Legislature(2003 - 2004)
02/24/2003 03:30 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 74-DISCHARGE PREVENTION & CONTINGENCY PLANS
MR. LARRY DIETRICK, Acting Director of Spill Prevention and
Response in the Department of Environmental Conservation (DEC),
read the following testimony into the record.
SB 74 supports the Governor's goal of improving
regulatory efficiency by reducing the administrative
burden while improving spill prevention.
SB 74 will streamline the state's permitting process
by lengthening the time for renewal of Oil Discharge
Prevention and Contingency Plans from the current
three years to five years.
A five-year renewal period will streamline the
contingency review process for industry while
maintaining Alaska's strong spill prevention and
response standards.
Focusing on the actual testing of oil spill prevention
and response preparedness through in-the-field
inspections, drills, and exercises is one of our most
effective means of ensuring spill prevention and
response readiness.
Oil Discharge and Contingency Plans are public
noticed, reviewed and approved by the Department of
Environmental Conservation.
They are required for operators of oil terminals,
refineries, crude oil transmission pipelines, oil
exploration and production facilities, oil tank
vessels, oil barges, nontank vessels of over 400 gross
tons and railroad tank cars.
There are multiple benefits from the change proposed
by the bill.
The bill furthers the goal of permit streamlining with
no loss of environmental protection, and complements
initiatives currently being undertaken by the
Department to shift the emphasis away from the
administrative review and approval process to field
verification of response capability.
The bill will significantly reduce the administrative
burden on the regulated community and will shift the
emphasis from paperwork to performance.
The reduction in paperwork will increase the ability
of operators and the Department to focus on spill
prevention and facility operation.
The change will allow operators more time to make
practical enhancements to their spill prevention and
response capabilities.
The change will improve environmental protection and
preparedness through increased field presence and the
ability to work directly with operators to ensure
response readiness through on-site facility and vessel
inspections, spill drills and exercises.
The change will also make the state renewal cycle
consistent with the five year renewal cycle for
federal oil spill contingency plans required under the
Oil Pollution Act of 1990, as well as those of other
West Coast states.
MR. DIETRICK told members that Mr. Tostevin, assistant attorney
general, was available to speak to members via teleconference
about a proposed amendment that addresses the transition
provisions.
4:00 p.m.
SENATOR ELTON asked Mr. Dietrick if SB 74 will prevent DEC from
issuing a permit or from approving a plan based upon a future
act of the permit holder. He expressed concern that a situation
may arise when an advance in technology would improve a plan,
but DEC would be prevented from asking the permittees to improve
their plan capabilities.
MR. DIETRICK said it would not. The provision for plan
amendments, which is the tool DEC would use to do that, remains
unchanged. By allowing DEC to field test technologies,
capabilities and representations made in the plan, DEC will
better be able to determine what is working.
CHAIR OGAN asked if, typically, changes are made to the plan at
the end of the three-year cycle, or whether changes are made to
the plan along the way.
MR. DIETRICK said the bulk of the facilities in Alaska haven't
changed over the years. These particular laws were enacted in
1990 so most of the existing facilities are on their fourth
three-year renewal cycle. Those that have had a change in
operations are required to amend their plans to reflect that
change. DEC then reviews and approves the amendment in
conjunction with the three-year renewal. This change will extend
out to five years. Any change that happens at a facility during
the five-year time frame that would result in, as stated in the
bill, "a diminishment in the response capability," is cause for
the plan to be amended. Therefore, operators cannot diminish
their spill response capabilities in any form without filing an
amendment to their plans.
CHAIR OGAN asked if the companies must submit any changes in
their contingency plans to DEC and that is when the plan is
amended, rather than during the three-year review.
MR. DIETRICK said at the end of the three-year renewal cycle,
the companies go through a formal public review process,
regardless of whether the companies have made any changes. Many
companies have made no changes so lengthening the renewal cycle
to every five years will provide a huge gain while preserving
the ability to amend a plan if any change occurs within the five
years.
CHAIR OGAN asked if many people testify at the public hearings.
