
     The bottom line is farmed  fish is kicking our rears up                                                                    
     here. We can  have all of the task forces  in the world                                                                    
     that we  can feel  good about  but, at  the end  of the                                                                    
     day, we're not going to  change that. Is that something                                                                    
     that you  think is going to  - if we invest  more money                                                                    
     and more  time and energy  of Alaskans that's  going to                                                                    
     come out  of this  that could  put the  salmon industry                                                                    
     back on its  feet, short of some kind  of a retaliatory                                                                    
     strike against the fish farmers...?                                                                                        
SENATOR GARY  STEVENS said that  is a fair question.  He believes                                                               
Alaska lost  market share because  the state wasn't  paying close                                                               
attention  to what  the farmed  fish  industry was  doing to  the                                                               
market. However, one positive outcome  is that the consumption of                                                               
salmon  has  increased.  He doesn't  believe  Alaska  salmon  can                                                               
compete on the same price level  as farmed fish, but the handling                                                               
practices of Alaska salmon can be improved to increase quality.                                                                 
In  response to  Chair Ogan's  question about  whether Alaska  is                                                               
likely to lose its fishing industry  after spending a lot of time                                                               
and  money,  he  does  not  believe so.  He  said  that  regional                                                               
marketing plans  are developing to publicize  area-specific fish,                                                               
which he  believes is all for  the good. He told  members that he                                                               
was able  to see  some fish processing  operations in  Europe and                                                               
felt  the strongest  advice he  received was  that Alaska  has to                                                               
stress the  fact that its salmon  is a wild, natural  product and                                                               
its harvest does no damage to the species.                                                                                      
CHAIR  OGAN concurred  that Alaska  needs  to carve  out a  niche                                                               
3:45 p.m.                                                                                                                       
SENATOR WAGONER  pointed out that  he is  a member of  the salmon                                                               
co-op in  Cook Inlet that increased  the value of the  co-op fish                                                               
three times  this year and that  was on a small  market of 10,000                                                               
pounds. The  co-op has committed  to 30,000 pounds next  year. He                                                               
agreed  that  niche  markets  do   exist  but  they  have  to  be                                                               
developed, and that his co-op is  focusing on the Lower 48 rather                                                               
than foreign marketing.                                                                                                         
SENATOR SEEKINS  noted that HCR  6 provides that  the Legislative                                                               
Council may, upon request, fund  contracts for research. He asked                                                               
if that would  provide the task force with a  mechanism to use if                                                               
it needs to contract for additional research.                                                                                   
SENATOR GARY STEVENS said that is  correct but the task force did                                                               
not take advantage of that provision this past year.                                                                            
SENATOR BEN STEVENS, the Chair  of the Joint Salmon Industry Task                                                               
Force, explained  that under the Legislative  Council procurement                                                               
rules, the task  force itself cannot expend  over $25,000 without                                                               
full council  approval. When  the task  force was  assembled last                                                               
July, Senate  President Halford and  Speaker Porter asked  him if                                                               
that amount  would be adequate. He  did not know but  thought the                                                               
task force  may want  to enter into  some contracts  for in-depth                                                               
economic analyses of  the proposals on the table.  The task force                                                               
never did  but this  provision will  allow the  task force  to do                                                               
what  the presiding  officers proposed.  During the  interim, the                                                               
task  force will  make requests  for funding  to the  Legislative                                                               
Council.  The   Senate  President,  Speaker  and   Chair  of  the                                                               
Legislative Council can approve the request.                                                                                    
SENATOR  SEEKINS said  he  wanted  to point  out  that a  funding                                                               
mechanism exists  that contains  a check  and balance  system. He                                                               
then  said the  commercial fishing  industry is  in deep  crisis.                                                               
It's the  sole support of many  Alaskan families. He said  he has                                                               
talked  to many  of those  families  in Interior  Alaska who  are                                                               
concerned that  the industry will try  to make up in  volume what                                                               
it is  losing in  price and  that is  a short-term  solution that                                                               
will have a  devastating effect on the wild fish  stocks. He said                                                               
Senator  Ben Stevens  understands the  complexity of  this issue.                                                               
The challenges  will remain unsolved  without a  concerted effort                                                               
by the state  and he believes the task force  is a good mechanism                                                               
to use.                                                                                                                         
SENATOR  GARY STEVENS  said if  the Legislature  does nothing  to                                                               
help  out, the  state  will be  facing  enormous bankruptcies  by                                                               
small  businesses. The  state has  already faced  the closure  of                                                               
processing plants.  Many coastal communities will  also suffer as                                                               
the  fishing  industry   is  an  important  tax   base  in  those                                                               
communities.  He said  volume is  not the  solution; quality  and                                                               
price are.                                                                                                                      
CHAIR  OGAN agreed  that volume  is  not the  answer because  the                                                               
argument in  the past  is if fishermen  cannot make  enough money                                                               
fishing, more  fish need to  be allocated to that  fishery, which                                                               
pits the  commercial and sport  fisheries against each  other. He                                                               
said  allocation  is part  of  the  problem  but not  the  entire                                                               
SENATOR ELTON  commented that  he believes  everyone on  the task                                                               
force understands  that the job of  task force members is  not to                                                               
