Legislature(2023 - 2024)BARNES 124
03/30/2023 01:00 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB128 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 128 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 128-OIL TERMINAL FACILITY
1:00:50 PM
CHAIR MCCABE announced that the only order of business would be
HOUSE BILL NO. 128, "An Act relating to the definition of 'oil
terminal facility.'"
1:01:41 PM
BUDDY WHITT, Staff, Representative Kevin McCabe, Alaska State
Legislature, on behalf of the bill sponsor, the House
Transportation Standing Committee, stated that the bill was
conceived when the Department of Environmental Conservation
(DEC) approached the committee with ideas for regulatory changes
for oil terminal facilities. He began a PowerPoint presentation
[hard copy included in the committee packet], on slides 2 and 3,
and said that the proposed legislation would make changes to
Alaska Administrative Code (AAC) 75.432, regarding response
planning for potential spills at oil storage facilities. The
new language would change the regulations for vessels operating
as oil terminal facilities to have the same requirements as
other vessels.
1:04:35 PM
MR. WHITT continued to slides 4-7, regarding the definition of
oil terminal facility. He said that DEC requested clarifying
language regarding vessels used as oil terminal facilities. He
gave the current definition of an oil terminal facility found
under AS 46.04.900(a)(14), which read:
(14) "oil terminal facility" means an onshore or
offshore facility of any kind, and related
appurtenances, including a deepwater port, bulk
storage facility, or marina, located in, on, or under
the surface of the land or waters of the state,
including tide and submerged land, that is used for
the purpose of transferring, processing, refining, or
storing oil; a vessel, other than a nontank vessel, is
considered an oil terminal facility only when it is
used to make a ship-to-ship transfer of oil, and when
it is traveling between the place of the ship-to-ship
transfer of oil and an oil terminal facility;
MR. WHITT said that this definition includes vessels acting as
oil terminal facilities under 18 AAC 75.280.
1:07:10 PM
MR. WHITT continued to slides 8-10 and gave an overview for
classification of oil terminal facilities under 18 AAC 75.280.
Operators of vessels acting as oil terminal facilities must
submit a written request to DEC. He stated that these
regulations have caused issues due to the difference of
responding to a land- or water-based oil spill. Land-based
facilities are required to have a plan that would allow them to
be able to respond to a spill of their biggest storage tank,
whereas vessels must plan for a percentage of their cargo. Mr.
Whitt continued as follows:
It appears that the definition of oil terminal
facility that includes vessels that transfer fuel to
smaller vessels in state waters now requires vessels
that already have oil spill contingency plans to now
plan for and acquire what could be tens of millions of
dollars of new equipment to comply with oil terminal
facilities' planning requirements.
MR. WHITT listed cost to stakeholder, and thereby costumers, as
well as time delays, as issues of concern.
MR. WHITT directed attention to slide 11 and gave the sectional
analysis of HB 128. He said that under Section 1, AS 46.04.900
(14) would be amended to exclude vessels with a discharge
prevention and contingency plan from the definition of oil
terminal facility.
1:11:06 PM
KEVIN O'SHEA, Safety and Environmental Manager, Vitus Energy,
LLC, stated that 200 million gallons of fuel come into the state
of Alaska via marine transport, approximately half of which
could be impacted by the current definition of oil terminal
facility. Primarily, larger barges making a transfer to smaller
barges going to remote villages would be affected. He said that
the current definition would place insurance coverage into
question if a spill were to occur.
1:14:38 PM
JIM BUTLER, Principal, Incident Response Group, LLC, stated that
the current statutory definition of vessel has three components.
The way the statute is currently written causes oil barges to
fall under the definition of oil terminal facility, meaning that
a barge that is not at full capacity would still be required to
plan for an incident in which it is at full capacity. He said
that the bill would allow vessels to make ship-to-ship transfers
using the same contingency plans as other vessels. The industry
has invested significant amounts of money into ship-to-ship
transfer equipment to increase safety.
