Legislature(2017 - 2018)BARNES 124
02/09/2018 01:00 PM House RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HB322 | |
| HB305 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 305 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 322 | TELECONFERENCED | |
HB 322-OIL SPILLS/POLLUTION:PENALTIES;PREVENTION
1:06:44 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."
1:08:04 PM
AVES THOMPSON, Executive Director, Alaska Trucking Association,
Inc., paraphrased from the following written testimony [original
punctuation provided]:
Thank you. Co-Chairs and members of the committee, I
am Aves Thompson, Executive Director of the Alaska
Trucking Association. The Alaska Trucking Association
is a state wide organization representing the
interests of our nearly 200 member companies from
Barrow to Ketchikan. Freight movement is an essential
element of our economy and impacts all of us each and
every day.
Relative to contingency plans in Section 13-18 in
HB322, 49 CFR part 130, already prescribes contingency
plans for the motor transport of oil. I'll read some
highlights from Part 130 regarding contingency plans
for oil bulk transport.
Contingency Plans for Oil bulk transport:
49 CFR 130. Oil spill prevention and response plans
Prescribes prevention, containment and response
planning requirements of the Department of
Transportation applicable to transportation of oil by
motor vehicles and rolling stock.
49 CFR 130.2 Scope (a) The requirements of this part
apply to --- 1. Any liquid petroleum oil in a
packaging having a capacity of 3,500 gallons or more;
and 2. Any liquid petroleum or non-petroleum oil in a
quantity greater than 42,000 gallons per packaging.
49 CFR 130.3 General Requirements No person may offer
or accept for transportation or transport oil subject
to this part unless that person--- (a) Complies with
this part; and (b) Has been instructed on the
applicable requirements of this part
49 CFR 130.31 Response Plans (a) No person may
transport oil subject to this part unless that person
has a current basic written plan that: goes on with
a list of requirements
The Alaska Trucking Association believes that since
the federal requirements already prescribe a
contingency plan for oil transporters of both crude
and refined product, sections 13-18 in HB322 are not
necessary.
Secondly, to dispel the notion that drivers
transporting oil are irresponsible, please note the
following training and retraining requirements to
drive such a rig. These men and women are highly
trained professionals who are committed to safety not
only for themselves but for other motorists as well.
Our drivers have families who live, work and play in
Alaska and want their outdoor experience to be free of
contaminated soil or streams. They are as concerned
about their environment as you are. Without truck
drivers driving trucks, Alaska would stop?
Hazardous Materials Driver Requirements
First, the driver will have to pass the test for their
hazardous materials endorsement (49 CFR 383). The HME
is required for all loads of placarded hazmat, which
includes all bulk transport of petroleum products. To
obtain an HME, a CDL holder must: a) demonstrate that
they can safely and competently transport hazardous
materials and are aware of the specific safety
requirements for doing so and b) pass a fingerprint-
based background check administered by the
Transportation Security Administration that checks the
driver against: ? Immigration databases, ?
Identification database, ? The FBI's NCIC database of
all known criminals and arrestees in the United
States, and ? The Terrorist Watch List
If the driver fails any of these checks (criminal
disqualifying factors available at 49 CFR 1572.103),
the endorsement is not issued.
Of course, because the driver is also operating a tank
trailer, a tank endorsement will also be required.
The tank endorsement requires the driver to
demonstrate that they know how to safely operate a
tank vehicle. Tank vehicles differ from traditional
Class 8 box trucks in 2 important respects: they have
a higher center of gravity and are subject to "slosh"
(yes, that's the technical term for it) where breaking
or accelerating the vehicle causes the liquid in the
tank to move in the opposite direction. This slows
acceleration and means that stopping distances are
longer. After a driver obtains a tank endorsement,
their motor carrier must also administer a road test
to that driver to double check that the driver can
safely operate a tank vehicle and understands the
differences to operate safely. (49 CFR 391.31)
Switching over to training, all drivers operating
trucks carrying hazmat must have several types:
? General awareness (49 CFR 172.704(a)(1)): Which
includes knowledge of how to respond to an emergency,
where on the shipping paper to find contact info for
safety and environmental remediation in the case of a
release, and how to most efficiently
? inform enforcement or emergency response of the
hazardous items in the load should a clean up become
necessary. ? Function-specific (172.704(a)(2): Means
requiring the driver to learn the specific safety and
welfare requirements that attach to trucks
transporting hazardous materials. Drivers in the tank
field will have driver-specific training, tanker-
specific training, and, sometimes training on the
specialty type of tank they're operating. ? Safety
training (172.704(a)(3)): Which specifically includes
"emergency response information," and "measures to
protect the employee" from a release. ? Security-
awareness training (172.704(a)(4)): General security
training is required for all loads of hazardous
materials The Transportation Security Administration
has developed a sample training that is widely used. ?
