Legislature(2023 - 2024)BUTROVICH 205
05/02/2023 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| SB127 | |
| HB128 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 127 | TELECONFERENCED | |
| *+ | HB 128 | TELECONFERENCED | |
HB 128-OIL TERMINAL FACILITY
2:09:58 PM
CHAIR KAUFMAN reconvened the meeting and announced the
consideration of CS FOR HOUSE BILL NO. 128(TRA) "An Act relating
to the operation of a tank vessel or oil barge as an oil
terminal facility; relating to the definition of 'oil terminal
facility'; and providing for an effective date."
He noted that this was the first hearing and the intention was
to hear the introduction, take invited and public testimony, and
hold the bill for further consideration.
2:10:19 PM
BUDDY WHITT, Staff, Representative Kevin McCabe, Alaska State
Legislature, Juneau, Alaska, introduced HB 128 with a
PowerPoint. He began with slide 2, highlighting the bolded
language in subsection (b) of 18 AAC 75.432.
[Original punctuation provided.]
18AAC75.432
(a) For a crude or non-crude oil terminal facility,
the plan holder shall maintain or have available under
contract within the plan holder's region of operation
or another approved location, sufficient oil discharge
containment, storage, transfer, and cleanup equipment,
personnel, and other resources to (1) contain or
control and clean up within 72 hours that portion of
the response planning standard volume that enters open
water; and (2) contain or control within 72 hours, and
clean up within the shortest possible time consistent
with minimizing damage to the environment, that
portion of the response planning standard volume that
enters a receiving environment other than open water.
(b) The response planning standard volume for a crude
or non-crude oil terminal facility is equal to the
capacity of the largest oil storage tank at the
facility covered by the plan, unless there are
specific natural or manmade conditions outside the
facility which could place the facility at an
increased risk of an oil discharge affecting one or
more storage tanks. (c) For an increased risk
described in (b) of this section, the response
planning standard volume is equal to the capacity of
all of the potentially affected oil storage tanks at
the facility. The plan must set out the basis for
selecting the storage tanks and the volume of oil
planned for in the response. (d) The department will,
in its discretion, reduce the requirements of (b) of
this section, by a percentage up to that shown, for
each of the following prevention measures in place at
the facility: (1) alcohol and drug testing of key
personnel: 5 percent; (2) an operations training
program with a professional organization or federal
certification or licensing of program participants: 5
percent; (3) on-line leak detection systems for tanks
and piping: 5 percent; (4) a sufficiently impermeable
secondary containment area with a dike capable of
holding the contents of the largest tank, or all
potentially affected tanks in the case of increased
risk, and precipitation: 60 percent; (5) for secondary
containment as described in (4) of this subsection,
designed with the following enhancements, an
additional allowance for (A) cathodic protection: 10
percent; (B) fail-safe valve piping systems: 15
percent; or (C) impervious containment area extending
under the full area of each storage tank or double
bottoms with leak detection: 25 percent; and (6)
containment outside the secondary containment area: 10
percent.
2:12:29 PM
MR. WHITT moved to slide 3 relating to 18 AAC 75.432. Response
planning standards for oil terminal facilities. He highlighted
the bolded language in the last sentence.
18AAC75.432(b) with proposed language
(b) The response planning standard volume for a crude
or non-crude oil terminal facility is equal to the
capacity of the largest oil storage tank at the
facility covered by the plan, unless there are
specific natural or manmade conditions outside the
facility which could place the facility at an
increased risk of an oil discharge affecting one or
more storage tanks. For vessels operating as oil
terminal facilities, the response planning standard is
based on the entire storage capacity of the vessel.
2:12:48 PM
MR. WHITT continued to slide 4, "Alaska Fuel Storage and
Handling Association response to proposed change.
Delete the language added/proposed. What exactly is a
"vessel operating as oil terminal facility"? Please
define and provide parameters when a VESSEL (barge,
NTV or TV) is considered an OIL TERMINAL FACILITY.
