Legislature(1993 - 1994)
03/21/1994 08:15 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
The House Resources Committee was called to order by
Chairman Bill Williams at 8:25 a.m. Members present at the
call to order were Representatives Williams, Hudson, Bunde,
Green, and Mulder. Members absent were Representatives
Carney, Davies, Finkelstein and James.
CHAIRMAN BILL WILLIAMS announced there is a quorum present.
He said the meeting is on listen only teleconference. He
stated the committee was originally scheduled to hear HB 496
but he decided to pull that bill off the agenda.
DRAFT CSHB 238, VERSION Z: "An Act relating to and
redesignating the oil and hazardous substance release
response fund and to the content of reports relating to oil
and hazardous substances; amending requirements relating to
the revision of state and regional master prevention and
contingency plans and requirements related to expenditures
for oil or hazardous substances; amending the authority to
contract to provide personnel to respond to a release or
threatened release of oil or a hazardous substance;
terminating the nickel-per-barrel oil conservation
surcharge; and levying and collecting two new oil
surcharges; providing for the suspension and reimposition of
one of the new surcharges; and providing for an effective
date."
CHAIRMAN WILLIAMS said the committee has had several
meetings to consider draft committee substitute version Y
and no action has been taken to adopt any of the versions.
He advised since the committee had expressed interest in a
split-nickel approach to revising the 470 fund, he is
submitting another draft version for the committee's
consideration. He explained that the version presented is a
split-nickel version based closely on the split-nickel
approach proposed by the Administration.
Number 041
JANICE ADAIR, COMMISSIONER'S REPRESENTATIVE AND REGIONAL
ADMINISTRATOR, DEPARTMENT OF ENVIRONMENTAL CONSERVATION
(DEC), testified via teleconference and stated version Z
divides the nickel surcharge into two accounts within the
Oil and Hazardous Substance Release Response Fund and
Prevention Fund: 1) the prevention account which is
allotted 3 cents and funds all of the state's current
operating activities except spill response and 2) a response
account which is allotted 2 cents and funds only responses,
including matching funds for federal cleanup activities, and
cost recoveries. There is no defining limitation on what
kind of a response may be funded from the response account.
It is essentially a revolving fund in that the costs from
this account will be repaid to the state through cost
recovery.
MS. ADAIR said in addition to the surcharge funding for each
account, the prevention account also receives all penalties,
fines, interest on both accounts, and program receipts
received by the department for a number of oil and hazardous
substance related activities. The response account receives
all cost recoveries and natural resource damages. She
pointed out that the recommendations from the Legislative
Audit have been incorporated into draft version Z.
Number 062
BRECK TOSTEVIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, testified via teleconference and stated when the nickel
is split into a 3 cents surcharge and a 2 cents surcharge.
The 3 cents surcharge goes into the prevention account and
the 2 cents surcharge goes into the response account.
MR. TOSTEVIN said because of the prohibition against a
dedicated fund, any incoming moneys are put in the general
fund account and at that point, are transferred into the two
surcharge accounts, the 3 cents surcharge is deposited to
the prevention account and the 2 cents surcharge is
collected each month and is put into a response surcharge
account. There is also a prevention mitigation account.
Fines, penalties, fees for services, etc., would be
deposited into the prevention mitigation account. There is
also a response mitigation account where cost recoveries,
natural resource damages, and other damages are deposited.
The legislature then has the option of appropriating those
moneys into the appropriate accounts of the response fund.
The response fund is broken into two accounts: the
prevention account to fund ongoing activities and the
response account which funds emergencies declared by the
Governor and also the municipal impact assistance grants.
Number 096
MS. ADAIR said it is important to recognize that in regard
to the municipal grants program, current statute requires a
gubernatorial disaster declaration before that grant program
can take effect.
MR. TOSTEVIN stated that from the response account, as under
current law, there will be the investigation, evaluation,
containment, and cleanup of oil or hazardous substance
releases and there is no size limitation. However, the
current limitations in law limiting expenditures to
situations creating imminent threat to human health and
environment is maintained. The response account also
provides for state cost recovery action and also allows for
restoration of the environment, which is important because
the legal distinction between when cleanup stops and
restoration begins is a very fine line. The natural
resource damages collected also return to the response
account.
MR. TOSTEVIN said the final purpose of the response account
is matching funds for cleanup activities under the federal
super fund law, Comprehensive Environmental Responses
Compensation and Liability Act of 1980, and the federal oil
response fund. The 2 cents surcharge which goes into the
response account has a suspension formula which is located
on page 5, Section 9. The suspension formula involves the
unreserved and unobligated balance in the response account
and includes any appropriations which might have been made
but have yet to be spent. The second part of the formula is
the surcharge account which is where the surcharge moneys
have been deposited, but not yet put into the fund through
appropriation. Therefore, part of the formula looks to those
yet to be deposited surcharges as part of the balance. The
third part of the balance is cost recovery of moneys
extended from the response account; moneys originally spent
for a cleanup or restoration which have been recovered by
the state, deposited into the mitigation account and are
waiting to be appropriated by the legislature into the
response account.
