Legislature(2017 - 2018)BARNES 124
02/05/2018 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB322 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 322 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 322-OIL SPILLS/POLLUTION:PENALTIES;PREVENTION
1:10:49 PM
CO-CHAIR JOSEPHSON announced that the first order of business
would be HOUSE BILL NO. 322, "An Act relating to penalties for
discharges of oil and other pollution violations; relating to
oil discharge prevention and contingency plans for commercial
motor vehicles transporting crude oil; and providing for an
effective date."
[CO-CHAIR JOSEPHSON opened invited testimony on the bill.]
1:12:33 PM
PATTI SAUNDERS, Spokesperson, Alaska Community Action on Toxics
(ACAT), informed the committee she has a personal interest in
the bill as she was one of the original members of the Prince
William Sound Regional Citizens' Advisory Council, Oil Spill
Prevention and Response Committee, and has been a long-time
volunteer following the [Exxon Valdez oil spill in 1989]. She
opined the bill contributes to the goal of preventing another
Exxon Valdez oil spill by imposing meaningful penalties for oil
spills to partially compensate Alaskans for the costs of damage
to habitat and wildlife, and of restoration. Ms. Saunders noted
provisions in the bill are long overdue, such as violations for
spills from tanker trucks and the requirement that tanker trucks
have contingency plans. She also spoke in support of Section 19
which removes the prohibition on discharges from ballast,
pesticides, paint, underground tanks, and cruise ships. A
primary goal of the bill is to adjust penalties to the value in
2018 dollars; however, Sections 2 and 6 double the amount of the
1977 penalty, but the 2018 equivalent would be four times that
of 1977 amounts, thus doubling the amount does not meet the
stated goal found in the sponsor statement. Although in support
of HB 322, ACAT urges the committee to adopt amendments to
Sections 2 and 6 to reflect actual 2018 dollars.
1:17:19 PM
REPRESENTATIVE RAUSCHER asked how the bill would stop future
events like the Exxon Valdez [oil spill].
MS. SAUNDERS explained penalties are one important element of
preventing future oil spills, and another is the requirement of
contingency plans for companies transporting and drilling for
oil; planning for preventing, minimizing, and cleaning up after
a spill is meaningful. She stressed penalties are a deterrent
and a way to compensate for damage to the state's resources.
Ms. Saunders cautioned if oil spills have no economic cost to
violators, there is no incentive to "be the best and safest
company you can be."
REPRESENTATIVE BIRCH expressed concern about the unnecessary
burden and regulatory cost the bill would impose on commercial
and business operations. He pointed out the aforementioned goal
of preventing another Exxon Valdez oil spill has been achieved
and said he is interested to hear testimony on the bill's impact
on the everyday life of Alaskans.
MS. SAUNDERS suggested a comparison of the price per gallon of
gasoline in 2018 with the cost per gallon in 1989; in fact, the
cost Alaskans pay [now for gasoline] far exceeds the doubling of
the cost of penalties incurred by a violator of Alaska's oil
spill statutes and regulations. Further, oil prices have risen
since 1989 and profits are high for companies that produce,
transport, refine, or sell oil at retail; in contrast, oil spill
penalties have not, thus realigning penalties to the value of
the 2018 dollar is not an undue burden on the oil industry.
Penalties established in 1977 are not an effective deterrent and
do not reflect the cost to repair damage to the environment.
1:24:07 PM
DOUGLAS MERTZ, Legislative Liaison, Prince William Sound
Regional Citizens' Advisory Council (Prince William Sound RCAC),
informed the committee the Prince William Sound RCAC is a
nonprofit coalition of interested parties who have a common
intent to protect the assets and people of Prince William Sound
including businesses, Tribes, commercial fisherman, and
environmentalists. He spoke in support of HB 322 which would
adjust penalties to reflect inflation; in fact, due to
inflation, the effective penalty rates have become a minor cost
of doing business. As written, the bill would address this
issue and the Prince William Sound RCAC feels this provision is
necessary to maintain effective deterrents, and incentives for
proper business practices. His experience in oil spill
enforcement since the 1970s has revealed the following cycle:
after a big oil spill, interest and legislative/regulatory
responses are high for about two years and then decline.