In-depth security training (172.704(a)(5): If the
petroleum load qualifies as a Class 3 Flammable Liquid
in Packing Group I or II (some petroleum products do,
some don't. Almost all crude oil does now, by DOT
rule), the motor carrier must also develop a security
plan. This security plan requires the motor carrier
to ensure they are securely: o Hiring and vetting
employees The background check on the HME takes care
of this for drivers o Protecting their facilities In
responsible plans, this includes protection from
terrorists getting in and spills getting it and o En-
route security Generally requiring "constant
attendance" of the load, which defends against
accidental releases.
There are other required trainings that might come in
to play for loading (PHMSA), unloading (PHMSA),
transport of hazardous waste (EPA), and others.
Not only are there state and federal regulations
governing the transport of oil, companies that
contract with the motor carriers place strict
environmental requirements on the motor carrier which
many times far exceed the regulatory requirements.
Insurance companies place additional requirements on
motor carriers to manage the risk involved in such
activities. Only the best survive in such a
competitive market place.
We urge that Sections 13-18 be stricken from HB322 as
duplicative and unnecessary. Thank you for your
attention.
1:14:45 PM
CO-CHAIR JOSEPHSON asked whether the two companies that are
trucking crude oil in Alaska are not required to have
contingency plans.
MR. THOMPSON expressed his belief [Title 49 Code of Federal
Regulations (CFR) Part 130: Oil Spill Prevention and Response
Plans] specifically requires that they do.
CO-CHAIR JOSEPHSON questioned whether said contingency plans are
"not copied to [the Department of Environmental Conservation
(DEC)]."
MR. THOMPSON advised CFR requires the contingency plans to be
maintained at the principal place of business and at the
location from where the trucks are dispatched.
CO-CHAIR JOSEPHSON surmised DEC does not receive the contingency
plans required by CFR.
MR. THOMPSON said correct. He restated the plans are available
at the principal place of business and at the point of dispatch.
CO-CHAIR JOSEPHSON asked Mr. Thompson if he agreed the bill does
not impact the regulation on the transportation of refined fuel.
MR. THOMPSON said yes. He remarked:
My understanding is that this bill deals, deals with
the transport of crude oil. However, throughout the
hearings I've heard several references to refined
product, and what about this and what about that, and
I just, so that's the reason that I mention that the
transport of refined product. Part 130 requires, in
my understanding of the law, requires that there be a
[contingency] plan for both crude oil and refined
product.
CO-CHAIR JOSEPHSON agreed there has been varied discussion in
this regard and media reports on a related topic.
CO-CHAIR TARR asked if there is a jurisdictional issue [between
DEC and the federal government] over the responsibility for a
cleanup of a spill.
1:19:10 PM
KRISTIN RYAN, Director, Division of Spill Prevention and
Response, DEC, said she was unaware of an existing
jurisdictional issue. The state is allowed to enforce or
implement federal standards; for example, the Department of
Transportation & Public Facilities (DOTPF) or DEC could request
a copy of the contingency plans for review.
CO-CHAIR TARR acknowledged requiring trucking companies to
produce a new plan would be duplicative, but suggested a company
could share its existing plan with DEC, although both
jurisdictions would need a physical copy of the contingency
plan. She asked whether DEC has the ability to request access
to the contingency plans.
MS. RYAN agreed DEC expertise could help companies with the
contingency plans and would benefit from an awareness thereof.
CO-CHAIR TARR remarked:
If these [contingency] plans are already being
prepared, you know, and they don't have a need to
prepare a new [contingency] plan but instead ... share
that [contingency] plan with DEC so that they can ...
take a look at it, and make sure everything looks
correct, does that address your concern about
duplication of effort?
