HB 205: "An Act relating to penalties for discharges of oil and other pollution violations; relating to the definition of 'waste' in the Alaska Oil and Gas Conservation Act; and providing for an effective date."
00 HOUSE BILL NO. 205 01 "An Act relating to penalties for discharges of oil and other pollution violations; relating 02 to the definition of 'waste' in the Alaska Oil and Gas Conservation Act; and providing 03 for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 31.05.170(15) is amended to read: 06 (15) "waste" means, in addition to its ordinary meaning, physical 07 waste ["PHYSICAL WASTE"] and includes 08 (A) the inefficient, excessive, or improper use of, or 09 unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, 10 equipping, operating or producing of any oil or gas well in a manner that 11 [WHICH] results or tends to result in reducing the quantity of oil or gas to be 12 recovered from a pool in this state under operations conducted in accordance 13 with good oil field engineering practices; 14 (B) the inefficient above-ground storage of oil; and the
01 locating, spacing, drilling, equipping, operating, or producing of an oil or gas 02 well in a manner causing, or tending to cause, unnecessary or excessive surface 03 loss or destruction of oil or gas; 04 (C) producing oil or gas in a manner causing unnecessary water 05 channeling or coning; 06 (D) the operation of an oil well with an inefficient gas-oil ratio; 07 (E) the drowning with water of a pool or part of a pool capable 08 of producing oil or gas, except insofar as and to the extent authorized by the 09 commission; 10 (F) underground waste; 11 (G) the creation of unnecessary fire hazards; 12 (H) the release, burning, or escape into the open air of gas [,] 13 from a well producing oil or gas or from a pipeline carrying oil or gas, 14 except to the extent authorized by the commission; 15 (I) the use of gas for the manufacture of carbon black, except as 16 provided in this chapter; 17 (J) the drilling of wells unnecessary to carry out the purpose or 18 intent of this chapter. 19 * Sec. 2. AS 46.03.758(a) is amended to read: 20 (a) The legislature finds that 21 (1) [RECENT INFORMATION DISCLOSES THAT] the discharge of 22 oil may cause significant short and long-term damage to the state's environment; even 23 minute quantities of oil released to the environment may cause high mortalities among 24 larval and juvenile forms of important commercial species, may affect salmon 25 migration patterns, and may otherwise degrade and diminish the renewable resources 26 of the state; 27 (2) the exact nature and extent of oil pollution can be neither 28 documented with certainty nor precisely quantified on a spill-by-spill basis; however, 29 in light of the magnitude of harm that [WHICH] may be caused by oil discharges, and 30 the vital importance of commercial, sport, and subsistence fishing, tourism, and the 31 state's natural abundance and beauty to the economic future of the state and its quality
01 of life, it is the judgment of the legislature that substantial civil penalties should be 02 imposed for the discharge of oil in order to provide a meaningful incentive for the safe 03 handling of oil and to ensure [INSURE] that the public does not bear substantial 04 losses from oil pollution for which, because of its subtle, long-term, or unquantifiable 05 nature, compensation would not otherwise be received; and 06 (3) the handling of oil in large quantities is a hazardous undertaking 07 that poses a significant threat to the economy and environment of the state, which can 08 be substantially reduced only by the taking of rigorous safety precautions involving 09 considerable expense; conversely, persons handling oil in smaller amounts pose a 10 correspondingly lower risk to the economy and environment of the state, and are 11 capable of safe oil handling practices at correspondingly lower costs; in order to 12 provide an incentive that is effective, [BUT NOT PUNITIVE,] it is necessary and 13 appropriate that the assessment of [CIVIL] penalties for discharges of small quantities 14 of oil be left for case-by-case [JUDICIAL] determination, while ensuring, through the 15 penalty provisions of this section, that the handling of oil in large quantities occurs in 16 a manner that will not impair the renewable resources of the state. 17 * Sec. 3. AS 46.03.758(b) is amended to read: 18 (b) The [NO LATER THAN THE 10TH DAY AFTER THE CONVENING 19 OF THE SECOND SESSION OF THE TENTH ALASKA LEGISLATURE, THE] 20 department shall establish in [SUBMIT TO THE LEGISLATURE] regulations 21 [ESTABLISHING] the following schedule of fixed penalties for discharges of oil: 22 (1) subject to (2) of this subsection, the penalties for the following 23 categories of receiving environments may not exceed 24 (A) $40 [$10] per gallon of oil that [WHICH] enters an 25 anadromous stream or other freshwater environment with significant aquatic 26 resources; 27 (B) $10 [$2.50] per gallon of oil that [WHICH] enters an 28 estuarine, intertidal or confined saltwater environment; and 29 (C) $4 [$1] per gallon of oil that [WHICH] enters an 30 unconfined saltwater environment, public land or freshwater environment 31 without significant aquatic resources;