Number 138
MR. TOSTEVIN stated those three items are added together:
the unreserved balance, the surcharge waiting to be
appropriated, and the cost recoveries waiting to be
appropriated and any appropriations which have been made
from the fund are subtracted from the sum. There might be
appropriations of money paid from the fund in that year.
What this does is it forwards funds to ensure there is
always a positive balance or a buffer in the fund. When
making the calculation, you then compare it to $50 million
and if the calculation is above $50 million, the tax is
suspended. It is done quarterly and on a fiscal year basis
so all the different components of the calculation are done
on a fiscal year basis. This attempts to get around the
cumulative problems found in current law calculation. Once
the $50 million point is reached or exceeded, the surcharge
is suspended for the quarter. The commissioner then
determines the next quarter if the balance has gone below
the $50 million level.
Number 160
MR. TOSTEVIN stated Section 1 amends the name of the
response fund to response account which the Governor can use
to respond to disaster emergencies involving oil or a
hazardous substance. Section 2 amends the name of the
response fund to response account which may be used for the
municipal grants program. Section 3 is a technical
amendment deleting the reference to the "spill reserve"
which is a leftover piece of some old legislation. Section
4 is another amendment to the municipal grants program and
includes the reference to the response account. Section 5
changes the name of the fund and adds the word prevention.
Section 6 involves the Exxon Valdez reimbursement, changes
the name of the fund and allows future reimbursements to be
credited to the prevention mitigation account, which is a
general fund accounting mechanism from which the legislature
may appropriate (indiscernible) prevention account.
Number 192
MR. TOSTEVIN said Section 7 is where the surcharge is broke
into separate surcharges and this section creates the 2
cents surcharge. Section 8 allows the 2 cents surcharge to
be appropriated to the response account. Section 9 is the
suspension of the 2 cents surcharge. Section 10 is the
incentive clause which says the 2 cents surcharge will be
suspended for one fiscal year if the legislature does not
appropriate all of the 2 cents surcharge revenues in the
surcharge account and all of the cost recovered 2 cent
surcharge funds. The surcharge is also suspended if the
legislature appropriates all of these funds and the Governor
vetoes or reduces the appropriation. He added that Section
40 provides that the incentive clause only applies once the
fund reaches the $50 million balance.
(CHAIRMAN WILLIAMS noted for the record that REPRESENTATIVE
JAMES joined the committee at 8:38 a.m.)
REPRESENTATIVE CON BUNDE clarified that if the legislature
does not appropriate moneys to the spill response account,
then the tax shuts off for a year. He asked what happens
after that year and also asked if the legislature could not
appropriate the funds for an extended period of time so the
fund never reaches $50 million.
MR. TOSTEVIN said essentially that is true. The mechanism
provides that the incentive clause not apply until the fund
reaches an initial balance of $50 million. The surcharge
shuts off for a year and at the end of the year, it begins
again.
REPRESENTATIVE BUNDE said in reality the legislature could
tough it out for a year and then the tax would start again.
He asked if the surcharge would then last only for a year.
MR. TOSTEVIN responded the surcharge will suspend for a year
and then start again. If the funds are not appropriated
again, it will suspend. He stated there are other incentive
clauses built into the calculation for the suspension of the
surcharge including the counting of the 2 cents surcharge,
the general fund account which has money yet to be
appropriated to the fund and also the cost recovery yet to
be appropriated to the fund. Therefore, the calculation
includes moneys which are not yet in the fund and is a way
of creating an incentive for putting those moneys in the
fund as well. He said conceivably the surcharge could be
cut off (indiscernible) reach the $50 million level without
those moneys actually being there if they were not
appropriated each year.
Number 270
REPRESENTATIVE BUNDE said even though the legislature does
not appropriate the money to achieve the $50 million, there
is a mechanism for the surcharge to eventually shut off.
MS. ADAIR told committee members to look at page 5, line 31
to page 6, line 1 where it says the "balance of the account
maintained under AS 37.05.142 that accounts for the proceeds
of the surcharge..." She said this is the calculation of
the $50 million and that language is directing the
calculation to the surcharge account even before it is
appropriated. Therefore, when one is calculating the $50
million cap, you are looking at the 2 cents surcharge
regardless of whether or not it has been appropriated.
MR. TOSTEVIN said Section 11 creates the definitions of what
the response account is and what the response mitigation
account is. Section 12 establishes the 3 cents surcharge
which funds the prevention account. Section 13 is an
amendment needed due to the creation of the two surcharges.
Section 14 amends current law by providing that cost
recoveries be deposited into the response mitigation
account.
Number 306
MS. ADAIR explained Section 15 is the language on the state
master plan and similar language is in all versions of HB
238. This section requires that the commissioner annually
review the plan and only revise it when necessary. Section
16 also deals with the plan--submitting it to the public and
to the legislature. She said it has been determined there
is one addition needed to this section; on line 24, page 9
after the word "plan" the words "or a revised plan" should
be inserted. This change provides that the additional state
master plan and any revisions thereto go through the review
process which is required by law.
MS. ADAIR said Section 17 deals with the regional master
plans and it does the same thing as the state master plan.
Section 18 amends the purpose section of the response fund.
It carries forward the idea that the fund have two purposes:
responding to releases and the prevention of those releases.