MR. THOMPSON pointed out transporters of bulk oil products
adhere to strictly-enforced spill reporting requirements that
would provide specific information following a spill. He opined
there would not be "too much objection to sharing those plans"
but acknowledged he has not discussed this topic with ATA
members. He referred to [Title 49 Code of Federal Regulations
(CFR) Part 130.31 Response Plans], which states the specific
elements of the [contingency] plan. Further, he noted the
federal regulation applies to interstate and intrastate carriers
at various levels of volume. He concluded submitting a
contingency plan to another level of review would be duplicative
and unnecessary.
CO-CHAIR TARR surmised the contingency plans would be the same
whether they are prepared for state or federal government. In
addition, DEC needs access due to the preventative nature of a
contingency plan. She restated the idea of sharing information
rather than duplicating work.
1:25:46 PM
MR. THOMPSON inquired as to whether the bill envisions another
level of review and approval of the contingency plans by the
state.
CO-CHAIR JOSEPHSON stated
... I don't intend to offer any amendments to change
[contingency] plans relative to refined or non-crude
oil truck traffic. It's not in the bill now, and the
discussion is ... the genesis of it is, I suppose, the
bill, but it's not part of the bill.
MS. RYAN said the fact that companies hauling oil and refined
fuel in Alaska have already crafted prevention and response
plans is "exciting news to us and we're really looking forward
to working with the companies to make sure that maybe we can
participate when they're, they're conducting their drills and
exercises of those plans which are, which looks like is also
required by the federal law, so hoping to be in a more
collaborative role in the future ...." She pointed out DEC
functions in an approval role and reviews prevention,
contingency, and response plans, so DEC would seek to "add some
value there," especially because the plans are not submitted to
a federal agency for approval.
1:29:01 PM
REPRESENTATIVE BIRCH observed the bill is clearly duplicative
and confusing. He directed attention to the bill on page 7
[beginning on line 22, and continuing to page 9, lines 1-3],
which read:
(a) In addition to the actions available under AS
46.03.758 - 46.03.760, the department may assess an
administrative penalty against a person who causes or
permits a serious discharge or repeat discharges of
oil not permitted under applicable state or federal
law. (b) An administrative penalty assessed under
this section may not be less than $1,000 nor more than
$10,000 for the initial violation, and may not exceed
$24 a gallon of oil discharged. When assessing a
penalty under this section, the department shall
consider (1) the effect of the discharge on the
public health or the environment;
(2) reasonable costs incurred by the state in the
detection, investigation, and attempted correction of
the discharge; (3) any previous history of
compliance or noncompliance by the person with this
chapter, AS 46.04, AS 46.09, and AS 46.14; (4) the
need to deter future discharges; and (5) the extent
and seriousness of the discharge, including the
potential for the discharge to threaten public health
or the environment. (c) If a person fails to pay an
administrative penalty assessed under this section,
the department may bring an action to collect the
penalty. The amount of the penalty is not subject to
review by the court in an action to collect the
penalty described in this section. (d) In a
collection action under (c) of this section, the court
shall award the prevailing party full reasonable
attorney fees and costs incurred in the collection
action. (e) Action under this section by the
department does not limit or otherwise affect the
authority of the department to otherwise enforce this
chapter, AS 46.04, AS 46.08, AS 46.09, AS 46.14, or
regulations adopted under those statutes, or to
recover damages, restoration expenses, investigation
costs, court costs, attorney fees, or other necessary
expenses. The court shall set off against a judicial
civil assessment subsequently awarded under AS
46.03.758, 46.03.759, or 46.03.760 an amount ordered
to be paid under this section by the same person for
the same discharge. (f) For the purpose of
determining the volume of discharged oil under this
section, the department shall include the produced
water, if any, that was mixed with the discharged oil
at the time of the discharge. (g) The department
shall annually increase the amounts of the
administrative penalties authorized in (b) of this
section by a percentage equal to the percentage of
increase in all items of the Consumer Price Index for
all urban consumers for Anchorage, Alaska. The index
for January of 2018 is the reference base index. (h)
In this section, (1) "discharge" means entry of oil
into or on the water or public land of the state,
regardless of causation, except discharges into an
enclosed and impervious oil spill containment area;
(2) "oil" means crude oil, petroleum, and any
substance refined from petroleum.