Under the new requirements, would the RPS of a 120,000
bbl. non crude barge be 120,000 bbl.? Why isn't the
15% reduction (for calculating RPS of non-crude barge
or tank vessel) utilized since these are VESSELS. Does
DEC consider vessels moored offshore for transfer
operations, to be a greater threat than a vessel
transiting from port to port? Please provide examples
(real world) of how a double-hulled vessel or barge
will lose its entire cargo.
2:14:07 PM
MR. WHITT moved to slide 5, Department of Environmental
Conservation response (1/6/2023).
The definition in 18 AAC 75.990 and AS 46.04.900(14)
for "oil terminal facility" answers the commenter's
question. The definition of "oil terminal facility"
includes "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[.]" A
vessel that falls under the definition in AS
46.04.900(14) is subject to the requirements for an
oil terminal facility, including the requirement at 18
AAC 75.430(c)(1). The proposed edit to 18 AAC
75.432(b) provides additional clarity and will be
retained.
2:14:39 PM
MR. WHITT moved to slide 6, AS 46.04.900(14) Current
Statutory Definition of "Oil Terminal Facility
(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 noted that concern was raised the existing definition
was too ambiguous.
2:17:11 PM
MR. WHITT continued to slide 7, "18 AAC 75.990(76) Regulatory
definition of "oil terminal facility.
"oil terminal facility" has the meaning given in AS
46.04.900 and includes vessels classified as oil
terminal facilities under 18 AAC 75.280
MR. WHITT stated that the purpose of slide 7 is ensure the
committee understands that there are clear differences between
an oil terminal facility and a vessel.
2:17:24 PM
MR. WHITT moved to slide 8, "18 AAC 75.280 Classification as an
oil terminal facility
18 AAC 75.280 Classification as an oil terminal
facility
(a) If a vessel is to operate as an oil terminal
facility as defined at AS 46.04.900, the owner or
operator shall submit a written request for
classification of the vessel as an oil terminal
facility to the department. The request for
classification must include the
(1) name of the owner or operator;
(2) vessel name and official number;
(3) oil storage capacity of the vessel;
(4) type of product carried as cargo; and
(5) period of time during which the classification
will apply.
(b) Upon receipt of a request under
(a) of this section, the department will issue a
certificate to the vessel, classifying the vessel as
an oil terminal facility for the prescribed period.
(c) If the capacity of the vessel for which
classification is requested is more than 10,000
barrels of noncrude oil, the owner or operator must
meet the financial responsibility requirements of 18
AAC 75.235(a)(2) and the oil discharge prevention and
contingency plan requirements of AS 46.04.030.
2:17:38 PM
MR. WHITT moved to slide 9.
• Alaska Statutes require land-based oil terminals
and vessels that deliver oil as cargo to have oil
spill response plans known as "contingency plans"
• Land-based terminals have a planning standard that
requires equipment to respond to a spill from their
largest tank.
• Vessel operators have a planning standard that
requires equipment to respond to spill from a
percentage of their total cargo.
• The planning standards differ because responding to
a spill on land is different than on water.
Comingling and lack of clarity regarding the
definition "oil terminal facility" is causing
concern among fuel delivery vessel operators in
Alaska
2:18:38 PM
MR. WHITT continued to slide 10.
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 plans to now plan for and
acquire tens of millions of dollars of new equipment
to comply with oil terminal facility planning
requirements.
The additional requirements and the financial
commitments to meet them are a concern to stakeholders
because those requirements will cost time and money
which will be passed on to customers.
2:19:30 PM
MR. WHITT moved to slide 11, "Sectional Analysis of House Bill
128 Version U.
Section 1 Page 1, lines 4 through 11 adds language
that an approved contingency plan for a tank vessel or
oil barge satisfies the requirement in (a) of this
section for contingency plans for oil terminal
facilities.
