Legislature(1993 - 1994)
04/17/1993 10:00 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 238: OIL/HAZARDOUS SUBS. RELEASE RESPONSE FUND Number 101 CHAIRMAN WILLIAMS explained that HB 238 had first been heard in the Resources committee on March 24, 1993, and that a draft committee substitute had been prepared by the bill's sponsor, Representative Joe Green a few days prior to this meeting, which had been distributed to legislative information offices (LIO's) throughout the state. He told those present in Juneau and at the LIO's statewide that they were welcome to comment on either version of the bill, as well as on the broader issues of oil spill response, clean- up and restoration. He noted that no motions would be made, action accepted by the chair, nor action taken at this meeting. Number 132 CHAIRMAN WILLIAMS also noted that a number of state officials were present at the Juneau site, if there were any questions. He explained that there was new material in members' packets, which included the draft CS to HB 238, as well as written testimony and a report by the Prince William Sound Regional Citizen's Advisory Council (PWSRCAC). Number 156 REPRESENTATIVE JOE GREEN, CHAIRMAN OF THE HOUSE SPECIAL COMMITTEE ON OIL AND GAS WHICH SPONSORED HB 238, explained that the bill's CS is a compilation of recommendations and agreements made among various factions concerned with the oil and hazardous substance spill response fund. He said the bill was initiated in response to a perception that liberties were being taken with the "nickel a barrel" oil surcharge fund. He remarked that the original intent of the fund was that it would be capped at $50 million. The current balance of the fund, he said, was around $20 million. REPRESENTATIVE GREEN, referring to the revised draft CS for HB 238, said it proposes a split in the nickel a barrel surcharge. Two cents per barrel, he advised, would go into a spill abatement and contingency account that would be used for oversight and the various functions performed by the Department of Environmental Conservation (DEC), the Regional Citizens' Advisory Councils (RCACs) and community involvement groups. REPRESENTATIVE GREEN said the other three cents per barrel would take over the obligation to establish equipment and facilities around the state, and to establish remote response depots which still do not exist four years after the Exxon Valdez oil spill. After those purposes are met, he explained, the three cent per barrel contribution would go toward building up the $50 million fund. CHAIRMAN WILLIAMS announced the committee would next begin to take testimony from the various sites around the state. He asked individuals testifying to limit their testimony to three minutes, and those testifying on behalf of organizations to speak for no more than five minutes. Number 253 JAMES STUDLEY, testified from Haines in agreement with the intent of HB 238, but felt the bill needed to include provisions to get money to communities that are directly responsible for planning and prevention, purchasing response equipment, and providing training. He said it would be important to have capable management of funds at a local level. Without provisions in a bill such as HB 238, he said, the costs of such activities would be passed off to the communities themselves. Number 340 RODNEY "ROCK" AHRENS, HAINES FIRE CHIEF, testified from Haines, and told the committee that his main concern is with getting funds to the communities for local emergency planning committees (LEPCs). He suggested that clear provisions be made in HB 238 for pass-through funding for those activities. Number 356 MARY MCBURNEY, EXECUTIVE DIRECTOR FOR THE CORDOVA DISTRICT FISHERMEN UNITED, testified from Cordova in opposition to HB 238. She stated that splitting the surcharge would be in the oil industry's interest. The most important lesson of the Exxon Valdez oil spill, she explained, was the need for preparedness. House Bill 238 takes away money for basic prevention and response, she said. She also expressed concern over changes proposed in HB 238 that would make the fund accessible only in response to "catastrophic" spills in excess of 100,000 barrels. MS. MCBURNEY called the proposed two cents per barrel inadequate to meet the need for preparedness and response to spill emergencies, and finally stated that she opposed HB 238 because it attempts to fix what is not broken. Number 399 NANCY LETHCOE, PRESIDENT OF ALASKA WILDLIFE, RECREATION AND TOURISM ASSOCIATION, testified from Valdez. She discussed the reasons for the association's concerns over HB 238. First, she said the bill addresses broad public policy questions, but was drafted and introduced with input from only a single industry. Second, she was unconvinced changes were needed in the present fund, which estimates predicted would reach its $50 million cap level in approximately two years without HB 238. Third, she said HB 238 increases the risk that tourism in Alaska will be affected by an oil spill. MS. LETHCOE continued describing her reasons for opposing HB 238. The fourth reason, she said, was that the bill reduces the ability to prepare for and