allocate; that is the job of the  Board of Fish. None of the task                                                               
force   members  are   interested  in   political  solutions   to                                                               
allocation issues.  He agreed that  part of the problem  is price                                                               
related so  the task force  focused on  issues that take  some of                                                               
the costs out of the industry  - on the harvesting and processing                                                               
side. He agreed  that the marketplace has changed  and Alaska now                                                               
has advocates for wild fish.  He said he appreciates that Senator                                                               
Seekins pointed  out there  is a  counterbalance on  spending and                                                               
said, "I'll be stunned if we ever  need it as I think we have one                                                               
of  the most  tight-fisted  Chairman that  we've  ever seen."  He                                                               
maintained that he does not mean  that in a pejorative manner and                                                               
that Chairman Stevens  has given members a high  level of comfort                                                               
in the  way he  has dealt  with issues. He  then pointed  out the                                                               
genesis of  this occurred last  year at the salmon  summit, which                                                               
was co-hosted  by former  Governor Knowles  and U.S.  Senator Ted                                                               
Stevens.  He thinks  the Legislature  has  done a  good job  kick                                                               
starting the process,  however the task force has  only been able                                                               
to  pick off  the low-hanging  fruit right  now. Alaska  has lost                                                               
over $600  million in the  salmon segment of the  industry alone.                                                               
The  challenges  are  great.  He  said  he  is  comfortable  with                                                               
continuation of the task force.                                                                                                 
SENATOR LINCOLN  said she supports  the continuation of  the task                                                               
force but  pointed out  that Senator  Gary Stevens  mentioned the                                                               
financial impact to the coastal  communities and she is concerned                                                               
that the  task force is looking  at the impact on  all of Alaska,                                                               
not just the coastal areas.                                                                                                     
SENATOR GARY STEVENS said it is  and that it is not the intention                                                               
of the task force to concentrate on coastal communities.                                                                        
CHAIR OGAN said he believes  commercial fishermen are some of the                                                               
best free market capitalists around  and the Legislature needs to                                                               
do what it can to help them.                                                                                                    
SENATOR DYSON  moved CSHCR 6(FSH) from  committee with individual                                                               
recommendations and its zero fiscal note.                                                                                       
CHAIR OGAN announced that without  objection, the motion carried.                                                               
He then announced the committee would take up SB 74.                                                                            
         SB 74-DISCHARGE PREVENTION & CONTINGENCY PLANS                                                                     
MR.  LARRY  DIETRICK, Acting  Director  of  Spill Prevention  and                                                               
Response in  the Department of Environmental  Conservation (DEC),                                                               
read the following testimony into the record.                                                                                   
     SB  74  supports  the   Governor's  goal  of  improving                                                                    
     regulatory  efficiency by  reducing the  administrative                                                                    
     burden while improving spill prevention.                                                                                   
     SB 74  will streamline  the state's  permitting process                                                                    
     by lengthening  the time for  renewal of  Oil Discharge                                                                    
     Prevention  and  Contingency  Plans  from  the  current                                                                    
     three years to five years.                                                                                                 
     A   five-year  renewal   period  will   streamline  the                                                                    
     contingency   review   process   for   industry   while                                                                    
     maintaining  Alaska's   strong  spill   prevention  and                                                                    
     response standards.                                                                                                        
     Focusing on the actual  testing of oil spill prevention                                                                    
     and   response    preparedness   through   in-the-field                                                                    
     inspections, drills,  and exercises is one  of our most                                                                    
     effective  means  of   ensuring  spill  prevention  and                                                                    
     response readiness.                                                                                                        
     Oil   Discharge  and   Contingency  Plans   are  public                                                                    
     noticed,  reviewed and  approved by  the Department  of                                                                    
     Environmental Conservation.                                                                                                
     They  are  required  for operators  of  oil  terminals,                                                                    
     refineries,  crude  oil   transmission  pipelines,  oil                                                                    
     exploration   and  production   facilities,  oil   tank                                                                    
     vessels, oil barges, nontank vessels  of over 400 gross                                                                    
     tons and railroad tank cars.                                                                                               
     There are  multiple benefits  from the  change proposed                                                                    
     by the bill.                                                                                                               
     The bill furthers the goal  of permit streamlining with                                                                    
     no  loss of  environmental protection,  and complements                                                                    
     initiatives   currently   being   undertaken   by   the                                                                    
     Department  to   shift  the  emphasis  away   from  the                                                                    
     administrative  review and  approval  process to  field                                                                    
     verification of response capability.                                                                                       
     The bill  will significantly reduce  the administrative                                                                    
     burden on  the regulated  community and will  shift the                                                                    
     emphasis from paperwork to performance.                                                                                    
     The reduction  in paperwork  will increase  the ability                                                                    
     of  operators  and the  Department  to  focus on  spill                                                                    
     prevention and facility operation.                                                                                         
     The  change  will allow  operators  more  time to  make                                                                    
     practical  enhancements to  their spill  prevention and                                                                    