Section 2 Page 1, line 12 through Page 2, line 6
adds language that proof of financial ability for a
tank or oil barge that is approved under this
subsection satisfies the requirements of (a) of the
section for proof of financial ability for oil
terminal facilities.
Section 3 Page 2, lines 12 through 26 changes the
definition of oil terminal facility to confirm to the
additions of sections one and two; specifying that
when a tank vessel or oil barge are operating with
approved contingency plans and proof of financial
ability, they are not considered "oil terminal
facilities".
Section 4 Page 2, line 27 Added an immediate
effective date to the bill.
2:21:21 PM
SENATOR MYERS referred to the mention of ship-to-ship transfer.
He asked about a ship-to-shore transfer. He wondered if the
transfer would qualify the ship as an oil terminal.
MR. WHITT deferred the question to the experts who were
available to answer questions.
CHAIR KAUFMAN moved to invited testimony.
2:22:20 PM
KEVIN O'SHEA, President, Alaska Fuel Storage and Handlers
Alliance, Eagle River, Alaska, informed the committee that the
alliance was a group of petroleum transporters and terminals
operating throughout the state of Alaska. He explained that the
group initially expressed concern with a recent regulation
change. The concern was that the new regulations might lead to
problems with insurance providers. Insurance carriers might not
cover the alliance because they would be in direct violation of
the statutes and regulations.
SENATOR MYERS repeated his question about whether the
legislation should apply to ship-to-shore transfer.
MR. O'SHEA responded that if a vessel is involved in a ship-to-
ship transfer of greater than 10 thousand barrels of fuel, the
ship is classified as a terminal. He stated that the transfer
requirement would apply to the barges traveling into the
villages. He noted that certain barges would be considered a
terminal at certain times, even if they were located at a
terminal.
2:24:39 PM
SENATOR MYERS offered his understanding that Alaska produces jet
fuel but does not produce aviation gas (avgas). He asked Mr.
O'Shea if that was the case.
MR. O SHEA said yes.
SENATOR MYERS commented that if this change is required for
ship-to-shore as well as ship-to-ship, then all crop planes in
the state will be grounded this summer if the bill doesn't pass.
CHAIR KAUFMAN asked the sponsor if he'd like to comment.
2:25:49 PM
REPRESENTATIVE KEVIN MCCABE, District 30, Alaska State
Legislature, Juneau, Alaska, explained ed that the bill was
brought to the House Transportation Standing Committee by an
Alaska fuel handlers group that utilizes barges to transfer
fuel. The group identified an issue with the existing language
in the statute language. The legislation simply tightens up the
language to the stakeholder's satisfaction.
CHAIR KAUFMAN clarified that the group was the Alaska Fuel
Storage and Handlers Alliance (AFSHA).
REPRESENTATIVE MCCABE thanked the committee for hearing the
bill.
CHAIR KAUFMAN asked Mr. O'Shea if he had any additional
commentary on the bill.
2:27:48 PM
MR. O'SHEA stated support for the current version of HB 128 and
expressed hope that the committee would help resolve the issue
for the industry by passing the bill from committee.
2:28:31 PM
MR. WHITT responded to Senator Myers's question by pointing out
that vessels are only considered oil terminal facilities when
they are performing ship-to-ship duties or are enroute to a
ship-to-ship transfer. He stated that the AFSHA performs other
types of fuel delivery as well and only in certain instances are
they considered oil terminal facilities. He suggested Jim Butler
confirm that point.