respond to a spill. Fifth, she noted that copies of the draft CS were not distributed until two days before this meeting. She felt this was not sufficient time to respond to as major a revision as the change to a 100,000 barrel catastrophic spill definition. Finally, she was concerned that the two cent per barrel charge was inadequate and that no provision had been made for inflation proofing the fund, particularly in light of declining oil revenues. Number 477 STAN STEPHENS, PRESIDENT OF THE PRINCE WILLIAM SOUND REGIONAL ADVISORY COUNCIL (RCAC), testified from Valdez in opposition to HB 238. He said the bill threatens to roll back efforts to protect citizens of Alaska. He said that the changes proposed in HB 238 indicate that the legislature has not only forgotten the lessons of the Exxon Valdez Oil Spill, but rips them right from the pages of the history books. House Bill 238 would return the DEC budget to levels before the 1989 spill, and would eliminate many of the purposes of the fund, including a reduction in requirements for clean-up and restoration of the environment. Number 500 MR. STEPHENS referred to Section 25 of HB 238, which calls for funding for the abatement account at two cents per barrel, calling it grossly insufficient and restricting of restoration efforts. He said the bill made inadequate provisions for training and preparedness, and for the filing of master plans. Section 34, he said, amends the definition of "threatened release" from "imminent danger" to "imminent release," and the definition of "property" is changed to include only tangible personal property, excluding the environment. Number 534 MR. STEPHENS expressed concern that Section 73 removes requirements for an annual review of the state master plan. Section 14, he said, limits public participation in annual reviews. He was also concerned with the proposed version of HB 238 in its prohibition of the DEC charging user fees. Number 558 CHAIRMAN WILLIAMS noted that Representatives Bill Hudson, Jeannette James and Kay Brown had joined the meeting. Number 560 JIM UDELHOVEN, REPRESENTING AN ALLIANCE OF OIL INDUSTRY SUPPORT BUSINESSES IN ALASKA, testified from Kenai, voicing strong support for HB 238. Alaska needs a fully-funded first response fund to protect its land and water, he explained, adding that the DEC has spent money from the fund irresponsibly. He stated that HB 238 corrects past abuses of the oil and hazardous substance release response fund. Number 580 LARRY SMITH, COOK INLET OIL REFORM ALLIANCE, stated that public hearings should always be part of the process of developing public policy. He said there was merit in the idea of having two separate funds, and noted that California has two four cent a barrel funds. One is for petroleum and one is for other hazardous substances. California also has a 25 cent a barrel fund which caps at $50 million for big spill responses. In addition to that cap, he explained, the California plan has a mechanism for increasing the per barrel contribution to one dollar a barrel should the state need to launch a response. That state has the ability to respond to the limit of its faith in credit. Number 616 MR. SMITH suggested that if Alaska proceeds with the idea of having two separate funds, they should each be funded at a nickel a barrel, and should be combined with a borrowing mechanism and sliding loan repayment system. He stated that this was the wrong time to cut state environmental services. He noted that the oil industry receives large tax breaks from the state, which amounts to the state kicking in about 25% of the nickel a barrel surcharge. When the oil and hazardous substance release response fund was established in 1989, he said, the first $20 million was contributed by the people of Alaska through legislative action. Number 646 BILL O'BRIEN testified by teleconference from Anchorage. He spoke in support of the split of the nickel a barrel contribution into two separate funds as proposed in the draft CS for HB 238. He said it appeared money had been siphoned off the fund for unintended purposes. House Bill 238, he said, was not complicated legislation and was not a major policy shift. He called the bill a good compromise. SHEILA GOTTEHRER, EXECUTIVE DIRECTOR OF THE PRINCE WILLIAM SOUND REGIONAL CITIZENS ADVISORY COMMITTEE (PWSRCAC), said that organization represents a number of spill-affected communities and Native organizations. She cautioned the committee that HB 238 would affect those communities and said that the CS would constitute major changes in public policy. Because of this, she said the public needs more time to understand the complexity and impact of the bill. She called the proposed CS an improvement over the original version of HB 238, but added that it was "still a wolf in sheep's clothing." TAPE 93-46, SIDE B Number 000 MS. GOTTEHRER offered the following comments regarding HB 238: First, she suggested the level of funding should be determined each year through the budget process. Second, she noted that the "470" fund would reach $50 million in FY 96 without HB 238. Third, she expressed concern that under HB 238, only "catastrophic" spills were