1:20:13 PM
TIFFANY LARSON, Director, Division of Spill Prevention and
Response, Department of Environmental Conservation, stated that
at the time of the oil spill, the Exxon Valdez vessel was
carrying 53 million gallons of oil, and the vessels currently
being used in Alaska have a capacity between 9,000 and 54.6
gallons. She said DEC has previously considered vessels meeting
the proposed definition to be compliant with the current
definition. She said that DEC is currently reviewing the
possible trickle-down effects that could occur due to the change
in definition. She questioned whether a statutory change was
necessary due to the way the department has previously
interpreted the definition in statute and said that clarifying
language could always be added in the current regulations.
1:25:50 PM
REPRESENTATIVE C. JOHNSON asked why changing the statute is
unnecessary if the interpretation of the definition and
subsequent regulations do not match the statute.
MS. LARSON answered that the department has been applying
regulations to meet the intent of the statute since it was
written.
1:27:56 PM
CHAIR MCCABE asked whether an insurance company would use the
discrepancy between the statute and regulation to absolve itself
from paying out in the event of a spill.
MR. BUTLER answered that insurance companies often look for any
possible reason to deny an insurance claim, so it is likely that
the discrepancy would be used in the event of a spill. He added
that a change in leadership at the department could result in a
change in regulations to match what is in the current statutory
definition.
1:29:37 PM
REPRESENTATIVE STUTES asked whether it is correct that insurance
companies and DEC have a different interpretation of the
statutory definition.
REPRESENTATIVE MCCABE confirmed that is correct. In response to
a follow-up question, he said that there is a planned meeting
between himself, DEC, and the insurance companies.
1:32:34 PM
REPRESENTATIVE SUMNER commented that he expected DEC to defend
the way that it interprets the definition of oil terminal
facility, although that does not mean that the bill is
unnecessary.
REPRESENTATIVE STUTES replied that DEC can "reach out" and work
on a solution to the discrepancy between the definitions.
CHAIR MCCABE added that DEC has offered some amendments to HB
128, and the goal is to ensure that operators are covered by
their insurance policies.
1:34:38 PM
REPRESENTATIVE C. JOHNSON questioned whether insurance companies
would continue to offer policies due to the current
discrepancies.
CHAIR MCCABE replied that a major focus on the bill is
addressing such an issue.
1:35:48 PM
REPRESENTATIVE VANCE asked if the Department of Law could give
insight into the possible effects of the proposed legislation.
1:36:12 PM
CAMERON JIMMO, Assistant Attorney General, Environmental
Section, Department of Law, answered that DEC's interpretation
of the current definition aligns with the Department of Law's
interpretation. He added that the department believes it would
be better to address oil prevention and response in statute
rather than modifying the definition of oil terminal facility.
1:38:12 PM
REPRESENTATIVE VANCE asked whether it is correct to say that any
vessel with an oil contingency plan would be considered an oil
terminal facility if it makes ship-to-ship transfers.
MR. JIMMO answered that the Department of Law has historically
interpreted the definition in that manner. He added that
changing the definition of oil terminal facility could have a
broader effect than what is intended by the proposed
legislation.
1:40:44 PM
REPRESENTATIVE C. JOHNSON asked whether it is possible to have
different definitions of vessel in different parts of the
statute to avoid a trickle-down effect.
MR. JIMMO answered that he is unsure but believes that it could
be a more favorable approach to fixing the discrepancy.
1:43:08 PM
MR WHITT stated that DEC has been very engaged in working on
solving the problem.
1:43:52 PM
CHAIR MCCABE opened public testimony on HB 128. After
ascertaining that nobody wished to testify, he closed public
testimony.
1:44:15 PM
CHAIR MCCABE announced that HB 128 was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB128.AS 46.04.030 and 040.pdf |
HTRA 3/30/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB128.SupportingDocuments.18 AAC 75.432.pdf |
HTRA 3/30/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB128.DEC SPAR Letter 2.17.23.pdf |
HTRA 3/30/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB128.SupportDocument.18 AAC 75.280.pdf |
HTRA 3/30/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB128.DEC SPAR Letter 3.3.23.pdf |
HTRA 3/30/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| House Bill 128 Sectional Analysis version A.pdf |
HTRA 3/30/2023 1:00:00 PM |
HB 128 |
| House Bill 128 Sponsor Statement version A.pdf |
HTRA 3/30/2023 1:00:00 PM |
HB 128 |
| HB 128 Presentation to HTRA.pdf |
HTRA 3/30/2023 1:00:00 PM |
HB 128 |