REPRESENTATIVE BIRCH said imbedded in the proposal is a
definition of a refined oil product. He directed attention to
Section 10 [on page 6, beginning on line 25, and continuing to
page 7, lines 1-5] which read:
(g) As used in this section, "economic savings" means
the economic benefit of noncompliance [THAT SUM WHICH
A PERSON WOULD BE REQUIRED TO EXPEND FOR THE PLANNING,
ACQUISITION, SITING, CONSTRUCTION, INSTALLATION AND
OPERATION OF FACILITIES NECESSARY TO EFFECT
COMPLIANCE] with the standard violated. When
determining an "economic savings," the court may
consider (1) deferred and avoided costs of compliance
with the standard violated; (2) a competitive
advantage gained by noncompliance with the standard
violated; and (3) income derived as a result of
noncompliance with the standard violated from
operations that were not authorized or permitted.
REPRESENTATIVE BIRCH questioned the clarity of the
aforementioned language because it does not refer to quantities,
time limits, or "how that's going to be calculated." He asked
Mr. Thompson how the proposal would be assessed.
MR. THOMPSON opined there is no standard methodology to
determine the economic benefit of noncompliance, and expressed
his interest in knowing how that would be calculated. Also, the
provision related to indexing of the penalties to a cost of
living allowance seems new to state government, and he
questioned its place in the bill.
CO-CHAIR JOSEPHSON advised indexing [to a consumer cost index]
is found in Alaska law in the labor code related to minimum
wage, and in the criminal code, thus the bill is not "inventing
the concept of indexing." Furthermore, the term "economic
savings" already exists in AS 46.03, the statute under
discussion.
1:33:05 PM
REPRESENTATIVE PARISH returned attention to [Title 49 Code of
Federal Regulations (CFR) Part 130.31 Response Plans], which is
divided into two tiers: [subsection (a)], transport of oil when
there is a contingency plan retained on file; [subsection (b)],
transport of a quantity greater than 1,000 barrels or 42,000
gallons, and in the latter case, the contingency plan must be
submitted to the Federal Highway Administrator, Washington, D.C.
He asked for the extent of the burden on ATA members to provide
copies to the state.
MR. THOMPSON said [subsection] (a) refers to cargo tanks
carrying greater than 3,500 gallons and [subsection] (b) refers
to volumes of 42,000 gallons, which could not be legally
transported by a tanker truck.
REPRESENTATIVE PARISH restated his question relative to
[subsection] (a).
MR. THOMPSON said, "I don't believe that would be terribly
difficult. I don't want to speak for my membership at this
point, as I pointed out, I, we haven't discussed that particular
aspect of it. I guess my concern would be the review and
approval aspects of that process."
REPRESENTATIVE LINCOLN asked whether the current contingency
plans are reviewed and approved by a government agency.
MR. THOMPSON advised the contingency plans are required to be
prepared and maintained at certain locations and are subject to
inspections by enforcement officers - both state and federal -
which are also known as compliance reviews.
REPRESENTATIVE LINCOLN said, "Is that a yes or a no on review
and approval?"
MR. THOMPSON further explained an initial review and approval
would take place at the time of inspection, and corrective
action could be required; however, there is no advance submittal
or approval required by federal regulation.
1:38:20 PM
CO-CHAIR JOSEPHSON stated in [AS] Title 46, the penalties are
more severe for the spillage of crude oil than for non-crude
oil; he expressed his understanding Mr. Thompson testified the
state is not allowed to approve the contingency plans for non-
crude oil, but can inspect and review the plans. However, the
bill is related to crude oil transportation along the Kenai
River, where no contingency plans for trucks carrying crude oil
are required, and he asked for affirmation.
MR. THOMPSON said contingency plans are required for crude oil
transport by the code of federal regulation. He added, "Now
whether the state comes to look at those or not, in an
enforcement proceeding ... they're certainly available for
inspection and if they're found wanting, then I'm sure that
penalties would, would follow."