considered to pose a threat. She said that the proposed two cent a barrel level would not be sufficient to meet the intended purposes, resulting in Alaska returning to the situation present in the days before the 1989 oil spill. MS. GOTTEHRER expressed concern with the failure of the CS to meet the objective of having funds accessible to respond in a timely manner to a spill. It cripples the DEC's ability to prevent and respond to spills, she added. Number 098 MARY FORBES, KODIAK AUDOBON SOCIETY, testified from Kodiak in opposition to HB 238 and the proposed CS. She stressed the need to invest in prevention of oil spills, and also pointed out the need to continue the involvement of citizens' oversight councils. Number 125 KRISTIN STAHL-JOHNSON, PRINCE WILLIAM SOUND REGIONAL CITIZENS ADVISORY COMMITTEE, testified in opposition to HB 238 and the proposed CS. The proposal to split the nickel a barrel fund into separate two cent and three cent funds, was "penny wise but pound foolish." She urged the committee not to pass HB 238. Number 195 DENNIS MCCARTY, KETCHIKAN GATEWAY BOROUGH ASSEMBLY MEMBER, testified from Ketchikan with concerns about the capital funding portion of HB 238. Funding for a ferry, he said, was important in addressing the need to have appropriate equipment available in the case of a spill, especially if a major spill occurred in Southeast Alaska. He also noted that the state marine highway vessel, AURORA, was called into service during the Exxon Valdez clean-up. MR. MCCARTY, in regard to previously stated concerns that a ferry could not respond because of the difficulty in discharging passengers and cargo in an emergency, said that it is possible to coordinate such a transition if needed, provided the state is adequately prepared and trained personnel are ready to respond. He stressed that the plan to fund the ferry was not a boondoggle. BOB WEINSTEIN, KETCHIKAN CITY COUNCIL MEMBER, noted that his comments did not necessarily reflect the feeling of the council. He commented that he shared concerns with the sponsors of HB 238 about past mis-uses of the response fund. He felt, however, that those problems could be addressed without major changes to public policy. He stressed the importance of having vessels available to respond to an emergency. He did not feel the oil industry had met its obligations to the state to provide prevention and response capabilities. Number 330 COLIN READ, ECONOMICS PROFESSOR AT THE UNIVERSITY OF ALASKA FAIRBANKS, testified from Fairbanks. He said that HB 238 does not make economic sense, in large part because it does not provide for inflation-proofing the funds. He also objected to the artificial definition of "catastrophic" spills, and said that it would not provide for clean-up of dangerous spills that don't happen to meet the definition set out in HB 238. He said the bill would result in constraining economic flexibility for Alaskan citizens to the benefit of the oil industry. Number 382 RANDY MCGOVERN, VICE CHAIRMAN OF THE STATE HAZARDOUS SUBSTANCE SPILL TECHNOLOGY REVIEW COUNCIL, testified from Fairbanks. He stated that with a proliferation of oil and other hazardous substance activities, Alaska is not the pristine wilderness it is perceived to be. The 470 fund, he said, made money available to the state to oversee or perform response activities, with cost recovery to come from the responsible parties. He reminded the committee of the frequency with which companies and even individuals leave behind toxic substances. Number 400 MR. MCGOVERN voiced his strong opposition to HB 238, calling it onerous and harmful to the citizens of Alaska's life and health. Of particular concern, he said, was the elimination of the public review process. Number 415 CHIP THOMA testified in Juneau in opposition to HB 238. He acknowledged that liberties had been taken in the administration of the oil response fund in the past, but felt that funds had not been used aggressively enough for prevention. He did not feel that the changes proposed in HB 238 were necessary. He voiced concern about inadequate equipment, and undermanning of vessels, and said the state is looking at another disaster if liberties are taken with the fund. Number 460 KARL BECKER, FISHERMAN AND MEMBER OF THE PRINCE WILLIAM SOUND CONSERVATION ALLIANCE, testified in Juneau. He expressed concern that the coastal communities stood to be most affected by an oil spill. One of his concerns was that citizens have continued involvement in legislative oversight, including the annual review of the state master plan, as well as assurance that citizens' oversight councils will be funded. He also cautioned that the split of the nickel a barrel fund weakens the state's ability to prevent or respond to spills. He asked that the Resources committee not pass HB 238 or the proposed committee substitute. Number 495 JACK BROWN, PRESIDENT OF THE COOK INLET REGIONAL CITIZENS ADVISORY COUNCIL (RCAC) testified from Homer. He noted his concern that because of HB 238, a number of projects that should be funded will be in limbo. He recommended that the legislature remember its obligations to the communities and citizens of