Section 19 establishes the two accounts - the prevention and
response accounts. Section 20 amends current statute and
states that money appropriated to either account will not
lapse back into the general fund but rather remain available
for appropriation by the legislature. Section 21 finances
the prevention account and includes money received from
private sources and all fines and penalties collected as a
result of a release or threat of a release of oil or a
hazardous substances; the interest on the balances of both
prevention accounts and both response accounts; all fees
which DEC may collect for contingency plan review, financial
response review, lab certifications, and oil spill response
action contractor registrations. It also provides the
mitigation account which goes into the prevention account.
MS. ADAIR explained Section 22 finances the response account
and includes money recovered by the state for its
containment and cleanup activities, but excludes fines and
penalties. It also includes natural resource or other
damages and the response mitigation account. Section 23 is
the use of the prevention account and includes everything
which is currently allowed under statute with the exception
of the investigation and evaluation of a release which poses
an imminent and substantial threat. It also excludes the
matching funds for participation in a federal cleanup
activity. Also included is a change which attempts to
address one of the audit's concerns and that is taking out
the language regarding the Division of Emergency Services
(DES) and its appropriate documentation. In the past, the
money for DES has come through DEC and (indiscernible) to
the division. It does not change the intent, but rather
addresses the confusion on how that money gets to DES or any
other agency.
Number 375
MS. ADAIR said Section 24 requires an appropriation for all
uses of the prevention account. Under current law, the
citizens oversight authorization does not require an
appropriation and this change requires an appropriation.
Section 25 is a technical amendment which directs the
appropriations for the citizens oversight council and the
Department of Transportation to come from the prevention
account not the response account. Section 26 is the purpose
of the response account. It includes the municipal impact
grant, release response, cost recoveries to the state,
restoration of the environment, and matching funds for super
fund or federal oil spill cleanup. It also allows the
Governor to use the response account for a disaster
emergency.
MS. ADAIR stated on page 16, beginning on line 2, the
authorization in existing law has been carried forward which
says money for emergency response activities does not
require an appropriation by the legislature. Added is a
requirement that the DEC commissioner within five days of
accessing the response account, provide a written report to
the Governor summarizing the release, what the state is
doing, what the state anticipates doing, what the state has
spent, what the state thinks it will spend and anything else
the commissioner thinks is appropriate. The Governor may at
any time during the state's response approve, disapprove, or
amend the action DEC has taken.
Number 414
MS. ADAIR said Section 27 comes from the legislative audit.
The audit recognized that DEC had little authority to
require information from other agencies receiving response
funds to compile a report which is required. This section
attempts to require agencies to provide DEC with whatever
information the department needs to do the report and
prohibits the department from funding, through a
reimbursable service agreement, an agency that does not give
the department that information. Section 28 amends the
report to the legislature. It removes all of the reporting
requirements on those activities which are subject to
legislative appropriations. All department activities under
the prevention account will not be included in the report.
The report will focus instead on response account
expenditures. Also included in this section are
requirements that the department report on successful cost
recoveries, recoveries of fines and penalties, natural
resource and other damage collection, and a summary of
municipal participation such as the grant program. If the
department anticipates particular response activities to
continue and they will be paid for out of the response
account, those activities need to be reported also.
MS. ADAIR stated Section 29 is also an audit recommendation
and it deals with contaminated sites. She pointed out the
requirement in current law for contaminated sites is
unwieldy as the auditor noted. Therefore, an attempt has
been made in this section to focus on the number of sites in
the database, whether the site is active or closed, and
requires a prioritization based on the immediate and long-
term threats to the public health or welfare, organized
statewide, as well as by community.
MS. ADAIR explained Section 30 is a technical amendment to
current law which recognizes that if the Governor has a
disaster declaration and the response account is used, he
must include that information in a submitted report.
Section 31 requires DEC to adopt regulations to implement
cost recovery. It was felt these regulations are important
for two reasons. First, it will put the public on notice as
to how the department will do cost recoveries and second, it
will give assurance to people that the department has a
legal process to seek recoveries and will follow it.
Sections 32 and 33 amend the lien provisions which have been
in every version of HB 238.
MS. ADAIR stated Section 34 is a technical amendment
changing the name of the response fund. Section 35 is a
definition section which defines the prevention account,
prevention mitigation account, response account, and
response mitigation account. Section 36 is the repealer.
The only addition to this list from that in the HB 238 work
draft is AS 46.08.040(b) which deals with the Governor's
requirement to report on the disaster declaration. That
requirement has been put in a different part of the law so
there was a need to repeal the current law.
Number 488
MS. ADAIR said Section 37 is a clarification that any
appropriations from the former spill reserve which
previously were done in the front section of the budget bill
are not considered an expenditure. Section 38 divides the
balance of the current response fund at the end of this
fiscal year between the response and prevention accounts
60/40, the same way the nickel surcharge is being split.
MR. TOSTEVIN explained Section 39 attempts to account for
the current nickel surcharge receipts and provides a
transition period. Surcharge moneys which come in before
June 30, 1994, go to the response fund in the normal way
under current law. Surcharge money coming in between June
30, 1994, and July 1, 1994, a one day period, will be paid
and split 60 percent/40 percent. The effective date of the
proposed legislation is July 1, 1994, and from that date
forward the provisions of the new law will apply.