     response capabilities.                                                                                                     
     The  change will  improve environmental  protection and                                                                    
     preparedness through  increased field presence  and the                                                                    
     ability  to  work  directly with  operators  to  ensure                                                                    
     response readiness through  on-site facility and vessel                                                                    
     inspections, spill drills and exercises.                                                                                   
     The  change  will also  make  the  state renewal  cycle                                                                    
     consistent  with  the  five   year  renewal  cycle  for                                                                    
     federal oil spill contingency  plans required under the                                                                    
      Oil Pollution Act of 1990, as well as those of other                                                                      
     West Coast states.                                                                                                         
MR. DIETRICK  told members that Mr.  Tostevin, assistant attorney                                                               
general,  was available  to speak  to members  via teleconference                                                               
about  a   proposed  amendment  that  addresses   the  transition                                                               
4:00 p.m.                                                                                                                       
SENATOR ELTON asked  Mr. Dietrick if SB 74 will  prevent DEC from                                                               
issuing a  permit or from  approving a  plan based upon  a future                                                               
act of the  permit holder. He expressed concern  that a situation                                                               
may arise  when an  advance in technology  would improve  a plan,                                                               
but DEC would be prevented  from asking the permittees to improve                                                               
their plan capabilities.                                                                                                        
MR.  DIETRICK  said   it  would  not.  The   provision  for  plan                                                               
amendments, which is  the tool DEC would use to  do that, remains                                                               
unchanged.   By  allowing   DEC  to   field  test   technologies,                                                               
capabilities  and  representations made  in  the  plan, DEC  will                                                               
better be able to determine what is working.                                                                                    
CHAIR OGAN asked  if, typically, changes are made to  the plan at                                                               
the end of  the three-year cycle, or whether changes  are made to                                                               
the plan along the way.                                                                                                         
MR. DIETRICK  said the bulk  of the facilities in  Alaska haven't                                                               
changed over  the years.  These particular  laws were  enacted in                                                               
1990  so most  of the  existing  facilities are  on their  fourth                                                               
three-year  renewal  cycle.  Those  that have  had  a  change  in                                                               
operations  are required  to amend  their plans  to reflect  that                                                               
change.  DEC   then  reviews  and   approves  the   amendment  in                                                               
conjunction with the three-year  renewal. This change will extend                                                               
out to five  years. Any change that happens at  a facility during                                                               
the five-year time  frame that would result in, as  stated in the                                                               
bill, "a diminishment  in the response capability,"  is cause for                                                               
the  plan to  be amended.  Therefore,  operators cannot  diminish                                                               
their spill response  capabilities in any form  without filing an                                                               
amendment to their plans.                                                                                                       
CHAIR  OGAN asked  if the  companies must  submit any  changes in                                                               
their  contingency plans  to DEC  and that  is when  the plan  is                                                               
amended, rather than during the three-year review.                                                                              
MR. DIETRICK  said at  the end of  the three-year  renewal cycle,                                                               
the  companies  go  through  a   formal  public  review  process,                                                               
regardless of whether  the companies have made  any changes. Many                                                               
companies have made  no changes so lengthening  the renewal cycle                                                               
to every  five years  will provide a  huge gain  while preserving                                                               
the ability to amend a plan  if any change occurs within the five                                                               
CHAIR OGAN asked if many people testify at the public hearings.                                                                 
MR. DIETRICK  said that  hearings are held  at the  discretion of                                                               
DEC. DEC is  mandated to provide a 30-day  public comment period.                                                               
If controversial  issues arise during that  public comment period                                                               
and a hearing is requested, DEC holds one.                                                                                      
CHAIR OGAN asked if DEC gets many requests for hearings.                                                                        
MR. DIETRICK  said the  number of  requests has  not been  high -                                                               
maybe 20 percent or less.                                                                                                       
CHAIR  OGAN asked  if any  changes  have been  made to  operation                                                               
plans based on public input and public hearings.                                                                                
MR. DIETRICK said yes, DEC does react to public input.                                                                          
CHAIR OGAN asked if public  comments are received at every public                                                               
hearing  and whether  DEC  changes  something in  the  plan as  a                                                               
result of each hearing.                                                                                                         
MR.  DIETRICK said  the bulk  of the  changes made  resulted from                                                               
written  comments. However,  regardless of  whether the  comments                                                               
are made  orally or in writing,  DEC considers them. He  said the                                                               
preponderance of  the input is  in response to the  30-day public                                                               
notice  and that  is the  largest category  of comments  that DEC                                                               
reacts to.                                                                                                                      
SENATOR LINCOLN  noted that SB  74 was introduced on  February 19                                                               
at  the request  of the  Governor and  that the  Senate Resources                                                               
Committee is the only committee  of referral. She asked the Chair                                                               
what process the Legislature has  used to provide adequate public                                                               
notice of  this legislation. She indicated  this legislation will                                                               
make a major change and was only submitted last week.                                                                           
CHAIR OGAN told Senator Lincoln  that the committee appropriately                                                               
noticed the legislation  by giving a 5-day notice.  He noted that                                                               