Alaska. The DEC, he said, has the responsibility to review and certify spill response contingency plans and to establish depots for near-shore response. He asked that the committee table HB 238 and said that the Cook Inlet RCAC was willing to work with the legislature to find a compromise solution to the problems that exist in administering the fund. Number 528 KEN CASTNER, REPRESENTING FISHING INTERESTS OF THE COOK INLET REGIONAL CITIZENS ADVISORY COUNCIL, testified from Homer. He reminded committee members of hearings in the 1992 legislature on a bill related to liability for oil spill response, HB 540. He urged vigilance in assuring strong response capability, and noted frustrations with developing the near-shore response project. One such project last year, he said, had been funded and then postponed. He also stressed the importance of protecting coastal communities, which stand to be most affected by another major spill. A nickel a barrel, he said, goes a long way toward prevention. Number 558 GAIL PARSONS, EDUCATOR, testified from Homer in strong opposition to HB 238. She said the bill would undermine all that has been accomplished. She emphasized that the opinions of the children in the Homer schools reflects fear that another spill could ruin the beaches and kill fish, animals and birds in the area. She urged the legislature to defeat HB 238, which she said would eliminate reserve funds for restoration of the environment. She also asked for increased prevention efforts instead of diluting them as, she said, would be the result of HB 238. Number 593 WALT SONAN, FISHERMAN, testified from Seldovia. He said the proposal to divide the nickel a barrel fund into two funds would stretch the resources too thin. He also objected to the definition of "catastrophic" spills, stating that it limits the scope of response too severely. Any proposal to change the oil and hazardous substance release response fund, he said, needs further review. Number 616 MARILYN KVARFORD, MEMBER OF SELDOVIA OIL SPILL (SOS) RESPONSE TEAM, recommended the Resources committee not pass HB 238 as currently drafted. She suggested that more time be given to thinking about what the state needs in terms of equipment and training of personnel in the event of any size spill. If the nickel a barrel funds are going to be divided, she said, the larger portion should go toward prevention and response. Another suggestion would be to have two three-cent funds. She expressed disappointment that HB 238 does not provide for the near-shore demonstration project. MARNIE GRAHAM testified from Valdez. She said it appeared the purpose of HB 238 and the draft CS was to reduce the expenditures on oil spill prevention, response and clean-up. She cautioned against weakening the DEC's ability to prevent or respond to oil and hazardous substance spills. Alaska's environment supports the livelihood of many in the communities of the state. Regarding the DEC's spending from the 470 fund, she commented that it is the legislature's responsibility to make appropriations for spending. She urged the committee to not pass HB 238 or the draft CS. Number 670 JOANNE LUNDFELT OF VALDEZ presented written testimony as read to the committee by Nancy Lethcoe. She objected to the unreasonably short time period for the public to respond to the draft CS for HB 238. She called the bill a radical change in public policy, undoing laws intended to protect Alaska's environment. She questioned whether the bill's primary purpose was to save the oil industry money or to enable the DEC to provide better prevention, spill response, clean-up and restoration. She said that HB 238 did not appear to meet the latter objective. More time was needed to study the issue, she said. TAPE 93-47, SIDE A Number 000 GERALD BROOKMAN testified from Kenai. He suggested that instead of the two and three cent funds proposed in the draft CS for HB 238, there should instead be a six cent and a four cent fund, for a total contribution of ten cents a barrel. He commented that the parties responsible for draining the state's resources should pay their fair share, and instead of weakening the fund, it should be strengthened. He referred to recent newspaper advertisements by oil companies in response to HB 238, and suggested that the oil industry accept change with good grace. He asked the committee to vote against HB 238. Number 084 CARL PORTMAN, RESOURCE DEVELOPMENT COUNCIL, testified from Anchorage. He said it was imperative that the fund be allowed to accumulate to $50 million, and that the fund be used only in a true emergency. He said the fund should not be used for citizens' oversight councils, which should be funded by the legislature if they are believed to be important. He commented that HB 238 is not a complex bill and does not constitute a major policy change. Number 129 DARCY RICHARDS, PROGRAM DIRECTOR OF THE ALEUTIANS WEST COASTAL RESOURCE AREA testified from Anchorage. She cautioned that the proposed legislation eliminates citizens' oversight, and she felt public input was critical. She stressed the importance of learning the lessons of the 1989 spill, and asked that the committee not