REPRESENTATIVE BILL HUDSON clarified version Z provides that
citizens oversight councils and new vessels heretofore have
been appropriated by the legislature will be authorized
subject to legislative approval but only out of the
prevention account.
MS. ADAIR answered that is correct. She said it was felt
that those are operating expenses of the state and the
legislature could make a determination as to how it wants to
spend the money.
REPRESENTATIVE HUDSON clarified there is no retroactivity.
Everything which has been done before is completed on its
own merit.
MR. TOSTEVIN replied that is correct.
REPRESENTATIVE HUDSON asked where hazardous substances are
funded in version Z.
MS. ADAIR replied it would depend. The ongoing operation of
the department's contaminated site program will come from
the prevention account. Any response to a release of a
chemical will come from the response account and are costs
which will be recovered by the department.
Number 565
REPRESENTATIVE HUDSON asked where the money will be replaced
once recovered.
MS. ADAIR responded through a series of legislative
appropriations, the money will go back into the response
account. She said the response account will essentially be
a revolving fund.
REPRESENTATIVE ELDON MULDER said it was his understanding
that two accounts were to be set up, but he sees four
accounts in this version, under Section 35.
BOB POE, DIRECTOR, DIVISION OF INFORMATION AND
ADMINISTRATIVE SERVICES, DEC, replied the four accounts
proposed are the same accounts as proposed in all other
split-nickel versions. In all versions, there are two
surcharge accounts, two mitigation accounts and a response
account and a prevention account.
REPRESENTATIVE MULDER asked why.
MR. POE told committee members to think in terms of buckets.
There is a need to have two buckets to collect the 3 cents
surcharge and the 2 cents surcharge; two buckets for fines
and penalties, cost recoveries, etc., which go into the
mitigation account; and two funds which the legislature
appropriates the surcharges into the funds and portions or
all of the mitigation account amounts into the funds. Under
the response account there is a response surcharge account,
a response mitigation account and then a response account.
The response surcharge account is collecting the 2 cents
surcharge; the response mitigation account is collecting
cost recoveries, etc.; and the legislature will appropriate
the surcharge amounts collected in the response surcharge
account and the amount of money which has been collected in
the response mitigation account into the response account.
The same logic works on the prevention side.
Number 619
REPRESENTATIVE MULDER asked if the 2 cents surcharge goes
directly into the response account or does the legislature
have to appropriate the money.
MR. POE responded the legislature has to appropriate the
money as it collects in the response surcharge account.
REPRESENTATIVE MULDER asked if it is possible for the
surcharge money to be directly deposited into the response
account.
MR. POE responded no. The legislature has to appropriate
the money. He added that is what the incentive clause is
focused on.
REPRESENTATIVE MULDER referring to Section 18, felt this
section expands the focus of the 470 fund or gives
justification for existence in terms of responding to
releases or threatened releases of oil and hazardous
substances.
MS. ADAIR replied this section is a technical amendment and
is not necessarily required to include. This section
recognizes that the fund is used for two things. The fund
is not only used for the protection of the environment but
also for responding to releases.
REPRESENTATIVE MULDER stressed that was his point. It seems
to be an expansion of the scope of what the legislature
intended for the 470 fund to be.
MS. ADAIR disagreed. She said the audit also shows the
initial purpose of the 470 fund was twofold: Give the state
response capability and also to deal with more long-term
threats and prevention activities.
MR. POE agreed that the audit is very clear on that point.
REPRESENTATIVE MULDER stated before the 5 cents surcharge
was implemented, there were no teeth behind the prevention
fund. He said the real guts of the whole effort came when
the legislature imposed the nickel surcharge because the
focus at that time was response. He felt Section 18 is an
attempt to recreate history in terms of expansion of the
scope and he does not support that attempt.
TAPE 94-37, SIDE B
Number 000
REPRESENTATIVE HUDSON stated he is trying to understand at
what point the 2 cents going into the response account shuts
off. He said in reading Section 10, it says if the
legislature does not appropriate the entire 3 cents
collected for that year, then the 2 cents surcharge shuts
off, but only if the response fund is up to $50 million. He
asked if the fund could be less than $50 million for the 2
cents surcharge to shut off.
MR. POE said the incentive clause relates to the 2 cents
surcharge and the surcharge shuts off if all of the 2 cents
amount collected has not been appropriated and includes cost
recovery. He explained if the legislature appropriates the
full amount and all of the cost recovery moneys, there is
not a problem unless the Governor decides to veto the
appropriation. If the Governor decides to veto the
appropriation, the incentive clause kicks in again.
REPRESENTATIVE HUDSON clarified that if the legislature does
not appropriate the 2 cents which goes into the response
fund or they do and the Governor vetoes the decision, the
surcharge shuts off.
MR. POE said the surcharge would shut off for one year.
REPRESENTATIVE HUDSON reiterated the incentive for the
legislature in asking the Governor to put those protection
moneys into the response account is the first shut off date
of the 2 cents surcharge is when the $50 million is reached.
REPRESENTATIVE MULDER referring to Section 25 regarding
citizens oversight councils, asked if the legislature is
going to be required to make an appropriation to the
councils.