CO-CHAIR JOSEPHSON surmised the position of ATA is that
contingency plans are inspected at the time of a penalty, but
are not reviewed before an accident.
MR. THOMPSON said, "Yes, that's not my interpretation Mr.
Chairman, that's what the federal regulation says, and we try to
abide by the regulations."
REPRESENTATIVE PARISH pointed out the federal definition of oil
means "oil in, of any kind, or in any form, including but not
limited to petroleum, fuel sludge - I'm sorry - fuel oil,
sludge, oil refuse, and oil mixed with wastes other than dredged
spoil." He surmised there are already contingency plans on file
at the principal places of business of all truckers who are in
compliance, and that Mr. Thompson said it would not be a
considerable burden to provide copies to the state.
MR. THOMPSON opined it would not be a huge burden to share
reports. He restated he does not have permission from ATA
membership to issue a commitment on this issue on their behalf.
He restated his concern is related to an additional review and
approval process.
CO-CHAIR JOSEPHSON remarked:
Your position, for the association, is that the State
of Alaska should not play a role in needing to approve
crude trucking contingency plans, ... that we should
be powerless in terms of that issue.
MR. THOMPSON stated if federal regulations are met, that is
meeting the law as currently written.
CO-CHAIR JOSEPHSON returned attention to the provision in the
bill related to consumer price indices, and pointed out AS
46.03.758 was written in the Tenth Alaska State Legislature,
circa 1979. He asked whether Mr. Thompson's position is that
fines assessed in 1977-79 should not increase due to inflation.
MR. THOMPSON acknowledged some things go up, and some don't, and
restated his concern about indexing.
1:43:57 PM
REPRESENTATIVE JOHNSON asked Mr. Thompson if there is confusion
as to whether the bill applies to crude oil, all types of oil,
or mixed oil products.
MR. THOMPSON remarked:
... there is some blurring of the lines there, I
think, in the definitions as to whether this is crude
oil ... the co-chairman has made it clear that he
believes it is for crude oil only, and I think that
was the intent, but there are some definitions that
cause one to think that perhaps it might sort of slip
over into refined products ....
CO-CHAIR JOSEPHSON clarified that the contingency plans refer to
crude oil transportation; in Section 1, the bill refers to non-
crude oil - as in current law - and in Section 5 the bill refers
to crude oil. He stated the bill makes no changes relative to
the categorizations of oil.
REPRESENTATIVE JOHNSON stated:
... different parts of the bill indicate different
things. There's discharged crude oil, to determine,
include, so for volume for that includes produced
water mixed with the oil. There's also a section that
says, "discharged mixed with water or anything that
was mixed with the discharged oil," could be listed as
the total volume. It talks about anything that ...
"there will be damages that will be determined
according to toxicity, degradability, dispersal
characteristics of the substance discharged, the
sensitivity of the receiving environment and the
degree to which the discharge degrades the existing
environmental quality," so ... its not really specific
as to what that is that's being discharged.
REPRESENTATIVE JOHNSON continued to note definitions of oil and
oil discharges and suggested the definitions and references are
not just to crude oil.
CO-CHAIR JOSEPHSON acknowledged the existing law requires
careful reading and recommended the committee review the
PowerPoint presentations provided [at the bill hearing of
2/2/18]. He restated HB 322 makes no changes regarding
degradability or other features of the existing law, but updates
penalties and adds the contingency plan feature for crude oil.
1:49:01 PM
REPRESENTATIVE JOHNSON directed attention to the bill on page 2,
lines [7-8] which read [in part]:
losses from oil pollution for which, because of its
subtle, long-term, or unquantifiable nature
REPRESENTATIVE JOHNSON urged the committee to carefully define
terms because of their potential effects on industry.
CO-CHAIR JOSEPHSON pointed out the aforementioned section of the
bill has been existing law for decades. Further, AS 46.03
provides that [action by the responsible party] can mitigate its
penalties, which is unchanged by HB 322. The bill is
fundamentally about updating 40-year-old [provisions].
CO-CHAIR TARR provided her interpretation of Representative
Johnson's concerns.
REPRESENTATIVE BIRCH raised a point of order that invited
testimony is open and suggested the committee complete witness
testimony before beginning debate on the bill.