pass HB 238. BOB BRODIE testified from Kodiak. He said that HB 238 reminds Alaskans to be vigilant and watch the legislature. He noted that he had been mayor of Kodiak at the time of the Exxon Valdez oil spill. He called HB 238 a waste of time and money, and called the efforts of the Alaska Oil and Gas Association to pass it a "smoke screen." He commented that if there were inappropriate uses of the 470 fund, there should be administrative remedies, which should involve participation of the citizens of Alaska. He did not believe there was anything salvageable in HB 238. Number 246 ALAIRE STANTON, MAYOR OF THE CITY OF KETCHIKAN AND VICE PRESIDENT OF THE SOUTHEAST CONFERENCE, commented that the potential for a spill in Southeastern waters exists everyday. She stressed the importance of the legislature allocating funds for capital needs, such as the ferry to be built with 470 funds, and said those funds should not be restricted. Regarding charges of mis-use of the 470 fund by the DEC, she said any problems could be corrected through administrative means, and not through legislation. Number 278 LYDIA RABOTTINI testified from Homer, and stated that the 470 fund was intended for prevention and first response. She said it was important for Alaska to learn from the Exxon Valdez oil spill that once the oil is in the water, it is too late to prevent damage. She commented that HB 238 would make prevention difficult. Number 291 DOUG YATES testified from Fairbanks, and explained that he works in the tourism industry. He said Alaska's real wealth is its clean air and water. Alaska's economic health will depend on the quality of its environment when the oil is gone, he added. Without funds to prevent spills, he said Alaska would be "just another pauper with its hand out to the federal government." He urged the committee not to let the oil industry design legislation that favors them, and added that the legislature should defeat efforts to change the 470 fund. Number 331 LARRY FANNING, JUNEAU FIRE CHIEF AND MEMBER OF THE CAPITAL CITY EMERGENCY PLANNING COMMITTEE, pointed out that the 100,000 barrel spill definition for "catastrophic" which is included in the draft CS for HB 238 overlooks the need for responding to spills which usually fall beneath that threshold. He said that in planning for oil emergencies, it is important to look at who will be doing the work. He described the case of the Exxon Valdez as evidence that the local agencies, such as fire departments, are usually first on the scene to try and contain the spill. Number 375 MR. FANNING referred to Coast Guard regulations that give industry a 48-hour response window, but stressed that this does not guarantee protection of the environment. He also referred to another area of HB 238 he felt needed attention. This related to the DEC's ability to transfer funds for hazardous material depot centers. He said it did not make sense that one agency charged with planning would not be associated by a direct tie with those that have the resource allocation. He recommended that depots be placed under the direct control of the DEC. MR. FANNING raised a third area of concern, that being funding for LEPCs. Those funds, he said, needed to be increased. He urged a proactive approach to the potential for another spill, including further restrictions on industry, such as triple-hulled tankers to reduce the risk of a spill. Number 410 RICHARD FINEBERG testified in Juneau. He told the committee members that he had been present in Valdez in 1989 during the clean-up of the Exxon spill. He said the state had experienced agonizing inefficiency in that response. He described two effects that HB 238 would have, which he described as "pernicious." First, he said, HB 238 slashes prevention and response mechanisms. Second, the bill seeks better accounting but creates a complex system which will cause greater confusion and will be back before the legislature in the future. MR. FINEBERG referred to tables prepared for the Senate Finance committee in members' packets, one of which showed the profits of the oil industry as $4.75 to $5 per barrel at the five cent a barrel surcharge level for calendar year 1991. He said the figures on line 14(c) put the issue in context. The second figure he referred to showed the after- tax profits as if the North Slope oil interests were one large corporation. He said those profits would be almost equal to those of the Fortune 500 corporations. MR. FINEBERG referred to a third table which showed that if the nickel a barrel surcharge was eliminated, oil industry profits would increase by approximately 2.5 cents per barrel, with the remaining 2.5 cents divided between the state and federal governments. Number 481 TIM ROBERTSON testified from Seldovia in opposition to HB 238. He explained that he had been among those who started the Seldovia Oil Spill Response Team (SOS), comprised of volunteers. He said the SOS Response Team is waiting for the state to support efforts to establish a response depot in Seldovia. If HB 238 is implemented, he said, that would never happen. He objected to attempts to do away with the citizens oversight councils, as