MS. ADAIR replied no. Under current law, there is no
requirement for an appropriation, but rather the law says
the legislative counsel can give documentation to the DEC
commissioner and the commissioner shall pay it. It is an
after the fact situation. She said the Department of Law
has previously given the opinion it is not a legal way to
give money to the councils but there has been no
appropriation. This section makes it clear that if the
citizens oversight councils are going to be funded, the
legislature is required to do a specific appropriation in
the budget bill.
REPRESENTATIVE MULDER asked if earlier versions of HB 238
had a section which deleted the authorization for citizens
oversight councils.
MR. POE replied there have been so many versions, he is not
sure.
REPRESENTATIVE MULDER referring to Section 28 which relates
to providing reports to the legislature, asked if this
section deletes the necessity for the department to report
on activities related to the prevention account.
MS. ADAIR responded that is correct.
REPRESENTATIVE MULDER asked why the legislature would not
want to know what is happening on the prevention side.
MS. ADAIR replied the legislature will get that information
through the appropriations process. The prevention account
requires appropriations completely.
MR. POE added there will be a budget detail presentation,
overviews and the normal budget process.
Number 069
REPRESENTATIVE MULDER said this is a special fund and it
would be nice to know where the funds are being spent. He
felt the public would better understand it if it was in a
special report as opposed to being part of the budget. He
stressed there is little justification given when included
in a budget and is detailed for only three individuals or
the budget subcommittee. He said if there is a detailed
report made public, everyone gets to look at it and it puts
greater responsibility upon the department to justify why
they are using the funds and to what end they are using the
funds.
REPRESENTATIVE BUNDE agreed with Representative Mulder.
REPRESENTATIVE JOE GREEN clarified that 3 cents will go to
prevention rather than going to the tank which would be
there in case it is necessary and the penalties, fines,
fees, 100 percent of the interest and 60 percent of the
existing tank will all go to prevention, leaving 40 percent
of an unfilled tank, 2 cents and some response mitigation to
build the tank.
MR. POE stated most of what Representative Green said is
true. He noted there were a few things included on the
prevention side that depend on whether or not the
legislature appropriates the money.
Number 100
REPRESENTATIVE GREEN asked if the plan in version Z was in
place for this year, how much money would go to prevention.
MR. POE said the initial balance into the spill response
account will be $25.3 million and $37.9 million will be in
the prevention account.
REPRESENTATIVE GREEN asked if these amounts exceed DEC's
current budget.
MR. POE said the 3 cent surcharge would equal $15.7 million
in the first year dropping down to $13.4 million by the
fifth year.
REPRESENTATIVE GREEN asked if interest is being taken off
the total nickel or only that portion which is applied to
prevention.
MS. ADAIR said in version Z, all interest from all of the
accounts goes to the prevention mitigation account and the
legislature appropriates that amount. She stated one of the
thoughts in allowing for all of the interest to be put into
the prevention account is for out years when the 3 cents is
no longer enough. Rather than going to the general fund,
the legislature could identify the interest and appropriate
that to the prevention account.
Number 146
REPRESENTATIVE JEANNETTE JAMES commented that many of the
hazardous waste cleanups and spills to be dealt with, even
in the out years, are not necessarily related directly to
crude oil and other payers should be considered, such as the
motor fuel tax. She expressed opposition to a plan which
says the 3 cents/2 cents split will take care of all of the
state's needs.
MS. ADAIR said on the response side where emergencies,
investigations, and cleanups would be dealt with, all costs
are required to be cost recovered from the responsible
parties. She pointed out that often the responsible parties
cannot afford the up-front costs and have the need to repay
the state over a matter of months.
REPRESENTATIVE JAMES responded there are many cleanups the
state has had in the past where there is no money to be
collected and the state has been solely responsible for
those spills. She does not anticipate those type of
situations to change.
MR. POE agreed there will be orphan spills in the future but
version Z states that requirements should be established for
cost recovery. He said cost recovery has come into full
swing in the last two years with respect to the response
fund. There has been a better collection rate on
reimbursements to the fund.
REPRESENTATIVE MULDER thought there had been a total summary
given for the $13.5 million which DEC is requesting for the
prevention mitigation side. He asked if there was $2.5
million included in the summary for underground storage tank
cleanup.
Number 191
MR. POE responded that amount was not in the $13.5 million.
He said this year in the operating budget, the mitigation
account is proposed to be used for underground storage tank
cleanup. He noted also in the motor fuel tax proposal which
the Governor has, 1 cent is dedicated to the underground
storage tank cleanup.
REPRESENTATIVE MULDER said on the particular chart he is
referring to, the top line on the $13.5 million addresses
some sort of cleanup.
MS. ADAIR said that is the contaminated sites program which
would come out of the prevention account under version Z.
REPRESENTATIVE MULDER clarified that contaminated sites are
not underground storage tanks.
MR. POE responded no.
Number 200
REPRESENTATIVE MULDER thought it would be useful if the
committee could walk through and understand in real dollar
terms what is being discussed. He said as a legislator, he
wants to be responsible to ensure adequate funding is being
provided for these programs, but added on the other hand,
the greatest abuser of these funds is not DEC, it is the
legislature.