REPRESENTATIVE PARISH asked Mr. Thompson whether the following
is correct: a contingency plan, filed in accordance with
federal code, is not subject to external review unless audited.
MR. THOMPSON said yes. He explained the state and federal
governments can review and approve the plans. Firstly, the
Federal Motor Carrier Safety Administration, U.S. Department of
Transportation (USDOT), has enforcement officers who conduct a
review of new entrants to trucking - similar to a compliance
review - and corrections can be made at that time. Secondly,
the Federal Motor Carrier Safety Administration has enforcement
personnel in Alaska who perform compliance reviews at cargo tank
facilities to check equipment, drivers' records, and contingency
plans, also providing an opportunity for corrective action.
REPRESENTATIVE PARISH questioned whether the aforementioned
procedures occur in Alaska.
1:56:13 PM
MR. THOMPSON said yes. He suggested further information in this
regard is available from the division of Measurement Standards
and Commercial Vehicle Enforcement, DOTPF. In further response
to Representative Parish, he said he does not monitor the
frequency of inspections.
CO-CHAIR JOSEPHSON related DEC's estimate that the bill would
cost all industries that transport fuels a [combined total] of
an additional $75,000 annually; he questioned whether industry
"[would] survive," after paying an additional $75,000.
MR. THOMPSON asked for clarification.
CO-CHAIR JOSEPHSON directed attention to [Fiscal Note
Identifier: HB322-DEC-SPAR-02-01-2018] which read [in part]
[original punctuation provided]:
Change in Revenue:
The amount of revenue generated from existing civil
penalty amounts varies significantly from year to year
and is dependent on several factors including the
number of releases that occur, specific details of the
releases, as well as the status and length of civil
actions/litigation. Over the past three fiscal years,
the Department has received an average of
approximately $150.0 per year associated with civil
penalties from releases of oil or hazardous
substances. With the increases of penalty amounts
provided in the bill and basing estimates on recent
data, it is estimated an additional $74.7 of revenue
will be received into the Prevention Account of the
Oil and Hazardous Substance Release Prevention and
Response Fund, with an annual increase based on
average inflation rates.
MR. THOMPSON recalled previous testimony that there are two
companies in Alaska transporting crude oil, and [increased costs
of] $37,500 each may be an onerous burden.
CO-CHAIR JOSEPHSON said:
... you're conflating all industries that transport
this sort of hazardous or fuel material and just the
C-plan carriers, and I'm talking about hundreds and
hundreds of transporters of all manner, could be
airplane companies, could be the railroad, all of them
together, according to the department, would pay
$75,000 more under the bill.
REPRESENTATIVE RAUSCHER suggested Representative Johnson was
concerned about increased fines and also unseen costs to manage
the details of the legislation, which would affect industry
profits.
MR. THOMPSON closed, noting there are two carriers currently
transporting crude oil: one carrier transports oil from Anchor
Point to Nikiski, and the other, located on the Kenai Peninsula,
has been transporting crude oil by truck for 30-40 years. He
opined this activity has continued safely and conscientiously
without significant spills.
REPRESENTATIVE LINCOLN requested additional information from DEC
that justifies its estimate of $75,000.
2:02:28 PM
KARA MORIARTY, President/CEO, Alaska Oil and Gas Association
(AOGA), provided a PowerPoint presentation entitled, "AOGA
Alaska Oil and Gas Association HB 322 Testimony," dated 2/7/18.