some amendments have  been suggested so he does not  plan to move                                                               
the bill out of committee today.                                                                                                
SENATOR LINCOLN  said in her efforts  to seek public input  on SB                                                               
74, she  heard a concern  expressed that DEC's  five-year renewal                                                               
process will  align with the federal  government's five-year time                                                               
frame  but the  federal  government requires  a  major oil  spill                                                               
drill  once every  three years.  Most Alaska  C-plan [contingency                                                               
plan] holders  schedule their drills  to coincide with  the state                                                               
mandated contingency  plan review.  She questioned  how companies                                                               
will  align the  oil spill  drill  to coincide  with the  federal                                                               
MR.  DIETRICK told  members that  DEC  envisions negotiating  the                                                               
alignment between the  review cycles. DEC hopes,  two years after                                                               
SB  74 is  enacted, to  negotiate with  an operator  so that  the                                                               
operator can  choose an alternative  date within the  state five-                                                               
year  window   to  allow   it  to  line   up  with   the  federal                                                               
requirements.  Regarding the  drill, Mr.  Dietrick said  they are                                                               
already   coordinated  in   Alaska.   Virtually   all  of   DEC's                                                               
significant  drills are  fully coordinated  with  the U.S.  Coast                                                               
Guard (CG)  and the U.S.  Environmental Protection  Agency (EPA).                                                               
Drills  consist  of  a  series   of  activities,  from  equipment                                                               
verification  checks to  telephone exercises  to full  deployment                                                               
exercises but the  higher cost drills are  fully coordinated with                                                               
the federal agencies as well as at the local level.                                                                             
SENATOR LINCOLN said the other  concern she heard was that Alaska                                                               
has the reputation  as a leader of the  best available technology                                                               
for oil  spill prevention and  response. She asked if  the change                                                               
to  a  five-year renewal  cycle  will  have  any effect  on  that                                                               
MR.  DIETRICK said  that DEC  believes  its ability  to test  the                                                               
technology represented  in the  plans will  be a  more productive                                                               
way to  find out  if those best  available technologies  work. To                                                               
date, DEC has not  had the ability to do tests  on the ground. By                                                               
freeing  up some  of the  administrative burden  and focusing  on                                                               
performance and response, DEC believes  it will better be able to                                                               
field check those technologies.                                                                                                 
SENATOR  LINCOLN expressed  concern that  she can't  envision how                                                               
streamlining the permitting system in  this way will provide more                                                               
staff time.                                                                                                                     
MR. DIETRICK  said DEC  considered how  to implement  this change                                                               
without  backsliding on  the requirements  or  the standards.  He                                                               
explained that the statute for  spill response has two parts. The                                                               
first applies to  contingency planning, which is where  a plan is                                                               
compared to a theoretical spill  with theoretical assumptions and                                                               
a response is designed to deal  with it. That is essentially what                                                               
the review process  is about. In the second part  of the statute,                                                               
the legislature clearly  recognized the need to  have an incident                                                               
command system  (ICS) and well-qualified and  trained people able                                                               
to  respond to  a  spill. He  feels that  is  the more  important                                                               
aspect of  the total  framework needed to  assure that  the state                                                               
has a  good response capability.  It shifts the balance  from the                                                               
plan review of the theoretical  spill and focuses the emphasis on                                                               
the ICS and  field practice of response. The  additional time DEC                                                               
will get is  the time realized from the [increase]  in the review                                                               
period from three to five years.                                                                                                
SENATOR LINCOLN asked  if a fiscal note will  be forthcoming from                                                               
the Department of Law.                                                                                                          
CHAIR OGAN asked Senator Lincoln to  defer to Mr. Tostevin for an                                                               
SENATOR ELTON  asked whether a  reduction in staff at  a facility                                                               
would trigger a plan review.                                                                                                    
MR.  DIETRICK  said  it  would   have  to  fit  into  the  phrase                                                               
"diminishment of response capability" so  that a reduction in the                                                               
number of personnel earmarked as part  of a planned response to a                                                               
theoretical spill would trigger the amendment process.                                                                          
CHAIR OGAN added that committee  staff requested fiscal notes but                                                               
the DEC  fiscal note is  the only  one that was  submitted. There                                                               
being no  further questions  of Mr.  Dietrick, he  took testimony                                                               
from Mr. Tostevin.                                                                                                              
MR.  BRECK TOSTEVIN,  assistant attorney  general, Department  of                                                               
Law  (DOL), said  he  would like  to first  speak  to a  proposed                                                               
amendment  to SB  74  offered by  DOL  that addresses  transition                                                               
scenarios that  may arise  after the  legislation is  enacted. He                                                               
explained  that the  amendment  would  add a  new  section to  an                                                               
uncodified  law provision,  which would  be in  title transition.                                                               
Subsection  (a) would  allow DEC  to administratively  extend the                                                               
expiration  date  of  oil discharge  prevention  and  contingency                                                               
plans approved before the effective  date of the act. There would                                                               
be  two  limitations on  DEC's  authority  to extend  the  C-plan                                                               
renewal date:  one would  be that  the plan would  have to  be in                                                               
effect  on the  day before  the effective  date of  the act;  the                                                               
second would  occur if DEC  had issued  a notice of  violation to                                                               