Number 212
MR. POE said under the 3 cents/2 cents split the first year,
when the existing $37.4 million is split 60/40 and the
nickels collected in 1994 are split 60/40, the spill
response account will have $25.3 million and the spill
prevention account will have $37.9 million.
REPRESENTATIVE MULDER clarified from those totals, DEC's
appropriation will be $13.5 million so the surplus in the
prevention account will be $24.4 million.
MR. POE said that is correct and that money will be there
for the future.
Number 230
REPRESENTATIVE MULDER asked Mr. Poe to continue to next
year.
MR. POE said in 1995, there will be $10.5 million collected
from the 2 cents surcharge and $15.7 million from the 3
cents surcharge. He explained since that is appropriated to
the two accounts at the beginning of 1996, the beginning on
the spill response account will be $35.3 million and the
beginning on the spill prevention account will be $40.1
million.
REPRESENTATIVE MULDER asked what the surplus will be without
any additional appropriations from the prevention side.
MR. POE responded $26.2 million at the end of that year.
REPRESENTATIVE MULDER asked Mr. Poe to go on to year three.
MR. POE said in fiscal year 1996, $10.1 million from the 2
cents surcharge will be collected and $15.2 million from the
3 cents surcharge will be collected. Therefore, at the
beginning of 1997, the spill response account will be $44.9
million and the spill prevention account will be $41.4
million.
REPRESENTATIVE MULDER asked if the surplus would be $41.4
million.
MR. POE said after the appropriations for that year, the
surplus will be $27.1 million and in that year, the $50
million point will have been reached and the 2 cents
surcharge would be suspended.
REPRESENTATIVE MULDER clarified the surcharge will shut off
even though the response account is at $44.9 million.
MR. POE responded actually at the end of that year, the
prevention account has $27.1 million. He told committee
members to remember the calculation does not look at
appropriations, it only considers nickels collected.
Therefore, the calculation to suspend the surcharge
considers the $7.4 million collected during 1996 in 2 cents
surcharge collections and factors in the $50 million
calculation to suspend the surcharge.
MR. POE stated in 1997, $7.4 million will be collected from
the 2 cents surcharge and $14.9 million from the 3 cents
surcharge. He said in 1998, the starting balance of the
spill response account will be $51.8 million and the
beginning balance in the spill prevention account will be
$42 million. After subtracting the appropriations for that
year, the ending balance on the spill account will be $51.0
million which includes $800,000 for emergency cleanups which
DEC assumes will be spent. The ending balance on the
prevention side will be $27.2 million.
Number 280
MR. POE stated in 1999, since in 1998 nothing is collected
in the 2 cents surcharge and $14.3 million was collected in
3 cents surcharge, the beginning balance of the spill
response account will be $51.3 million. He said the reason
for the $.3 million is that cost recovery which happened in
1998 is added in. The beginning balance for the spill
prevention account will be $41.5 million. When the
appropriations are taken out from that amount, the balance
at the end of the year is $50.5 million in the spill
response account, because $800,000 was taken out for
emergency cleanup, and $26.3 million in the spill prevention
account.
REPRESENTATIVE MULDER said those figures demonstrate what he
mentioned earlier and that is, there is this account which
sits out there which is open for abuse. He felt it is a
fund which the legislature will continually abuse. He
thought the reason for HB 238 is to eliminate the abuse and
put some brakes on the legislature in terms of controlling
its habit of spending the money. He said this version
allows that to continue.
Number 310
REPRESENTATIVE GREEN asked Mr. Poe if the figures he just
gave included the interest of $2.5-$3.0 million and fees,
fines, etc.
MR. POE responded they do not because interest, fines,
penalties, etc., have to be appropriated and the history of
the legislature has not shown these moneys being
appropriated. Often times the moneys have been appropriated
to other purposes. He felt an assumption these moneys will
now be appropriated would not be supported by history.
REPRESENTATIVE GREEN said it is in version Z.
MR. POE responded the bill says the legislature may
appropriate.
MR. TOSTEVIN added that fines and penalties are very
speculative and stated although fees for services are
something DEC is authorized to do, they do not currently
collect them. He said the only money currently collected is
the response action contract registration fee. He stated in
regard to interest, that is something under current law the
legislature can do but has not chosen to do it yet.
REPRESENTATIVE HUDSON expressed concern that the legislature
has not yet arrived to the point what he thought the
legislature originally wanted to get to when the nickel
surcharge was established and that is the emphasis on
prevention through depots. He stressed the sooner the state
gets to $50 million in the response fund, the better off the
state will be. He assumed the Administration is not too
concerned about reaching the $50 million because in version
Z that point is not reached for at least four years.
MR. POE stated the $50 million will be reached in the second
quarter of the third year.
REPRESENTATIVE HUDSON stressed that is three years away. He
added not only will the $50 million point not be reached
until that time, money is also being taken out of the
account. The $37 million currently in that account, which
in a matter of 2-3 years could reach the $50 million, will
be put in an account which basically sits there and fuels
normal operations. He has not seen the Administration
indicate strongly that if the moneys are to be taken out of
the spill response fund, there truly will be a prevention
plan along the coast of Alaska which includes depots.