01 (2) for discharges of oil that are caused by the gross negligence or 02 intentional act of the discharger, or when the court finds that the discharger did not 03 take reasonable measures to contain and clean up the discharged oil, the penalty shall 04 be determined by multiplying the penalty established under (1) of this subsection by a 05 factor of five. 06 * Sec. 4. AS 46.03.758 is amended by adding a new subsection to read: 07 (m) The department shall, every 10 years, increase the amounts of the civil 08 penalties authorized in (b) of this section by a percentage equal to the percentage of 09 increase in all items of the Consumer Price Index for all urban consumers for urban 10 Alaska. The index for January of 2025 is the reference base index. 11 * Sec. 5. AS 46.03.759(a) is amended to read: 12 (a) A person who is found to be liable under any other state law for an 13 unpermitted discharge of crude oil in excess of 18,000 gallons is, in addition to 14 liability for any other penalties or for damages or the cost of containment and cleanup, 15 liable to the state in a civil action for a civil penalty, up to a maximum of 16 $500,000,000, in the amount of 17 (1) $20 [$8] per gallon of crude oil discharged for the first 420,000 18 gallons discharged; and 19 (2) $30 [$12.50] per gallon of crude oil discharged for amounts 20 discharged in excess of 420,000 gallons. 21 * Sec. 6. AS 46.03.759 is amended by adding new subsections to read: 22 (h) For the purpose of determining the volume of discharged crude oil under 23 this section, the department shall include the produced water, if any, that was mixed 24 with the discharged crude oil at the time of the discharge. 25 (i) The department shall, every 10 years, increase the amounts of the civil 26 penalties authorized in (a) of this section by a percentage equal to the percentage of 27 increase in all items of the Consumer Price Index for all urban consumers for urban 28 Alaska. The index for January of 2025 is the reference base index. 29 * Sec. 7. AS 46.03.760(a) is amended to read: 30 (a) A person who violates or causes or permits to be violated a provision of 31 this chapter other than AS 46.03.250 - 46.03.313, or a provision of AS 46.04 or
01 AS 46.09, or a regulation, a lawful order of the department, or a permit, approval, or 02 acceptance, or term or condition of a permit, approval, or acceptance issued under this 03 chapter or AS 46.04 or AS 46.09 is liable, in a civil action, to the state for a sum to be 04 assessed by the court of not less than $2,000 [$500] nor more than $400,000 05 [$100,000] for the initial violation, nor more than $25,000 [$5,000] for each day after 06 that on which the violation continues, and that shall reflect, when applicable, 07 (1) reasonable compensation in the nature of liquidated damages for 08 any adverse environmental effects caused by the violation, which shall be determined 09 by the court according to the toxicity, degradability, and dispersal characteristics of 10 the substance discharged, the sensitivity of the receiving environment, and the degree 11 to which the discharge degrades existing environmental quality; 12 (2) reasonable costs incurred by the state in detection, investigation, 13 and attempted correction of the violation; 14 (3) the economic savings realized by the person in not complying with 15 the requirement for which a violation is charged; and 16 (4) the need for an enhanced civil penalty to deter future 17 noncompliance. 18 * Sec. 8. AS 46.03.760(d) is amended to read: 19 (d) In addition to liability under (a) and (c) [(a) - (c)] of this section, a person 20 who violates or causes or permits to be violated a provision of AS 46.03.740 - 21 46.03.750 is liable to the state, in a civil action brought under AS 46.03.822, for the 22 full amount of actual damages caused to the state by the violation, including 23 (1) direct and indirect costs associated with the abatement, 24 containment, or removal of the pollutant; 25 (2) restoration of the environment to its former state; 26 (3) amounts paid as grants under AS 29.60.510 - 29.60.599 and as 27 emergency first response advances and reimbursements under AS 46.08.070(c); and 28 (4) all incidental administrative costs. 29 * Sec. 9. AS 46.03.760(e) is amended to read: 30 (e) A person who violates or causes or permits to be violated a provision of 31 AS 46.03.250 - 46.03.313, 46.03.460 - 46.03.475, AS 46.14, or a regulation, a lawful