the  C-plan holder  concerning the  C-plan. That  violation would                                                               
have to  be corrected to  the satisfaction  of DEC before  the C-                                                               
plan expiration  date can be  extended. The intent  of subsection                                                               
(a)  would be  to allow  DEC to  extend the  expiration dates  of                                                               
existing C-plans without going  through new administrative review                                                               
or   renewal  procedures   and  without   having  to   adopt  new                                                               
regulations. Under  subsection (a), DEC would  upon the effective                                                               
date of  the act administratively  extend the expiration  date of                                                               
the C-plan then  in effect for up to two  years. This would allow                                                               
the immediate benefits to DEC  and the industry discussed earlier                                                               
by Mr.  Dietrick. Subsection (b)  gives DEC the ability  to adopt                                                               
regulations  implementing  the  transition  provision  if  it  so                                                               
chooses.  However,   adopting  regulations  would   be  optional.                                                               
Subsection  (a)   clearly  provides  that  regulations   are  not                                                               
necessary  in  order  for  DEC  to  administratively  extend  the                                                               
expiration date.                                                                                                                
MR. TOSTEVIN  said in conclusion,  the adoption of  the amendment                                                               
creating  the  transition  provision  would  clarify  that,  upon                                                               
enactment of  this legislation, DEC  could extend  the expiration                                                               
date up to two years.                                                                                                           
TAPE 03-7, SIDE B                                                                                                             
CHAIR OGAN said  the proposed amendment had not  been offered yet                                                               
so he would  take further testimony on the bill  at this time and                                                               
address the amendment later.                                                                                                    
SENATOR ELTON  asked if DEC  anticipates that the  review process                                                               
for  a five-year  permit  will be  substantially  similar to  the                                                               
review process for a three-year permit.                                                                                         
MR. DIETRICK said the review process will remain the same.                                                                      
SENATOR SEEKINS asked  if DEC believes the process  used over the                                                               
last  three  years  is  substantial   enough  to  allow  for  the                                                               
automatic extension of permits for two more years.                                                                              
MR.  DIETRICK  said DEC  is  comfortable  with that  process  for                                                               
several reasons:                                                                                                                
   · The required amendment remains in place so if an operator                                                                  
      diminishes the operation at any time within the extension,                                                                
      DEC must be notified.                                                                                                     
   · DEC also has a requirement of non-notification readiness so                                                                
      an operator must immediately notify DEC if any equipment                                                                  
      has been taken off line.                                                                                                  
   · Subsection (b) of the proposed amendment will ensure that                                                                  
      an extension will not be granted to any existing plans that                                                               
      are out of compliance.                                                                                                    
SENATOR  LINCOLN said  Mr. Dietrick  is assuming  that with  this                                                               
proposed  change, DEC  will have  the same  number of  staff. She                                                               
asked if a budget cut to DEC staff could create a problem.                                                                      
MR. DIETRICK said  DEC has considered this change  and prepared a                                                               
zero  fiscal  note  with  no  change  in  the  current  level  of                                                               
SENATOR LINCOLN asked what a decrease  in the number of DEC staff                                                               
would do to this whole process.                                                                                                 
MR.  DIETRICK  said any  reduction  in  staff  would have  to  be                                                               
SENATOR ELTON asked what would happen  in a situation if the best                                                               
available technology  (BAT) has changed on  a currently permitted                                                               
three-year plan. He noted the  language in the proposed amendment                                                               
is  permissive in  that DEC  may extend  the expiration  date. He                                                               
asked whether  DEC will provide  automatic extensions  or whether                                                               
it will go through some kind  of a review process. He pointed out                                                               
if  DEC does  a review  process, it  might be  more expedient  to                                                               
approve a new five-year plan  rather than extend an existing plan                                                               
for two more years.                                                                                                             
MR. DIETRICK said the operator does  the BAT analysis at the time                                                               
of  plan  submission.  Again,  if  there  is  no  change  to  the                                                               
operation, DEC would likely conclude  that the analysis continues                                                               
to be  valid for  another two  years.   DEC is  also doing  a BAT                                                               
review with  funds awarded by the  Legislature last year.   A DEC                                                               
workgroup  is comprehensively  looking  at  spill prevention  and                                                               
response technologies.                                                                                                          
SENATOR ELTON said if there is  a review process on an extension,                                                               
he would  think the private  entity would  prefer to apply  for a                                                               
new five-year permit rather than a two-year extension.                                                                          
MR.  DIETRICK deferred  to Mr.  Tostevin  for an  answer to  that                                                               
question, but  said his understanding of  the transition language                                                               
is that any three-year plan  approved prior to the effective date                                                               
of the bill can be extended for  up to two additional years. If a                                                               
plan was reviewed after the  effective date, it would be eligible                                                               
for a five-year approval.                                                                                                       
SENATOR ELTON said his concern is  that if DEC has the discretion                                                               
to  extend,  it  may  be  beneficial to  the  entity  to  request                                                               
approval of a five-year permit rather than a two-year extension.                                                                
MR. DIETRICK deferred to Mr. Tostevin for an answer.                                                                            