Number 385
MS. ADAIR stated DEC will be conducting a near-shore
demonstration project and has a near-shore capability that
is imminent. She said DEC is also looking at agreements
with villages along rivers where the villages will provide
river protection with DEC assisting.
MR. POE distributed to committee members a letter addressed
to Representative James from Mead Treadwell, which outlines
the current status of depots and corps in the state and
those steps which are being taken currently to get to a
firmer depots and corps ability in the state.
MEAD TREADWELL, DEPUTY COMMISSIONER, DEC, stated the
responsibility for depots and corps was a Department of
Military and Veterans Affairs (DMVA) responsibility at the
time legislation was passed. He said early in this
Administration, DEC had significant discussions with DMVA.
It was concluded that because there would be a significant
number of cooperatives and other entities created under
federal and state laws to respond to the requirements of the
law, DEC would work with the cooperatives to get the depots
established and then assess where the gaps are. He pointed
out that DEC has worked with the legislature to get the
near-shore demonstration projects started and noted the
projects will start this spring. He noted the projects will
involve three entities which can become depots.
Number 435
MR. TREADWELL said in the letter to Representative James,
DEC has outlined price tags for establishing more depots
around the state. He stressed the information has been
shared with every appropriation committee DEC has worked
with in the last four years. He said originally, depots
were not the only use for the nickels, it was one major use.
Money has been spent to increase the communications
capability. DMVA has a major communications package now.
The Emergency Operations Center has been upgraded. DEC has
done some training with communities and there is more which
can be done in the depot area. He felt DEC has taken a
prudent approach and not just sprinkling the state with
containers of boom boxes without assessing the needs. He
said it is difficult to come before the committee and on one
hand be accused of spending too much from the response fund,
and on the other hand, where DEC has taken a conservative
and appropriate course, to be criticized for not spending
enough.
REPRESENTATIVE HUDSON stated he was present when the
original fund was established and felt the goal was to get,
as quickly as possible, a major potential containment system
up and down the coast of Alaska. He said his desire is to
ensure the state is protected along the coast with a good,
well-considered response capability. He stated by taking
the money out of the existing spill response fund and
putting it into an administration slush fund...he asked if
the legislature can use the money for whatever it wants.
MS. ADAIR responded the statute is very clear on what the
prevention account can be used for and it requires an
appropriation by the legislature. DEC cannot use that money
without an appropriation. The restrictions in statute do
not apply to fines, penalties, etc., in the prevention
mitigation account and the 3 cents surcharge account which
does not contain an incentive clause. She said the
legislature could conceivably appropriate the money to
another purpose. She stressed after the money gets into the
prevention account, it has (indiscernible) sideboards on it,
and presents (indiscernible) as does current law, which
provides that moneys in that account do not lapse, but
remain available for future years for purposes outlined in
statute if the legislature chooses to appropriate some or
all of the moneys for those purposes.
Number 508
REPRESENTATIVE HUDSON stated he has seen legislatures come
and go and use moneys for whatever they want to. He
stressed if the money is in the spill response fund, the 2
cents shuts off if the legislature does not appropriate it
and $26 million is out there, with the economic situation
the state faces for the next few years, who knows what the
next legislature will do. They could take the money,
appropriate it wherever they want and there still will be no
depots.
REPRESENTATIVE HUDSON felt if ultimately there is going to
be a $26 million prevention fund which continues on and
grows, there should be restrictions put on the fund so it
cannot be used for anything except for spill prevention and
response, and enhancement of prevention along the coast.
MS. ADAIR said the comment about the economic outlook for
the state is one reason why DEC felt it was important to
have more in the prevention account now than what will be
needed in the next few years, because it was recognized that
general funds will become more and more scarce. In order to
maintain a credible prevention program, which is the best
defense to spill response, DEC wants to make sure that this
money will be available for the legislature to appropriate
to prevention programs rather than having it go to the
general fund to supplement.
Number 567
MIKE CONWAY, DIRECTOR, DIVISION OF SPILL PREVENTION AND
RESPONSE, DEC, stated in DEC's budget, the only money which
DEC has been given is for the near-shore demonstration
projects. He said during testimony for the fiscal year 1993
budget where the project was first included, DEC indicated
to the House Finance Committee that the depots and corps
responsibility was with DMVA. He stressed the committee
consciously made the choice to give the money for the near-
shore demonstration projects to DEC but said before DEC does
depots and corps, do a prototype to determine present
status. He said that is the first part in the letter to
Representative James.
MR. CONWAY stated DEC will be able to have packages which
will have cost figures, feasibility, etc., and the
legislature can work with communities. He said what
happened in the early days with the depots and corps is
every community along the coast requested money to do that.
He pointed out the only money to come out of the response
fund for depots and corps has substantially paid for staff
for DMVA. There was an amount the legislature gave to DMVA
to buy equipment and that equipment was the
telecommunications gear which DES purchased. An amount was
also used to train first responder volunteers. He stressed
that has been the extent of the money appropriated by the
legislature to do depots and corps.
MR. CONWAY pointed out that the original fiscal note
included $20 million with an annual amount of $3 million
thereafter to keep depots and corps going. That money has
not been made available. He felt it was an unrealistic
expectation that the depots and corps be out there now.