01 order of the department, or a permit, approval, or acceptance, or term or condition of a 02 permit, approval, or acceptance issued under AS 46.03.250 - 46.03.313, 46.03.460 - 03 46.03.475, AS 46.14, or under the program authorized by AS 46.03.020(12), is liable, 04 in a civil action, to the state for a sum to be assessed by the court of not less than 05 $1,000 [$500] nor more than $200,000 [$100,000] for the initial violation, nor more 06 than $25,000 [$10,000] for each day after that on which the violation continues, and 07 that shall reflect, when applicable, 08 (1) reasonable compensation in the nature of liquidated damages for 09 any adverse environmental effects caused by the violation, that shall be determined by 10 the court according to the toxicity, degradability and dispersal characteristics of the 11 substance discharged, the sensitivity of the receiving environment, and the degree to 12 which the discharge degrades existing environmental quality; for a violation relating to 13 AS 46.14, the court, in making its determination under this paragraph, shall also 14 consider the degree to which the discharge causes harm to persons or property; for a 15 violation of AS 46.03.463, the court, in making its determination under this paragraph, 16 shall also consider the volume of the graywater, sewage, or other wastewater 17 discharged; this paragraph may not be construed to limit the right of parties other than 18 the state to recover for personal injuries or damage to their property; 19 (2) reasonable costs incurred by the state in detection, investigation, 20 and attempted correction of the violation; 21 (3) the economic savings realized by the person in not complying with 22 the requirement for which a violation is charged; and 23 (4) the need for an enhanced civil penalty to deter future 24 noncompliance. 25 * Sec. 10. AS 46.03.760(f) is amended to read: 26 (f) An owner, agent, employee, or operator of a commercial passenger vessel, 27 as defined in AS 43.52.295, who falsifies a registration or report required by 28 AS 46.03.460 or 46.03.475 or who violates or causes or permits to be violated a 29 provision of AS 46.03.250 - 46.03.314, 46.03.460 - 46.03.490, AS 46.14, or a 30 regulation, a lawful order of the department, or a permit, approval, or acceptance, or 31 term or condition of a permit, approval, or acceptance issued under AS 46.03.250 -
01 46.03.314, 46.03.460 - 46.03.490, or AS 46.14 is liable, in a civil action, to the state 02 for a sum to be assessed by the court of not less than $10,000 [$5,000] nor more than 03 $200,000 [$100,000] for the initial violation, nor more than $25,000 [$10,000] for 04 each day after that on which the violation continues, and that shall reflect, when 05 applicable, 06 (1) reasonable compensation in the nature of liquidated damages for 07 any adverse environmental effects caused by the violation, that shall be determined by 08 the court according to the toxicity, degradability, and dispersal characteristics of the 09 substance discharged, the sensitivity of the receiving environment, and the degree to 10 which the discharge degrades existing environmental quality; for a violation relating to 11 AS 46.14, the court, in making its determination under this paragraph, shall also 12 consider the degree to which the discharge causes harm to persons or property; this 13 paragraph may not be construed to limit the right of parties other than the state to 14 recover for personal injuries or damage to their property; 15 (2) reasonable costs incurred by the state in detection, investigation, 16 and attempted correction of the violation; 17 (3) the economic savings realized by the person in not complying with 18 the requirement for which a violation is charged; and 19 (4) the need for an enhanced civil penalty to deter future 20 noncompliance. 21 * Sec. 11. AS 46.03.760(g) is amended to read: 22 (g) As used in this section, "economic savings" means the economic benefit 23 of noncompliance [THAT SUM WHICH A PERSON WOULD BE REQUIRED TO 24 EXPEND FOR THE PLANNING, ACQUISITION, SITING, CONSTRUCTION, 25 INSTALLATION AND OPERATION OF FACILITIES NECESSARY TO EFFECT 26 COMPLIANCE] with the standard violated. When determining an "economic 27 savings," the court may consider 28 (1) deferred and avoided costs of compliance with the standard 29 violated; 30 (2) a competitive advantage gained by noncompliance with the 31 standard violated; and