MR. TOSTEVIN clarified that the  way the transition is drafted, a                                                               
currently approved plan  would get a two-year  extension upon its                                                               
expiration date. When  the two years expires,  the operator would                                                               
have to apply for a renewal,  which would last for five years. If                                                               
an  operator  wanted to  voluntarily  seek  a renewal  after  the                                                               
effective date of the act,  that would be legally permissible, as                                                               
it is right now.                                                                                                                
SENATOR ELTON  said it seems  that DEC  is taking an  option away                                                               
from a  facility manager by  not offering  the option of  a five-                                                               
year renewal.                                                                                                                   
SENATOR  SEEKINS said  he understood  it the  other way  around -                                                               
that an  operator could voluntarily  reapply for a  new five-year                                                               
permit at any time.                                                                                                             
4:30 p.m.                                                                                                                       
MR. TOSTEVIN  said there is  nothing to prevent an  operator from                                                               
applying for a new five-year  C-plan approval after the effective                                                               
date of the legislation.                                                                                                        
CHAIR  OGAN said  common sense  dictates that  no one  will apply                                                               
before the expiration date because it will cost that much more.                                                                 
MR. DIETRICK said one reason a  company might want to apply for a                                                               
five-year  renewal  rather than  an  extension  is to  align  its                                                               
renewal  date with  the federal  renewal cycle.  He believes  Mr.                                                               
Tostevin said that would be allowable.                                                                                          
CHAIR OGAN took testimony from members of the industry.                                                                         
MS. MARILYN CROCKETT,  Deputy Director of the Alaska  Oil and Gas                                                               
Association (AOGA),  told members  that all  of AOGA's  17 member                                                               
companies  are  required  to  carry  C-plans  as  part  of  their                                                               
operations. AOGA  has spent quite a  bit of time during  the last                                                               
year looking  at possible opportunities to  update and streamline                                                               
statutes  and  regulations  to enhance  resource  development  in                                                               
Alaska.  AOGA  used a guiding principle  throughout that process,                                                               
based on  the premise that it  wanted to see streamlining  of the                                                               
requirements    occur    without    compromising    environmental                                                               
protection.  AOGA believes  SB 74  is a  perfect example  of that                                                               
MS.  CROCKETT said  the current  federal renewal  cycle and  West                                                               
Coast states' renewal cycles are  based on five-years. AOGA found                                                               
the other oil  producing states in the United States  also have a                                                               
five-year renewal cycle. Therefore, it  is a tried and true plan.                                                               
She noted the development of a  C-plan and the renewal process is                                                               
very costly.  The renewal process  can run anywhere  from $60,000                                                               
to $100,000. She said she could  not provide the costs to DEC and                                                               
to the public  of responding to those applications  when they are                                                               
renewed  every  three years,  but  she  assumes those  costs  are                                                               
substantial  as well.  SB 74  will  save the  private sector  and                                                               
state money.                                                                                                                    
MS. CROCKETT  pointed out that SB  74 will also free  up DEC from                                                               
the paperwork exercise  of reviewing plans every  three years and                                                               
will allow them to get out  and see the operations first hand and                                                               
conduct  drills. AOGA's  experience  on C-plan  reviews has  been                                                               
that industry members must submit  their renewal package 180 days                                                               
in advance  of the  three-year expiration  date. AOGA  found that                                                               
about  the time  the C-plan  is finally  approved, companies  are                                                               
starting  to prepare  materials for  the next  three-year renewal                                                               
cycle. She said that  SB 74 will at least let the  ink dry on the                                                               
125 existing plans. She encouraged  members to favorably consider                                                               
SB 74 and offered to answer questions.                                                                                          
CHAIR  OGAN  asked  how  many man-hours  goes  into  preparing  a                                                               
MS. CROCKETT  said that she  would have to get  that information,                                                               
but added  that hundreds to  thousands of man-hours  are involved                                                               
in  the development  of plans.  She noted  the plans  are several                                                               
volumes  thick  and  consist  of  substantial  and  comprehensive                                                               
documents.  She   added  that  it  probably   costs  hundreds  of                                                               
thousands of dollars.                                                                                                           
CHAIR OGAN took testimony from Tadd Owens.                                                                                      
MR. TADD  OWENS, Executive Director  of the  Resource Development                                                               
Council  (RDC),  stated  support  for SB  74  for  the  following                                                               
   · The current three-year renewal cycle often does not result                                                                 
     in meaningful improvements in environmental protection or                                                                  
     regulatory compliance. Increasing the time between renewals                                                                
     from three to  five years will bring  the program's benefits                                                               
     in line with its costs.                                                                                                    
   · A five-year renewal cycle will allow the state to focus its                                                                
     resources on  site inspections rather  than the  office work                                                               
     associated with plan  reviews and provide staff  with a more                                                               
     thorough  understanding of  industry  operations. Staff  can                                                               
     better evaluate  the effectiveness of existing  plans, which                                                               
     will  allow for  better  oversight,  incorporate more  high-                                                               
     value  improvements,   and  be  less  vulnerable   to  legal                                                               
   · Industry can shift its resources away from the largely                                                                     