2:29:31 PM
JIM BUTLER, Council for the Alaska Fuel Storage and Handlers
Alliance, Kenai, Alaska, shared an example illustrating the
ambiguity the regulations cause operators. The example involved
a barge that is loaded in Nikiski, Alaska and travels to Dutch
Harbor. The barge has a planning standard that has been met
since it was adopted in the early 1990s. The hypothetical issue
involved that same barge that might leave Dutch Harbor and
travel to Nome where fuel is unloaded in a ship-to-ship transfer
to smaller vessels that travel up the river. At this point, the
planning standard would change significantly, making it
physically impossible to have the proper equipment available. In
the event of a casualty, even if a ship complied with the
contingency plan as a "tank barge," there might still be
problems with insurance coverage. Under that definition, the
barge could have morphed into a terminal so the other measures
apply. He noted an increase over the last several years with
ship-to-ship transfers operating in Western Alaska because of
the source of fuel that comes in to support the residential
communities throughout the region.
MR. BUTLER thanked Representative McCabe and his staff for
navigating through lawyers, the Department of Environmental
Conservation, and industry to arrive at a workable solution. He
pointed out that Section 3 clarifies that when a vessel has
contingency plans and financial responsibilities in place, it
does not convert into a different entity when delivering fuel
one way versus another. He appreciated Section 4 because the
fuel delivery season is beginning and the safe delivery of fuel
is on everybody's mind. He hoped to eliminate confusion with the
statute, the agency, or the industry.
2:32:24 PM
CHAIR KAUFMAN noted that Ms. Larson was available to answer
questions
2:32:52 PM
TIFFANY LARSON, Director, Spill Prevention and Response DEC,
Fairbanks, Alaska, stated that DEC is already doing what the
bill proposes to achieve and has been complying with the
required standards since the statutes were enacted in the 1990s.
The legislation does not change DEC's existing practices. The
department's only concern is the change in the definition
section, which is considered substantive law. Should the bill
pass, the department will have to look at every place in the
statute that references "oil terminal facility" and determine
the implications. She informed the committee that the packet
from the department included letters addressing AFSHA's
concerns.
2:34:18 PM
REPRESENTATIVE MCCABE responded that AFSHA brought the issue to
him because of concerns about insurance liability, not concerns
with DEC. He expressed appreciation for the cooperative work
with all parties and specifically for the help his office
received from DEC.
2:35:35 PM
CHAIR KAUFMAN opened public testimony on HB 128. Seeing no one
online or in the room who wished to testify he closed public
testimony.
2:36:16 PM
At ease.
2:36:34 PM
CHAIR KAUFMAN reconvened the meeting.
SENATOR TOBIN expressed her gratitude for the industry's concern
that their practices match statutory authority.
2:37:34 PM
CHAIR KAUFMAN held HB 128 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 127 Sponsor Statement v. S 5.1.2023.pdf |
STRA 5/2/2023 1:30:00 PM |
SB 127 |
| SB 127 Explanation of Changes v. B to S.pdf |
STRA 5/2/2023 1:30:00 PM |
SB 127 |
| SB 127 STRA CS Work Draft v. S.pdf |
STRA 5/2/2023 1:30:00 PM |
SB 127 |
| SB 127 Legal Memo on Retroactive Collection Liability 4.28.23.pdf |
STRA 5/2/2023 1:30:00 PM |
SB 127 |
| HB 128 Sponsor Statement version U.pdf |
STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB 128 Sectional Analysis version U.pdf |
STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB128.Explanation of Changes.Version A to U.pdf |
HTRA 4/25/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| CSHB128.Version.U.pdf |
HTRA 4/20/2023 1:00:00 PM HTRA 4/25/2023 1:00:00 PM STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB 128 Fiscal Note DEC 4.28.23.pdf |
STRA 5/2/2023 1:30:00 PM |
HB 128 |
| 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.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 2.17.23.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 |
| HB128.DEC SPAR Letter 4.4.23.pdf |
STRA 5/2/2023 1:30:00 PM |
HB 128 |
| HB 128 Presentation to STRA 5.2.23.pdf |
STRA 5/2/2023 1:30:00 PM |
HB 128 |
| SB 127 Amendment S.3.pdf |
STRA 5/2/2023 1:30:00 PM |
SB 127 |