Legislature(2001 - 2002)
02/01/2001 01:07 PM House TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 55 - OIL DISCH PREVENTION: NONTANK VESSELS/RR CHAIR KOHRING announced the next order of business was HOUSE BILL NO. 55, "An Act regarding oil discharge prevention and cleanup involving self-propelled nontank vessels exceeding 400 gross registered tonnage and railroad tank cars and related facilities and operations and requiring preparation and implementation of oil discharge contingency plans for those nontank vessels and railroad tank cars; amending the definition of 'response action' that relates to releases or threatened releases of oil and thereby amending the duties and liabilities of response action contractors; authorizing compliance verification for nontank vessels and for trains and related facilities and operations; and providing for an effective date." CHAIR KOHRING called an at-ease at 2:20 p.m. The meeting was called back to order at 2:22 p.m. CHAIR KOHRING pointed out the letter given to committee members from Larry Dietrick, director of the Division of Spill Prevention and Response. He summarized concerns about HB 55 from the last meeting. The first issue was industry being governed through the regulatory process. The next concern was hiring new employees. He stated that Larry Dietrick has specially addressed the employee issue in paragraph three [of Mr. Dietrick's letter]. The last issue was the fiscal note. Chair Kohring wondered what impact this program would have on the 470 fund. The 470 fund consists of monies that are generated into a special oil cleanup fund from North Slope Oil; we receive 3 cents per barrel from that. The concern that the amount of oil going through the pipeline is declining has a direct impact on this program. He stated that there might not be enough money to fund the various programs that are currently relying on these monies. It would take a "third of a million bucks" out of this particular fund for this legislation to be enacted. CHAIR KOHRING declared that he is not comfortable with the information the committee has received. He explained that it does not satisfy his quest for information concerning how this bill would impact that fund and other programs that are relying on it [the fund]. LARRY DIETRICK, Director, Division of Spill Prevention Response, Department of Environmental Conservation (DEC), explained that the department [DEC] attempted to address some of the concerns brought up at prior meetings. He mentioned that he appreciates the deliberation and consideration the House Transportation Standing Committee has given to House Bill 55. MR. DIETRICK said in regard to the issue of long-term sustainability, that the Department of Revenue has projections for crude oil flow down the pipeline through 2010. The Department [of Environmental Conservation] accepts these projections "at face value" since they are the official source for the state on oil flow through the pipe. He stated that when one looks at the "out years" compared to the long-term cost of the fiscal note, it comes to $141,500 a year. This current estimate is roughly over 1 percent of the revenue generated by the 3-cent surcharge. This enables the department to conclude that HB 55 would be sustainable under a long-term forecast, at least until 2010. This is the cost that would be in place after going through the startup of the program in FY 03 and FY 04. After that, the program would be in the steady state mode as shown in the fiscal note. CHAIR KOHRING asked Mr. Dietrick to address the employee issue discussed in the third paragraph on page one of the letter. Number 0242 MR. DIETRICK said the department understands the concern about growth in state government. He said that the note has been ratcheted [down] substantially since the task force made the first estimates. He remarked that at this point, assumptions that the task force envisions include the private sector approach coming online. The department has modified its assumptions to take into account that the spill cooperatives, the incident management surfaces, the marine exchange, and the ship's agents will provide the services that were envisioned by the task force as being the way to get this legislation implemented. As a result, the fiscal note will be cut back by converting two employment positions to temporary ones. This is a way of "providing a checkpoint. He said: "after we have FY 03 and 04, those positions won't linger on so to speak." The positions would be changed to accommodate the peak workflow period during the phase in of the program. It was also recommended that the department take stock at the end of that fiscal year, FY 04, and make adjustments as may be appropriate based on the actual workload that comes in. CHAIR KOHRING remarked that it was commendable that the department lowered the number of employees from eight to two. CHAIR KOHRING said in regard to regulation and industry that "we were concerned that this might be a opening the door for excessive oversight and control of the maritime industry." He stated that this was brought to the committee's attention by Representative Ogan and his recommendations. Number 0352 REPRESENTATIVE OGAN brought attention to Amendment 1, labeled 22-LS0309\A.3, Chenoweth, 1/25/01, which read: Page 1, following line 9: Insert a new bill section to read: "* Section 1. The uncodified law of the State of Alaska is amended by adding a new section to read: INTENT. It is the intent of the legislature that the report of the Task Force on Motorized Oil Transport (sec. 5, ch. 128, SLA 2000), the documents the task force used in preparing the report, and the transcripts of the task force meetings be used by the Department of Environmental Conservation as the guidelines for drafting regulations to implement this legislation." Page 1, line 10: Delete "* Section 1." Insert "* Sec. 2." Renumber the following bill sections accordingly. Page 6, line 13: Delete "sec. 7" Insert "sec. 8" Page 6, line 14: Delete "sec. 7" Insert "sec. 8" Page 6, line 17: Delete "sec. 7" Insert "sec. 8" Page 6, line 18: Delete "sec. 7" Insert "sec. 8" REPRESENTATIVE OGAN explained that Amendment 1 would essentially codify the legislative intent into law. It would say that the task force recommendations on motorized oil transport and the documents used in preparing the report shall be used as guidelines for drafting regulations to implement this legislation. He suggested that this amendment would have more force than a letter of intent. If there were regulations that exceeded what the intentions of the task force and legislature were, the industry would be able to make a case before a judge that this was not the legislation's intent. He said that this amendment makes him "a little bit more comfortable with the bill." He mentioned that there seems to be broad support from industry representatives for this amendment. CHAIR KOHRING commented that he agrees with Representative Ogan's thoughts on the intent of