Number 614
REPRESENTATIVE MULDER asked Representative Hudson if he
would be amenable to a Letter of Intent requesting DMVA
prepare an annual capital improvement plan for depots and
corps and submit it each year to the legislature or would it
be better to include that within the bill.
REPRESENTATIVE HUDSON felt the bill itself is the vehicle
and did not think Letters of Intent do too much. He said
the committee needs more information about the
interrelationship between DMVA and DEC in the depots and
coastal near-shore protection plan. He felt the committee
is being asked to agree to a major change in the statutes
which will establish a plan for both emergency major spill
type situations as well as minor spills, without really
knowing a lot.
REPRESENTATIVE MULDER stated the reason he had not looked at
putting the request in the statute was it seemed to be a
temporary condition. He expressed appreciation for the
figures and information included in the letter to
Representative James. He is amenable to including more
money on the prevention side for up-front costs for depots
and corps. He thought the capital program could be funded
through the 3 cents appropriation to the prevention account.
Number 698
REPRESENTATIVE HUDSON felt there will be sufficient funds on
the 3 cents side to take care of plans review, drills, etc.,
and hopefully still have sufficient funds on an annual basis
to implement the entire near-shore plan.
MR. CONWAY said once the demonstration project is over, the
next process which needs to occur is to have a unit which is
compatible...
TAPE 94-38, SIDE A
Number 000
MR. CONWAY...and sit down with the legislators and the
communities. He felt community input is something which has
been missing, yet is very important to determine their
concerns, see what the packages are, and develop priorities
based upon a hazards analysis which is going to be completed
at the end of the fiscal year. He said these are all the
pieces of the puzzle to ensure that DEC does not duplicate
what is already out there, meet the needs of the
communities, and know what substances are out there which
DEC needs to be prepared to respond to. DEC had targeted to
have that information ready and have a sound basis for a
capital improvement project budget in the fall. He said if
DEC had put numbers in the capital budget before now, he
would not have been able to tell the legislature what the
money would be used for.
MR. POE responded to Representative Hudson's comment in
regard to surplus saying there is a very small surplus over
the normal $13.5 million program coming from the 3 cents
surcharge. If the funding aspects which Mr. Conway
discussed are reviewed, splitting the fund is an important
element.
Number 023
REPRESENTATIVE HUDSON asked where the vessels are being
built.
MR. CONWAY said they are being built in Washington.
REPRESENTATIVE HUDSON asked why they are not being built in
Sitka.
MR. CONWAY replied Sitka did not bid on the contract. He
added there is an Alaskan contractor serving as the primary
contractor.
Number 035
REPRESENTATIVE BUNDE stated if the committee is going to
predicate all hazardous responses on crude oil, some day
there is not going to be any money to pay for it. He
encouraged committee members to remember that crude oil
should not be the only source of funding for environmental
protection.
MR. TREADWELL stated there are two mechanisms to complete
the depots and corps issue being discussed: 1) local
agreements which can go through DEC; and 2) the depots and
corps which can go through DMVA. He said there have been
many requests from inland communities who are subject to
hazardous substance spills or crude oil spills along the
pipeline. He pointed out DEC's type A response capability
is very limited, so there will be a need for that as well
and that price tag is not addressed in the letter to
Representative James.
Number 063
REPRESENTATIVE MULDER asked how much money is outstanding to
be paid into the mitigation account.
MR. POE responded approximately $5 million.
REPRESENTATIVE GREEN asked if in the analysis of response,
is DEC looking at the possibility of using people with
shallow draft boats.
MR. CONWAY stated there are two different kinds of
demonstration projects, and work groups were set up which
included people from the industry to ensure DEC did not
duplicate. He said the demonstration project which is going
to happen next month in Seldovia will have a new barge which
was designed by a work group and the cooperatives are
looking at it to see if it is something they could use.
Fishing vessels of opportunity will manage the deployment of
the barge and that is what will be tested - if wood vessels
can be used, using local volunteers and local fishermen...
He assured the committee there is no duplication of efforts.
MR. CONWAY said the Southeast project includes some rapid
shallow draft vessels that are to be operated where the
water is more protected, enabling more rapid deployment of
boom and they will have to integrate with vessels of
opportunity to be able to recover the oil. He distributed
several different handouts. (On file.)
CHAIRMAN WILLIAMS said the committee will not hear HB 238
this week. He hoped that industry, committee members and
the public will keep in contact with his office regarding
suggested changes.
REPRESENTATIVE MULDER stated because there have been so many
versions of the bill, it gets confusing about which draft is
being discussed and the committee recreates the wheel each
time. He recommended that committee members come to the
next meeting on HB 238, use version Z for suggested
amendments to enable the development of a bill which the
committee can adopt as a working document, and develop a
final product to be submitted forward.
CHAIRMAN WILLIAMS said that was his intention.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced the committee will meet
Wednesday, March 23 at 8:15 a.m. to hear HB 259 and HB 443.
He told committee members to note there will be a joint
meeting on Thursday, March 24 at 1:30 p.m. with the House
Finance Committee to get a briefing on the Governor's new
proposal on Mental Health Trust Lands Settlement.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 10:10 a.m.
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