Therefore, his organization seeks legislative/regulatory
provisions that maintain a constant level of enforcement,
particularly now that there is interest in new oil exploration
and production in the state and off its coast, and with the
absence of pertinent federal regulations and safety measures.
Mr. Mertz stressed businesses that are invited into the state
must be regulated to exercise diligence and prevent spills. He
warned against complacency. Although the Prince William Sound
RCAC limits its scope of interest to oil transportation and
handling within Prince William Sound, his personal experience is
that truck rollovers - though they are small spills - are a
constant problem because of their frequency; the bill's
requirement that truckers and haulers of oil products provide
contingency plans does not have to add a regulatory burden. He
pointed out the requirement is limited to crude oil and
cautioned that many types of refined products are more toxic and
more common than crude oil, and urged the committee to revisit
this serious issue.
1:29:55 PM
REPRESENTATIVE BIRCH inquired as to whether there have been many
spills occurring subsequent to the Exxon Valdez that have not
been managed or mitigated by the responsible parties.
MR. MERTZ said no, although there have been near misses
involving tankers. [There have been no spills similar to the
Exxon Valdez], because "Prince William Sound has the best oil
spill prevention and response system in the country, maybe in
the world now, and our job at RCAC is to make sure it's, it's
maintained that way."
REPRESENTATIVE BIRCH related his experience with Alyeska
Pipeline Service Company supports the vigilance of the Prince
William Sound RCAC; however, close calls don't count, and he
noted the absence of significant occurrences in the past 29
years. He pointed out some fees are quadrupled [by provisions
within HB 322], from $5,000 to $25,000 per day, and questioned
whether there is a problem with the transportation business.
MR. MERTZ said the larger increases [to penalties] in the bill
are tied to the responsibility for spills by operators who are
negligent and do not take the most common required steps to
avoid spills, which justifies higher fees and penalties.
REPRESENTATIVE RAUSCHER asked for the most common required steps
to avoid spills.
MR. MERTZ acknowledged there are differences between pipelines,
wells, trucks, and tankers; for all entities, the most important
primary general requirement is for contingency plans so that
knowledgeable parties can plan for prevention and response. The
absence of advance planning is playing games with resources and
livelihoods. In further response to Representative Rauscher,
Mr. Mertz opined advance planning is not happening with tanker
trucks, which is a problem.
REPRESENTATIVE RAUSCHER said, "So you figure that this bill will
create that?"
1:34:35 PM
MR. MERTZ stated contingency planning for fleets of tanker
trucks would help. In further response to Representative
Rauscher, he said the bill would require contingency planning.
He advised contingency plans do not need to be onerous, or
extremely costly, if the operator of a fleet of trucks contracts
with an oil spill cleanup service company.
REPRESENTATIVE JOHNSON questioned whether spills are ignored for
economic reasons as is implied by the bill.
MR. MERTZ said no, but spill preventive measures and spill
planning are ignored for economic reasons.
CO-CHAIR JOSEPHSON suggested the question is related to the
economic benefit of noncompliance, which is a provision of HB
322.
MR. MERTZ stated the state should avoid a situation in which
spills and spill responses are a cost of doing business, and a
company can choose not to be diligent and save money. He
remarked:
But, I don't think we see anywhere where it's actually
been applied in any rigorous way where a court or
other decider actually looks at how much they saved by
not complying.
REPRESENTATIVE BIRCH recalled previous testimony that trucking
companies already have contingency plans. He observed in
Anchorage most residents heat with natural gas and in Juneau, he
personally does not have fuel oil delivery, but in Fairbanks
many residents do, and cautioned against unintentionally
multiplying the cost of essential services to certain areas of
the state.
1:40:08 PM
CO-CHAIR JOSEPHSON asked:
You're not suggesting that we can't enhance penalties
because some people would be impacted more than others
based on how they consume fuel. Because then we just
could never enhance penalties, we would have to wait
[until] everyone's on the same system.
REPRESENTATIVE BIRCH said exactly. In a community which relies
on fuel products that are transported by rail, truck, or snow
machine - if penalties are added - the cost of fuel would
increase: regulation adds cost. He noted the absence of
testimony that oil spills are happening in the Prince William
Sound area, and restated the Exxon Valdez oil spill was 29 years
ago. He opined responsible operators are acting responsibly and
restated his dissatisfaction that HB 322 is a committee bill.