the amendment. He was concerned that HB 55 would not be carried out as far as the legislature's intent. He said that it is not that "we don't trust the agency; it's just there might be a difference of opinion as far as to what extent do we carry the regulatory process." REPRESENTATIVE OGAN added to Chair Kohring's comments, "The industry wants some rope to hang themselves. I'd like to give them as little rope as possible; so they're asking for rope, we'll give them rope, but no more than they need." CHAIR KOHRING asked Mr. Dietrick if he had any problems with the amendment. MR. DIETRICK said the department concurs with the amendment. The department participated in the task force on an "equal footing basis" with the other members. Therefore, the task force report is the department's instruction book for writing the regulation. He said this was a good amendment and that the department can support it. REPRESENTATIVE OGAN, in response to Representative Wilson, explained that the amendment is not deleting any sections. It is a technical change through renumbering. The amendment is creating a new Section 1 [on line 3 of the amendment]. Line 12 of the amendment conforms the rest of the bill. "Delete *Section 1." means delete the word and replace it with the word "Section 2.," not the actual Section 1. He said that the remainder of the amendment deals with renaming as well. Number 0690 REPRESENTATIVE MASEK made a motion to adopt Amendment 1 with unanimous consent. There being no objection, Amendment 1 was adopted. CHAIR KOHRING stated that he does not want to move the bill out of committee until his concerns in regard to projections for the 470-fund issue are addressed. He stated that he assumes the Department of Environmental Conservation is currently working with the Senate Finance Committee on this issue. He is concerned that if the 470 fund is substantially depleted, it will take away monies from important programs such as the underground storage tank remediation program. People in the Matanuska-Susitna area have used monies from this program to help finance the replacement of underground storage tanks that have leaked. He said that after the committee receives this information on the 470 fund, they will proceed in possibly moving HB 55 out of committee. Number 0788 REPRESENTATIVE SCALZI asked if the 3-percent surcharge, which Mr. Dietrick mentioned earlier, is a new fee. CHAIR KOHRING responded that it was a 3-cents-per-barrel surcharge, as opposed to a percentage. MR. DIETRICK explained that the 3-percent surcharge is 3 cents per barrel on Alaska crude oil production. It was instituted at 5 cents a barrel as a result of the Exxon Valdez situation. It was then changed and split from the 5-cent to the 2-cent and 3- cent accounts in 1995. REPRESENTATIVE SCALZI said he'd meant to ask if there was additional revenue coming out of this. He asked for clarification on Mr. Dietrick's estimate that 1 percent of the standard surcharge for a barrel of oil would cover this cost. MR. DIETRICK clarified that the 3-cent surcharge is the price per barrel that flows through. He explained that the Department of Revenue forecasts current production rates as the volume through the pipe. It generates approximately between nine and ten million dollars a year. In short, the $140,000 fiscal note for this program is a percentage for the amount generated; the 9.4 million is a little over a percent of that revenue that is generated from the 3-cent surcharge. REPRESENTATIVE KOOKESH stated that his first impression was that 1 percent of the 3 percent was going to be taken out, not 1 percent of the total amount that is generated (140,000). He said that it is only 1 percent of the nine-plus millions that are generated; it would take 1 percent of the 3 percent, which would be about three million dollars. MR. DIETRICK apologized for any confusion on this issue. He reiterated it was 1 percent of the total revenue generated. CHAIR KOHRING thanked Mr. Dietrick for the letter. He stated that substantial progress on HB 55 is being made, which is encouraging. CHARLOTTE MACCAY, Senior Administrator, Environmental and Regulatory Affairs, Cominco Alaska Incorporated, noted that she'd prepared comments to address the concern on why private industry might be embracing more regulations. She read the following testimony: The Spot Charter Group has an interesting perspective on non-tanker oil co-regulation. We do not have our own vessels, nor do the vessels used spend much time in Alaska waters. The vessels we use are chosen by availability off the world market. (Indisc.) depending on taking whichever vessels are available. Often vessels only come to the same port one or two times. The private industry ... using these vessels has little control or influence on the vessels preparing us for an oil spill or on our action during a spill. We, however, are likely to hold a great responsibility in the cleanup of any such spill. We also have a public relations and ethical concern regarding the potential for damage that can be caused by the ships we bring into our port. The regulations passed last session provided the users of the (indisc.) that these vessels will be required to (indisc.) adequate oil spill response. The task force findings will provide us assurance that these oil spills preparations will be adequate, very feasible, very (indisc.) and most importantly, effective. This is a (indisc.) that would have been unlikely to be effectively provided by individuals (indisc.) on a one-time basis on short notice. But the task force findings provide for an agent to have an incident management team and still refund the contractor set up to place the specific oil spill plan. This way, the ship would often come on just a few days notice and are able to sign into this plan and these preparations in an expeditious manner while ensuring they do have the resources and the authority to commit those resources as needed. The task force also gave recommendations that [provide] substantial reassurance to the agents that they will not be held liable in the consequence of providing these services; (indisc.) they will have the incentive to provide these services and the liabilities will remain with the ship. Furthermore, by having a regulation in place, the playing field is level in regards to (indisc.) cognitive oil spill prevention. Without a regulation in place, (indisc.) operators would take some of the cost to replace at an economic disadvantage in the competitive market. With the regulations in place as well as the similar regulations already in place in the other (indisc.), no operator will be put at an economic disadvantage by being prepared for an oil spill from these ships. Furthermore, there are many options for (indisc.) including fleet plans (indisc.). TAPE 01-10, SIDE A Number 0001 MS. MACCAY concluded by urging that the task force recommendations in this bill move forward. [HB 55 was held over.]
| Document Name | Date/Time | Subjects |
|---|