     administrative   exercise   of    three-year   renewals   to                                                               
     additional prevention activities.                                                                                          
[A  copy of  Mr. Owens'  written testimony  can be  found in  the                                                               
committee file.]                                                                                                                
CHAIR OGAN announced  that in an effort to provide  a good public                                                               
process, he  would like  a member  to offer  Amendment 1  for the                                                               
purpose  of discussion,  and  then he  hold it  and  the bill  in                                                               
committee  until  March 3.  That  will  provide members  and  the                                                               
public more time to consider the amendment and measure.                                                                         
SENATOR  SEEKINS  moved to  adopt  Amendment  1, which  reads  as                                                               
                      A M E N D M E N T  1                                                                                  
OFFERED IN THE SENATE RESOURCES              BY SENATOR SEEKINS                                                                 
TO: SB 74                                                                                                                       
Page 1, following line 10:                                                                                                      
     Insert a new bill section to read:                                                                                         
  *Sec. 2. The  uncodified law of the State of  Alaska is amended                                                               
by adding a new section to read:                                                                                                
          TRANSITION. (a) Notwithstanding any contrary provision                                                                
of AS  46.04, including  the review  procedures in  AS 46.04.030,                                                               
and the  regulations adopted  under AS  46.04, the  Department of                                                               
Environmental Conservation  may extend,  up to an  additional two                                                               
years, the  expiration date  of an  oil discharge  prevention and                                                               
contingency plan approved by the  department before the effective                                                               
date of this Act, if                                                                                                            
          (1) the plan is still in effect on the day before the                                                                 
effective date of this Act; and                                                                                                 
          (2) the Department of Environmental Conservation has                                                                  
not given  notice of violation of  this chapter to the  holder of                                                               
the plan that  has not been corrected to the  satisfaction of the                                                               
Department of Environmental Conservation.                                                                                       
     (b) The Department of Environmental Conservation may adopt                                                                 
regulations under AS 44.62 to implement this section.                                                                           
Renumber remaining sections accordingly.                                                                                        
SENATOR SEEKINS asked who drafted Amendment 1.                                                                                  
MR. DIETRICK told members that Mr. Tostevin drafted Amendment 1.                                                                
SENATOR SEEKINS pointed to the words  "may" on line 7 and "up to"                                                               
and  said  that  as  a   used  car  salesman,  "...I  think  this                                                               
Philadelphia  lawyer wrote  those to  give  his client  a lot  of                                                               
wiggle room  here because  'may' could be  'may not.'  It implies                                                               
they may  not, and 'up to'  could be 'less than.'"  He noted that                                                               
Mr. Dietrick  has said the  process is  good enough and  that the                                                               
plans  can  be  extended  for another  two  years,  therefore  he                                                               
believes this language should be  specific rather than uncertain.                                                               
That way, if  a company is running up against  the time when this                                                               
bill  is  enacted,  the  company should  have  the  certainty  of                                                               
knowing  its plan  will be  extended, barring  any contingencies,                                                               
for two years.                                                                                                                  
In  addition, SENATOR  SEEKINS expressed  concern  that the  word                                                               
"may"  is  used   again  on  line  15,  allowing   DEC  to  adopt                                                               
regulations. He asked whether that  language is necessary because                                                               
it  is already  implied that  DEC has  the right  to adopt  those                                                               
regulations once this bill passes.                                                                                              
MR. TOSTEVIN  responded that he  used the words, "may  extend" to                                                               
provide flexibility when  addressing a situation in  which a plan                                                               
holder  might want  a shorter  period than  two years  to address                                                               
coordinating the plan with the  federal five-year renewal period.                                                               
He said the  committee could certainly make  the extension period                                                               
SENATOR SEEKINS said he was  more interested in pinning DEC down,                                                               
rather  than the  applicant.  He said  he  thought the  applicant                                                               
already had that flexibility.                                                                                                   
CHAIR OGAN said  if the issue is alignment  with federal permits,                                                               
the language could read, "shall extend up to two years."                                                                        
SENATOR  SEEKINS said  he still  doesn't like  the words  "up to"                                                               
because he believes DEC ought  to extend it automatically and the                                                               
plan  holder  should be  given  the  option of  coordinating  the                                                               
timing with the  federal permit. He does not want  DEC to be able                                                               
to extend a permit for one year.                                                                                                
CHAIR OGAN  suggested asking industry  people to comment  on this                                                               
SENATOR ELTON commented  that "shall extend for  two years" tells                                                               
DEC  it  can't  work  with   a  company  if  it  wants  something                                                               
different. He  noted DEC already  has the authority to  mandate a                                                               
plan amendment  so he'd be stunned  to find this was  designed to                                                               
do anything  but give  more flexibility  to the  applicant rather                                                               
than the department.                                                                                                            
MR. DIETRICK said DEC thought,  when it reviewed Amendment 1, the                                                               
intent  of that  language was  to  allow DEC  the flexibility  to                                                               
accommodate companies  that want  to synchronize their  plans. He                                                               
pointed out  that subsection (2)(a)  is the other  key provision.                                                               
The  "may"  is  contingent  upon  whether  it  is  prior  to  the                                                               