REPRESENTATIVE PARISH requested further information related to
the toxicity of refined fuel products compared to that of crude
oil.
MR. MERTZ related his experience is there is a constant series
of truck rollovers that contaminate streams, rivers, and lakes.
REPRESENTATIVE PARISH directed attention to Section 13, which
read:
Sec. 13. AS 46.04.030(d) is amended to read:
(d) Upon approval of a contingency plan, the
department shall issue to the plan holder a
certificate stating that the contingency plan has been
approved by the department. The certificate must
include the name of the facility, pipeline, tank
vessel, commercial motor vehicle, or oil barge for
which it is issued, the effective date of the
contingency plan, and the date by which the
contingency plan must be submitted for renewal. A
contingency plan must be submitted for renewal every
five years.
REPRESENTATIVE PARISH suggested the addition of "a fleet of
motor vehicles."
CO-CHAIR JOSEPHSON urged for the use of well-defined terms in
any forthcoming amendments.
1:44:19 PM
CO-CHAIR TARR acknowledged the Exxon Valdez oil spill was a
number of years ago; however, [in 2010] one of the three major
owner-operators on the North Slope was the [lessee] of the
Deepwater Horizon drilling rig that exploded and leaked oil
resulting in over $4 billion in fees, fines, penalties, and
restoration costs. The lessee was found guilty of 14 criminal
counts, and lives were lost. Co-Chair Tarr said [HB 322] is
part of safety planning - not just to address environmental
damages - and she warned against waiting for another disaster.
She asked Mr. Mertz whether it is common for jurisdictions to
review fees and penalties - which would only be assessed after
an operator makes a mistake or is criminally negligent - in
order to protect human lives and the environment.
MR. MERTZ restated the high and then declining interest in
penalties and preparedness methods, following the Deepwater
Horizon disaster, are part of the aforementioned cycle of
interest; in fact, after the Deepwater Horizon disaster,
residents sought to create RCAC organizations for the Gulf of
Mexico and for the North Slope. Also, the federal government is
disinterested in enforcing safety regulations in well blowouts,
and the state may need to fulfill the federal government's role,
or an accumulating lack of interest will lead to spills.
REPRESENTATIVE DRUMMOND clarified that the bill seeks to only
regulate trucks that transport crude oil - not that transport
refined fuel oil that is delivered to Fairbanks and elsewhere;
she reminded the committee ExxonMobil was forgiven $4.5 billion
of its $5 billion penalty originally assessed, "and thousands of
Alaskans suffered as a result."
REPRESENTATIVE BIRCH asked for information as to the frequency
of truck rollovers.
CO-CHAIR JOSEPHSON offered to provide the requested information
from DEC.
REPRESENTATIVE DRUMMOND returned attention to the PowerPoint
presentation entitled, "Division of Spill Prevention and
Response," dated 2/2/18, that was presented to the committee on
2/2/18, and said slide 4 indicated 4.5 million gallons of oil
were spilled in 1997.
1:49:52 PM
BOB SHAVELSON, Advocacy Director, Cook Inletkeeper, informed the
committee Cook Inletkeeper is a public interest group, supported
by Alaskans, that works for clean water and healthy salmon
around Southcentral Alaska. Further, he has been a board member
of the Cook Inlet Regional Citizens' Advisory Council and is a
board member representing the Oil Spill Region Environmental
Coalition, Prince William Sound Regional Citizens' Advisory
Council. Mr. Shavelson expressed general support for HB 322.
He said during his 22 years of experience with Cook Inletkeeper
he has seen hundreds of spills from pipelines, platforms,
trucks, and storage tanks; unfortunately, penalties for spills
have become a cost of doing business in Alaska. He reported
after a spill a company brings in a contractor - who may or may
not clean up the spill - and a relatively small fine is paid;
afterward, there is a return to business as usual. Mr.
Shavelson said the current penalty regime does not deter future
violations and has been eroded due to inflation, so the
penalties need to be inflation-proof. Also, he agreed with a
previous speaker that Sections 2 and 6 need to be more robust.