well as to the appearance that the oil industry was taking precedence over other industries. He expressed dismay at the dismantling of the 470 fund, and urged the committee to not pass HB 238. Number 515 JUNE RUHLING testified from Seldovia with three points related to HB 238. First, she objected to the lack of funding for near-shore demonstration projects, which she said were needed for spill prevention in coastal areas. Second, she said HB 238 does not provide for public review of the state's master contingency plan. Third, she said that the three cent a barrel fund for a catastrophic spill could not be accessed for any spill less than 100,000 barrels. Her objection was based on the potential for damage from much smaller spills in an environmentally sensitive area. MS. RUHLING said the two cent portion of the fund would not be enough to cover prevention programs and response to smaller spills. She also said it would make more sense to increase the two cent fund to three cents. She asked that the committee not pass HB 238. Number 535 JOHN KVARFORD testified from Seldovia. He suggested the money from the 470 fund be spent the way it was intended, which would include projects like the near-shore demonstration team. Given new oil finds in the upper Cook Inlet, he said that project is even more important than ever, as well as increased spending for prevention, equipment, and training. Number 547 VIVIAN MENAKER, LYNN CANAL CONSERVATION, testified from Haines and questioned who would benefit from HB 238. The proposal to split the fund into two separate funds, she said, would not provide enough money for prevention and for clean-up of small spills. The three cent portion, she said, was unnecessary because of federal funding established through a 1990 act. MS. MENAKER said that HB 238 would reduce the DEC's ability to respond to a spill and would eliminate public oversight. She said that oversight capability is needed in Haines, given the potential for environmental damages with the development of the Windy Craggy Mine. She said that the present law does not need to be changed. Number 580 KRISTA ROGERSON testified from Valdez in opposition to HB 238. She expressed dissatisfaction with the amount of time to respond to the draft CS, and said that the bill and CS disempowers the DEC. Number 601 ERIC MYERS testified from Anchorage. He questioned whether there were real problems with the 470 fund. Regarding suggestions that the draft CS is a compromise, he called those suggestions an absurd reading of the situation. He described the proposed changes as amounting to "a frontal lobotomy" on the DEC's ability to deliver core prevention and response programs. MR. MYERS said that he had served for many years as a House Finance Committee Aide, and was involved in the preparation of the DEC's budget. In that regard, he was struck by the media blitz launched by the oil and gas industry concerning the 470 fund. He said the essential message was that the fund has been squandered, leaving no money for response to a major spill. He said the fundamental premise of the advertising campaign was incorrect, because $20 million was available. MR. MYERS called the claim a deliberate deception. The essential debate, he explained, was a matter of revisionist history on the part of the proponents of HB 238. He stressed that when the fund was established, there was a clear understanding that there would be essential on-going funding of state agency programs for prevention and response. He said this understanding was in contrast with the idea that the fund would just sit, waiting for an emergency "like the Maytag repairman." The central issue, he stressed, is who benefits from HB 238. MR. MYERS suggested that the only benefit of HB 238 is to oil producers who do not like to pay taxes. He said that the legislation was unnecessary. Number 653 CHAIRMAN WILLIAMS noted that Representative Gail Phillips was present. WALT PARKER testified from Anchorage in opposition to HB 238. Passage of the bill, he said, would seriously harm the state's ability to have strong prevention and response programs. He had been involved in planning and preparation for spills for 25 years, and currently serves as chairman of the Hazardous Substance Spill Technology Review Council. He noted that the views expressed were his own and not those of the council. Number 682 MR. PARKER cautioned that the state needs to continue to build up strong systems to control the transportation of oil in the marine environment, rather than go backward and begin the process again. He briefly described the history that led to the current situation, including the court case, Chevron vs. Hammond in 1979, which the state lost. In the 1980's, he said, the system for prevention and response collapsed completely. He referred to legislation in 1989 and 1990, and said it was never intended that the 470 fund should be inflexible. MR. PARKER said the prevention side is still extremely weak, with the same fleet that was available four years ago. He raised the point that when the state relaxed its presence in spill prevention and response, the Coast Guard also relaxed its regulations. TAPE 