She said AOGA is a private trade association representing the
majority of oil and gas producers, explorers, refiners, and
transporters of Alaska's oil and gas, and her testimony reflects
the opinion of its membership (slide 2). Ms. Moriarty stated
the industry is committed to safety and seeks to diligently
prevent and prepare for the unfortunate instance of a spill; in
fact, the industry is already prepared with a robust response
capability in the event of a spill. Companies engaged in, or
who intend to undertake oil and gas exploration, development,
production, or transportation, are required to have current
contingency plans in place, and sufficient equipment available,
and to exercise both plans and equipment at an annual cost to
each operator of $2 million to over $8 million. Further,
companies are members of spill response cooperatives such as
Cook Inlet Spill Prevention and Response, Inc. (CISPRI), and
Alaska Clean Seas (ACS), which provide personnel, equipment, and
training for response to an oil spill. Membership fees for oil
spill response organization can range from $500,000 to $100,000
in addition to annual fees; in fact, Alyeska Pipeline Service
Company (APSC) conducted over 200 spill drills and exercises
last year. Ms. Moriarty described the procedures and costs
attributed to the Ship Escort/Response Vessel System (SERVS),
APSC (slide 3). She said if the Division of Spill Prevention
and Response (SPAR), DEC, responds to an oil spill, DEC almost
always recovers the full cost of the response, which cannot be
said for non-oil industry facilities. She directed attention to
slide 4, which illustrated the 22-year average for the number
and volume of all spills in Alaska is trending down. Slide 5
illustrated about one-quarter of all spills are sourced from
oil-related facilities. From fiscal year 2010 (FY 10) to FY 14,
oil and gas exploration and production accounted for 29 percent
of the total spill volume by facility. Slide 6 further
illustrated crude oil spills from FY 15-FY 17 accounted for less
than 2 percent of all spills in Alaska by volume. She pointed
out Section 5 of HB 322 would force DEC to include produced
water in the calculation of a spill; she acknowledged there can
be crude oil in produced water, however, the volumes and number
of produced water spills are also trending downward (slide 7).
2:10:25 PM
MS. MORIARTY observed if the purpose of the bill is to increase
fines and penalties to deter spills, there is no reason to do so
because the oil and gas industry consists of Alaskans and
environmentalists who want to protect Alaska; furthermore, the
industry has direct economic incentives to prevent spills. For
example, the costs of prevention, cleanup, and restoration are
tremendous deterrents for industry and would probably exceed a
fine or penalty. Although the intent of the bill may be to
incentivize better behavior, AOGA believes fewer spills is the
goal of all Alaskans. In addition, there is a perception that
the bill is a revenue generator for SPAR, and she noted SPAR is
funded by industry and a one penny per gallon assessment on
wholesale refined fuel products. The state's oil and hazardous
substance release response fund - also known as the "470 Fund" -
is the primary source of revenue for SPAR and ensures the
state's ability to respond to a spill. Using the 470 Fund, SPAR
conducts prevention, initial response, and contaminated site
cleanup activities, including reviewing discharge prevention and
contingency plans (C-plans), conducting training response
drills, and verifying cleanup organizations' proof of financial
ability. She pointed out, although the 470 Fund's purpose is
cleaning up and preventing spills, the fund has been
appropriated to non-spill projects such as campgrounds,
airports, tank farms, and privately-owned facilities, which may
have reduced the corpus of the fund during the 1990s. Ms.
Moriarty also noted SPAR has not responded to AOGA suggestions
that may have preserved the fund. She concluded additional
revenue for SPAR should be collected from all affected parties
(slide 8).
2:15:03 PM
MS. MORIARTY turned to certain provisions of the bill. [AOGA]
questions the necessity of increasing fines or linking penalties
to inflation in order to change behavior; she restated the cost
of remediation is a deterrent to the industry, and characterized
the provision as an automatic tax increase. She asked for
clarification of the information that concluded the bill was
necessary. Section 5 expands the definition of oil spills to
include produced water and she said although produced water
contains a small amount of crude oil, it does not create equal
damage, and should not be treated as the same. [AGOA] considers
Section 10 to be subjective, ambiguous, and open to the abuse of
confidential financial records to determine the economic benefit
of noncompliance. In Section 12, the proposed administrative
penalties are unclear and subjective, and grant DEC broad
discretion without limitations. Relative to the need for DEC to
approve commercial motor vehicle transportation C-plans for
trucks that transport crude, she said the bill - because of the
definition of processed water - would apply to vehicles on the
North Slope and Cook Inlet, and thus would affect trucks that
move drilling water and wastewater. [AOGA's] members believe
the provisions do not provide additional protection because the
affected trucking companies already comply with federal
regulations. She cautioned the bill could increase the duties
of SPAR, although the [attached] fiscal note does not include
additional staffing, and AOGA members report SPAR staff may not
be able to meet timelines for ongoing operations. [AOGA] agrees
with the Alaska Trucking Association that this section should be
removed from the bill; if the section is not removed, AOGA urges
for an amendment allowing trucking operations to continue under
USDOT mandates if DEC causes delays. Ms. Moriarty stated AOGA
is not in support of the bill and urged the committee to search
for alternatives.