Regarding oil trucking, he expressed support for contingency
plans for trucking and observed BlueCrest is producing from the
Cosmopolitan unit adjacent to Stariski Creek on the Kenai
Peninsula. Because there is no pipeline to the Tesoro Refinery,
BlueCrest is running several trucks per day north on the
Sterling Highway. He said BlueCrest has been open with its
plans and has generally done a good job reducing risk, but the
riskiest part of BlueCrest's business plan is moving the oil
north and crossing several important salmon streams, namely,
Stariski Creek, Deep Creek, Ninilchik River, Kasilof River, and
Kenai River; driving on icy roads is challenging and stream and
river crossings are especially risky. Mr. Shavelson reviewed
the importance of the streams and rivers to the tourism, sport,
commercial, and subsistence economies, therefore [trucking
companies] need a rapid response contingency plan in place
should there be a spill in a river. He pointed out there are
costs to producing, moving, and using oil, and he questioned
whether the cost would be borne by the publicly-owned land,
water, and fishery resources, or by oil producers and society.
1:53:54 PM
STEVE CATALANO, Spokesperson, Cook Inlet Regional Citizens
Advisory Council (CIRCAC), informed the committee CIRCAC is a
nonprofit corporation organized and federally mandated under the
provisions of Section 5002 of the Oil Pollution Act of 1990 [OPA
90], exclusively for the oversight, monitoring, assessing, and
evaluation of oil spill prevention safety and response plans,
terminal and oil tanker operations, and environmental impacts of
oil tanker and oil terminal operations in Cook Inlet. [CIRCAC]
consists of thirteen members from seven communities including
Alaska Native groups, commercial fishing and aquaculture,
tourism, recreational, and environmental interest groups all of
which have a significant stake in the environment and resources
at risk from oil production and transportation in the region.
[CIRCAC] supports HB 322 in its current form, including the use
of a mechanism to annually increase penalties based on the
Anchorage consumer price index for January 2018 as the base
index. Further, CIRCAC supports enhanced civil penalties to
deter future noncompliance due the importance to discourage oil
discharges and to encourage oil spill prevention and a proper
response when prevention measures fail.
REPRESENTATIVE PARISH asked whether mitigations completed by
responsible parties after a spill are sufficient to reverse the
damage to fisheries.
MR. CATALANO related the operators in Cook Inlet are responsible
and with good oversight by the state there is a complete
response.
REPRESENTATIVE PARISH questioned whether CIRCAC is familiar with
the occurrences totaling about 15,000 gallons that were spilled
last year.
1:57:10 PM
MR. CATALANO said he is familiar with the crude oil spills.
CO-CHAIR JOSEPHSON expressed his understanding the Prince
William Sound Regional Citizens' Advisory Council is funded as a
caretaker of Prince William Sound, and CIRCAC is similar, but
without staffing and resources.
MR. CATALANO explained both organizations were formed under
[Section 5002] of OPA 90 and both are tasked with the same
responsibilities; however, CIRCAC has a smaller staff and a
different metric for funding.
CO-CHAIR TARR asked Mr. Catalano to describe the process for
contingency plans.
MR. CATALANO advised spill contingency plans are on a five-year
renewal cycle; after five years, a plan holder submits an
application to the state for review and public comment. After
public comment, the state comments and requests additional
information from the company in response to both state and
public comments.
CO-CHAIR TARR observed there are requirements for live drills.
MR. CATALANO said companies are required to hold an annual drill
which may occur over multiple days; in addition, after a major
change, a contingency plan can be amended after public review.
REPRESENTATIVE BIRCH directed attention to the bill on page 9,
[lines 2-3], which read:
(2) "oil" means crude oil, petroleum, and any
substance refined from petroleum.
REPRESENTATIVE BIRCH surmised the aforementioned definition
includes asphalt and any product refined in Alaska.
2:02:08 PM
The committee took a brief at-ease.
2:03:17 PM
CO-CHAIR JOSEPHSON noted the abovementioned definition applies
to [HB 322] Section 12: Administrative penalties for discharges
of oil and crude oil.
2:03:39 PM
CO-CHAIR JOSEPHSON opened public testimony. After ascertaining
no one wished to testify, public testimony was left open.
[HB 322 was held over.]
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