93-47, SIDE B Number 000 MR. PARKER said that to do the job right, the state should retain flexibility in administration of the 470 fund. Number 015 RUSSELL HEATH, EXECUTIVE DIRECTOR OF THE ALASKA ENVIRONMENTAL LOBBY (AEL), testified in Juneau. He reiterated that there had not been enough time to analyze the draft CS. He expressed thanks to the chair of the committee for holding this meeting and allowing public testimony. He referred to comments he said were made at the bill sponsor's press conference, which he said indicated the AEL had been contacted by the sponsor's office for their input in the development of HB 238. Mr. Heath acknowledged that was true, but clarified that the AEL had declined the offer as it did not want to be part of "back room deal- making." MR. HEATH had suggested an open forum during the legislative interim to address some problems with the 470 fund, but said he was told that that would not happen and that HB 238 would pass this year. Number 065 GREG PETRICH testified in Juneau. He said the emphasis should be on planning, and added that the local level is the best place for effective planning to take place on a site specific response approach. For this reason, he opposed a proposal in HB 238 to do away with the citizens' oversight councils. He said this attempt by the oil industry to change the fund accentuates public mistrust of the oil industry. Regarding problems with misuse of the fund, he said that attention should be focussed on an administrative direction. PAMELA MILLER, GREENPEACE BIOLOGIST, testified from Kenai. She said HB 238 severely compromises the intent of the 470 fund, because it eviscerates the state's ability to prevent, respond to and clean-up an oil spill. She said the state must hold the oil industry accountable for spill prevention and response. She strongly opposed HB 238. Number 142 AIMEE BOULANGER, COMMUNITY COORDINATOR FOR POLLUTION ISSUES AT THE ALASKA CENTER FOR THE ENVIRONMENT, testified from Kenai in opposition to HB 238. She said that the split of the fund seems to focus on post-spill clean-up and not on prevention. She felt the funds need to be available for clean-up of various sizes and types of spills. She also expressed concern with restrictions on restoration uses. She called it a farce if the funds cannot be used for prevention of spills or for restoration of the environment. Number 175 PETER VAN TUYN, ATTORNEY, testifying from Kenai, said that he supported the comments made by others, and opposed the passage of HB 238. Number 190 SUSAN MCLEAN testified from Homer in opposition to HB 238. She said the state should keep control of the 470 fund, because, she explained, the oil companies would do what was in their own best interests if the state let them. She stressed the role of prevention in keeping Alaska's environment healthy. Number 203 WILLIAM HOPKINS, EXECUTIVE DIRECTOR OF THE ALASKA OIL AND GAS ASSOCIATION, testified from Anchorage. He said that tax stability was important in the economic climate to encourage industry investment. He also noted that the oil industry was concerned with expenditures from the 470 fund for purposes other than those for which the nickel a barrel charge was imposed. After the Valdez oil spill, he explained, the legislature levied the surcharge for the purpose of accumulating a $50 million fund for emergency oil spill containment and clean up. MR. HOPKINS said since that time more than $90 million has been collected from the industry, and most has been spent, but not for oil spill emergencies. Misuses of the 470 fund need to be stopped, he contended, so the fund can accumulate to its cap and the state will have that fund available in the event of an emergency like the one in 1989. LINDA FEILER testified from Kenai in opposition to HB 238. She said the state needs protective legislation that will ensure the oil industry pays for preventive measures. Number 246 JIM LEVINE testified in Juneau. He noted that he was in agreement with the testimony against HB 238. Regarding the $50 million fund, he compared that amount with the $3 billion spent by Exxon in the aftermath of the Exxon Valdez oil spill. He pointed out that even if the state asked for $50 million annually from the oil industry, it would take 60 years to accumulate the amount that it cost Exxon. He said that HB 238 was not a fair compromise, but instead was a recipe for disaster and catastrophe. Number 273 MR. LEVINE defended the process of including citizens in development of public policy. He particularly supported the inclusion of the citizens oversight groups in assuring that volunteers are knowledgeable and diverse. These volunteers, he said, included areas of expertise from engineering, science, law and others. He implored the committee to discard HB 238 and its attempt to revise the 470 process. Number 312 STEVE COLT, AN ECONOMIST FROM ANCHORAGE, testified in Juneau. He said that it made economic sense for the cost causer to be the cost payer. He referred to the Alaska Public Utilities Commission (APUC) and the move to have a user-pay approach where the regulated industry was expected to bear the burden of providing regulatory