Legislature(1993 - 1994)

04/17/1993 10:00 AM RES

Audio Topic
* first hearing in first committee of referral
+ 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                       
  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                                                                   
  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                         
  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                                                                   
  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                                                                   
  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                       
  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                                                                   
  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                       
  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                                                                   
  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.                   
  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                                                                   
  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                                                                   
  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                  
  Number 330                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                  
  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                                                                   
  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-                      
  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                  
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                                                                   
  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                        
  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.                                                                      

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