2:20:54 PM
CO-CHAIR JOSEPHSON recalled past legislation which added a penny
to the state gasoline tax as a source to fund SPAR. At that
time, Ms. Moriarty's position was that because the oil and gas
industry had supported SPAR for years, all industries and the
public should share in the cost; subsequent to passage of the
legislation, Alaska residents now pay an additional penny for
gas to fund SPAR. He questioned why AOGA does not now support
an adjustment to fines and penalties that are assessed to
industry and to non-crude oil industry parties who are
responsible for oil spills.
MS. MORIARTY pointed out AOGA members pay the costs of preparing
for oil spill response, and increasing their penalties along
with others in the industry is not a deterrent; she restated her
request for specific examples to justify additional legislation
aimed at repeat offenders.
REPRESENTATIVE PARISH returned attention to slide 7 and asked
why the number of spills has increased, and the volume of
produced water spilled since [2011] has remained even, although
oil production has decreased by approximately two-thirds.
MS. MORIARTY explained more produced water than crude comes from
an oil well in a 40-year-old field. In fact, as the production
of oil declines, and the amount of produced water increases, the
number and volume of produced water spills may correlate, but
[slide 7] shows the opposite. In further response to
Representative Parish, she said she would provide more
information on the impacts of potential harm from produced
water.
2:29:01 PM
REPRESENTATIVE PARISH asked specifically for the factor of harm
represented by a gallon of crude compared to produced water.
CO-CHAIR JOSEPHSON opened public testimony. After ascertaining
no one wished to testify, public testimony was closed.
REPRESENTATIVE RAUSCHER returned attention to slide 6 and
inquired what substances other than crude oil have been spilled.
MS. MORIARTY advised the SPAR spill response report indicates a
range of incidents including home heating oil spills or oil
spills by industries other than oil and gas industries.
2:32:36 PM
[HB 322 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| AK Trucking Assn, 49 CFR Part 130.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| AK Trucking Assn testimony.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB 322 - AOGA Testimony - Final - 2.7.2018.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| 1 2.7.2018 - DEC Response to H RES re HB322.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| 2 OHSRRF 4th Qtr 2017.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB 322 Sectional Analysis.docx |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB 322 Sponsor Statement.docx |
HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 HRES PwrPt for Feb 2.pdf |
HRES 2/2/2018 1:00:00 PM HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| HB 322 DEC Spill Penalties Overview 2.2.18.pdf |
HRES 2/2/2018 1:00:00 PM HRES 2/9/2018 1:00:00 PM HRES 2/12/2018 1:00:00 PM |
HB 322 |
| SPAR Spill Penalties Overview Presentation.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB 322 Sectional PwrPt.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB322 Fiscal Note - DEC-SPAR 2.1.18.pdf |
HRES 2/9/2018 1:00:00 PM |
HB 322 |
| HB305 Transmittal Letter 1.25.2018.pdf |
HRES 2/9/2018 1:00:00 PM HRES 2/23/2018 1:00:00 PM HRES 2/26/2018 1:00:00 PM |
HB 305 |
| HB305 ver A 1.25.2018.pdf |
HRES 2/9/2018 1:00:00 PM HRES 2/23/2018 1:00:00 PM HRES 2/26/2018 1:00:00 PM |
HB 305 |
| HB305 Sectional Analysis ver A 1.25.2018.pdf |
HRES 2/9/2018 1:00:00 PM HRES 2/23/2018 1:00:00 PM HRES 2/26/2018 1:00:00 PM |
HB 305 |
| HB305 Fiscal Note DEC-SPAR 1.25.2018.pdf |
HRES 2/9/2018 1:00:00 PM HRES 2/23/2018 1:00:00 PM HRES 2/26/2018 1:00:00 PM |
HB 305 |
| HB305 Supporting Document - Fact Sheet 1.25.2018.pdf |
HRES 2/9/2018 1:00:00 PM HRES 2/23/2018 1:00:00 PM HRES 2/26/2018 1:00:00 PM |
HB 305 |