services. He said it was curious that HB 238 moves in the opposite direction, away from responsible funding by industry of its own oversight. Number 320 MR. COLT reminded the committee that because of inflation, the five cent per barrel tax was somewhere close to four cents, and the $50 million cap has already been reduced by inflation to approximately $40 million in real purchasing power. He pointed out that rather than discussing a reduction of the surcharge, the committee should be debating how to maintain the fund by inflation-proofing it. By reducing the tax, he said, the fund would be destroyed. Only prevention really pays, he said, and this should be the lesson remembered from the Exxon Valdez spill. Number 338 THEO MATTHEWS, ADMINISTRATIVE ASSISTANT FOR UNITED COOK INLET DRIFT ASSOCIATION, testified from Kenai. He said his organization represented 585 commercial salmon drift permit holders in Cook Inlet. Oil spills caused major disruptions in the fisheries in 1987 and 1989, he explained, and stressed the importance of keeping oil out of the water. Regarding the proposal in the draft CS for HB 238 to establish two separate funds, he said that would work only if each fund had enough money to adequately do the job it is intended for. MR. MATTHEWS expressed concern with wording in sections 13 and 14, regarding response plans; section 25, with elimination of restoration; section 14, which allows the Exxon settlement to top off the fund; and section 34, with the definition of "threatened release." He asked that the committee not support HB 238. Number 379 HUGH DOOGAN testified in Fairbanks in opposition to HB 238. He also referred to other bills in the legislature, and to a recent settlement received from Alyeska. He questioned whether the state was ever fully reimbursed for the costs incurred in response to the Exxon Valdez oil spill. Number 406 JOHN SANDOR, COMMISSIONER OF THE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, replied that the state had recovered its costs in the Exxon Valdez clean up. Number 409 JERRY MCCUNE, UNITED FISHERMEN OF ALASKA (UFA), testified in Juneau. He referred to the controversial nature of HB 238, and advised the committee to move slowly and to bring all the parties affected together to examine what needs to be addressed. He urged that sufficient time be given to resolving the issues. CHAIRMAN WILLIAMS asked for a poll of all teleconference sites to determine whether there were any others wishing to testify on HB 238. Number 449 AMY HAUSEN, HOMER HIGH SCHOOL STUDENT AND VICE PRESIDENT OF STUDENT GOVERNMENT, testified from Homer in opposition to HB 238. She emphasized the importance of having funds available to clean up oil spills, and said that the funds that benefit Alaskan coastal communities are well spent. She cautioned that if HB 238 was passed, those funds would go back into the pockets of the oil companies. She urged the committee to assure that oil would be kept off the beaches of Alaska for the benefit of Alaskans and its wildlife. Number 480 CHAIRMAN WILLIAMS asked if there were any others wishing to testify by teleconference. There were no respondents at the teleconference sites. COMMISSIONER SANDOR addressed the general comments heard in testimony on HB 238. He explained that the issues addressed in the bill are very complex, comprising a divergence of points of view. He briefly described the evolution of the oil and hazardous substance release response fund. In 1986, he said, HB 470 was enacted with specific funding objectives. Legislation in 1989 added other uses of the fund, and those were again added to in 1990 legislation. He noted that it was not unreasonable for some to consider the additional uses of the fund as going beyond what was originally intended. COMMISSIONER SANDOR explained that an audit was ordered in 1991. He noted the balances in the spill reserve fund for each of the past four fiscal years: FY 91, $6.026 million; FY 92, $12.627 million; FY 93, $23.656 million; and, FY 94, $25 million. He said that the DEC believes it can improve fund management and will work with the legislature and other parties to improve administration of the fund. Number 535 COMMISSIONER SANDOR noted that there had been 18 spills around the size of the Exxon Valdez spill in the past 30 years. He stressed the importance of strong research, prevention and response capabilities to reduce the risks and effects of potential spills. He said that while much remains to be done, Alaska can be proud of its progress along those lines. He also mentioned the importance of partnership among the federal, state, industry and citizen groups participating in cooperative efforts. He added that hearings such as this one were important in identifying ways to improve management of the fund. Number 558 CHAIRMAN WILLIAMS asked if there were any other testimony. There was no response. He thanked those who participated in the teleconference and assured them that the House Resources Committee would give due consideration to the comments heard, and would keep the public informed of progress on HB 238. ANNOUNCEMENTS
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