01 (3) income derived as a result of noncompliance with the standard 02 violated from operations that were not authorized or permitted. 03 * Sec. 12. AS 46.03.760 is amended by adding new subsections to read: 04 (h) When assessing the need for an enhanced civil penalty to deter future 05 noncompliance under this section, the court may take into consideration 06 (1) the seriousness of the violation; 07 (2) the degree of culpability of the person; 08 (3) the history of previous violations of the person; 09 (4) other penalties assessed for the same violation; 10 (5) good faith efforts made by the person to comply with applicable 11 requirements and to minimize or mitigate the effects of the violations; 12 (6) the economic effect of the violation on the person; and 13 (7) other factors as justice may require. 14 (i) The department shall, every 10 years, increase the daily civil penalty caps 15 in (a), (e), and (f) of this section by a percentage equal to the percentage of increase in 16 all items of the Consumer Price Index for all urban consumers for urban Alaska. The 17 index for January of 2025 is the reference base index. 18 * Sec. 13. AS 46.03 is amended by adding a new section to read: 19 Sec. 46.03.762. Administrative penalties for discharges of oil and crude oil. 20 (a) In addition to the actions available under AS 46.03.758 - 46.03.760, the department 21 may assess an administrative penalty against a person who causes or permits a serious 22 discharge or repeat discharges of oil not permitted under applicable state or federal 23 law. 24 (b) An administrative penalty assessed under this section may not be less than 25 $500 nor more than $10,000 for each violation. When assessing a penalty under this 26 section, the department shall consider 27 (1) the effect of the discharge on the public health or the environment; 28 (2) reasonable costs incurred by the state in the detection, 29 investigation, and attempted correction of the discharge; 30 (3) any previous history of compliance or noncompliance by the 31 person with this chapter, AS 46.04, AS 46.09, and AS 46.14;
01 (4) the need to deter future discharges; and 02 (5) the volume, extent, and seriousness of the discharge, including the 03 potential for the discharge to threaten public health or the environment. 04 (c) If a person fails to pay an administrative penalty assessed under this 05 section, the department may bring an action to collect the penalty. The amount of the 06 penalty is not subject to review by the court in an action to collect the penalty 07 described in this section. 08 (d) In a collection action under (c) of this section, the court shall award the 09 prevailing party full reasonable attorney fees and costs incurred in the collection 10 action. 11 (e) Action under this section by the department does not limit or otherwise 12 affect the authority of the department to otherwise enforce this chapter, AS 46.04, 13 AS 46.08, AS 46.09, AS 46.14, or regulations adopted under those statutes, or to 14 recover damages, restoration expenses, investigation costs, court costs, attorney fees, 15 or other necessary expenses. The court shall set off against a judicial civil assessment 16 subsequently awarded under AS 46.03.758, 46.03.759, or 46.03.760 an amount 17 ordered to be paid under this section by the same person for the same discharge. 18 (f) For the purpose of determining the volume of discharged oil under this 19 section, the department shall include the produced water, if any, that was mixed with 20 the discharged oil at the time of the discharge. 21 (g) The department shall, every 10 years, increase the amounts of the 22 administrative penalties authorized in (b) of this section by a percentage equal to the 23 percentage of increase in all items of the Consumer Price Index for all urban 24 consumers for urban Alaska. The index for January of 2025 is the reference base 25 index. 26 (h) In this section, 27 (1) "discharge" means entry of oil into or on the water or public land of 28 the state, regardless of causation, except discharges into an enclosed and impervious 29 oil spill containment area; 30 (2) "oil" means crude oil, petroleum, and any substance refined from 31 petroleum.
01 * Sec. 14. AS 46.03.900 is amended by adding a new paragraph to read: 02 (38) "produced water" means water that is the byproduct of the 03 exploration, extraction, development, production, refining, processing, or disposal of 04 energy-related products. 05 * Sec. 15. AS 46.03.758(c) and 46.03.760(b) are repealed. 06 * Sec. 16. This Act takes effect January 1, 2026.