effective  date of  the  act  and that  a  company  has no  prior                                                               
SENATOR SEEKINS  said that he  has been  on the receiving  end of                                                               
that kind  of language and  that is  not how the  court perceives                                                               
it. He said  he has no problem providing more  flexibility to the                                                               
applicant,  but   he  does  not   feel  comfortable   giving  the                                                               
bureaucracy flexibility.                                                                                                        
CHAIR OGAN asked Ms. Crockett and Mr. Owens to comment.                                                                         
MS. CROCKETT  expressed concern about a  misinterpretation of the                                                               
words, "may extend"  because they will open  up opportunities for                                                               
legal challenges.  She wondered  whether there is  a way  to make                                                               
this   a   simple,    self-implementing   provision   that   says                                                               
notwithstanding the  contingency provisions, the  expiration date                                                               
of a C-plan previously approved  by DEC before the effective date                                                               
will be  extended by two years.  That way, if no  violations have                                                               
occurred and the  plan was approved prior to  the effective date,                                                               
DEC will  not be  required to jump  through hoops  to demonstrate                                                               
that a plan should be extended.                                                                                                 
MS. CROCKETT said  with regard to a situation  where an applicant                                                               
may want to have a  C-plan review for coordination purposes prior                                                               
to the two  years, she is hard pressed to  imagine that DEC would                                                               
turn down  a request of that  nature. She said she  would support                                                               
language that  makes it abundantly  clear that  the legislature's                                                               
intent is to extend the plans  in place today and operating under                                                               
the requirements of the laws and regulations.                                                                                   
CHAIR OGAN asked Ms. Crockett to  comment on DEC's "we're here to                                                               
help you" argument  about why it needs the  flexibility to assist                                                               
the industry.                                                                                                                   
MS. CROCKETT said the real issue  is the attention this could get                                                               
in the courts because the language is unclear.                                                                                  
CHAIR  OGAN  said  ambiguous  statutory   language  is  ripe  for                                                               
SENATOR  SEEKINS  noted  if  the  words  "shall"  and  "for"  are                                                               
substituted for "may" and "up to,"  it will have no effect on the                                                               
"if" provisions of line 9.                                                                                                      
CHAIR OGAN  told members he  drafted proposed language for  a new                                                               
SENATOR ELTON asked if anyone is sponsoring the amendment.                                                                      
SENATOR SEEKINS agreed to be the sponsor of Amendment 1.                                                                        
SENATOR ELTON said he wants to  make sure that what the committee                                                               
is doing  will accomplish something without  putting handcuffs on                                                               
somebody. He said  it is his understanding that  an operator with                                                               
an  existing plan  can request  a plan  renewal at  any time.  He                                                               
questioned what would  happen if an operator  wanted an extension                                                               
for a  year. He asked if  the language says shall  extend for two                                                               
years,  will  DEC be  able  to  work  with  them or  whether  the                                                               
operator can apply for a new permit.                                                                                            
MR. DIETRICK  said it  would be DEC's  desire to  allow companies                                                               
the  opportunity to  synchronize  the federal  plan review  cycle                                                               
with the state  plan review cycle. DEC normally does  not like to                                                               
renew plans  in a cycle  shorter than  three years because  it is                                                               
more work.  However, with  this change,  he can  see the  need to                                                               
grant  a request  for  a shorter  duration in  order  to allow  a                                                               
company to make that alignment.                                                                                                 
SENATOR ELTON said his concern  is that this language will create                                                               
a problem  for a company  that needs  to be aligned  three months                                                               
after their permit expiration.                                                                                                  
MR.  DIETRICK  said this  language  could  create a  time  crunch                                                               
problem  of  some  operators.  The   bigger  operators  and  more                                                               
complicated  reviews are  for the  larger  facilities: TAPS,  the                                                               
Valdez Marine  Terminal, and the  Prince William Sound  crude oil                                                               
tanker  traffic.  DEC  can  approve  the  plans  of  the  smaller                                                               
operators in a shorter time period.                                                                                             
CHAIR OGAN  said he  had language prepared  to amend  Amendment 1                                                               
and would like to move the  amendment but hold it in committee to                                                               
provide time for consideration.                                                                                                 
SENATOR  SEEKINS moved  to adopt  the amendment  to Amendment  1,                                                               
which reads as follows:                                                                                                         
                    AMENDMENT TO AMENDMENT 1                                                                                
Lines 5-9                                                                                                                       
TRANSITION:  (a) Notwithstanding  any  contrary  provision of  AS                                                               
46.04, including the  review procedures in AS  46.04.030, and the                                                               
regulations adopted  under AS  46.04, the  expiration date  of an                                                               
oil  discharge prevention  and contingency  plan approved  by the                                                               
Department  of Environmental  Conservation  before the  effective                                                               
date of this Act shall be extended for two years if                                                                             
Lines 15-16: Delete paragraph (b).                                                                                              
SENATOR ELTON  asked if  this bill will  be rescheduled  for next                                                               
Monday's meeting.                                                                                                               
CHAIR  OGAN announced  a brief  at-ease. When  he reconvened  the                                                               
meeting, he announced SB 74 and  its amendments would be heard on                                                               
Monday, March  3, 2003.   He then  adjourned the meeting  at 5:05                                                               

Document Name Date/Time Subjects