MR. DIETRICK said that hearings are held at the discretion of
DEC. DEC is mandated to provide a 30-day public comment period.
If controversial issues arise during that public comment period
and a hearing is requested, DEC holds one.
CHAIR OGAN asked if DEC gets many requests for hearings.
MR. DIETRICK said the number of requests has not been high -
maybe 20 percent or less.
CHAIR OGAN asked if any changes have been made to operation
plans based on public input and public hearings.
MR. DIETRICK said yes, DEC does react to public input.
CHAIR OGAN asked if public comments are received at every public
hearing and whether DEC changes something in the plan as a
result of each hearing.
MR. DIETRICK said the bulk of the changes made resulted from
written comments. However, regardless of whether the comments
are made orally or in writing, DEC considers them. He said the
preponderance of the input is in response to the 30-day public
notice and that is the largest category of comments that DEC
reacts to.
SENATOR LINCOLN noted that SB 74 was introduced on February 19
at the request of the Governor and that the Senate Resources
Committee is the only committee of referral. She asked the Chair
what process the Legislature has used to provide adequate public
notice of this legislation. She indicated this legislation will
make a major change and was only submitted last week.
CHAIR OGAN told Senator Lincoln that the committee appropriately
noticed the legislation by giving a 5-day notice. He noted that
some amendments have been suggested so he does not plan to move
the bill out of committee today.
SENATOR LINCOLN said in her efforts to seek public input on SB
74, she heard a concern expressed that DEC's five-year renewal
process will align with the federal government's five-year time
frame but the federal government requires a major oil spill
drill once every three years. Most Alaska C-plan [contingency
plan] holders schedule their drills to coincide with the state
mandated contingency plan review. She questioned how companies
will align the oil spill drill to coincide with the federal
schedule.
MR. DIETRICK told members that DEC envisions negotiating the
alignment between the review cycles. DEC hopes, two years after
SB 74 is enacted, to negotiate with an operator so that the
operator can choose an alternative date within the state five-
year window to allow it to line up with the federal
requirements. Regarding the drill, Mr. Dietrick said they are
already coordinated in Alaska. Virtually all of DEC's
significant drills are fully coordinated with the U.S. Coast
Guard (CG) and the U.S. Environmental Protection Agency (EPA).
Drills consist of a series of activities, from equipment
verification checks to telephone exercises to full deployment
exercises but the higher cost drills are fully coordinated with
the federal agencies as well as at the local level.
SENATOR LINCOLN said the other concern she heard was that Alaska
has the reputation as a leader of the best available technology
for oil spill prevention and response. She asked if the change
to a five-year renewal cycle will have any effect on that
reputation.
MR. DIETRICK said that DEC believes its ability to test the
technology represented in the plans will be a more productive
way to find out if those best available technologies work. To
date, DEC has not had the ability to do tests on the ground. By
freeing up some of the administrative burden and focusing on
performance and response, DEC believes it will better be able to
field check those technologies.
SENATOR LINCOLN expressed concern that she can't envision how
streamlining the permitting system in this way will provide more
staff time.
MR. DIETRICK said DEC considered how to implement this change
without backsliding on the requirements or the standards. He
explained that the statute for spill response has two parts. The
first applies to contingency planning, which is where a plan is
compared to a theoretical spill with theoretical assumptions and
a response is designed to deal with it. That is essentially what
the review process is about. In the second part of the statute,
the legislature clearly recognized the need to have an incident
command system (ICS) and well-qualified and trained people able
to respond to a spill. He feels that is the more important
aspect of the total framework needed to assure that the state
has a good response capability. It shifts the balance from the
plan review of the theoretical spill and focuses the emphasis on
the ICS and field practice of response. The additional time DEC
will get is the time realized from the [increase] in the review
period from three to five years.
SENATOR LINCOLN asked if a fiscal note will be forthcoming from
the Department of Law.
CHAIR OGAN asked Senator Lincoln to defer to Mr. Tostevin for an
answer.
SENATOR ELTON asked whether a reduction in staff at a facility
would trigger a plan review.
MR. DIETRICK said it would have to fit into the phrase
"diminishment of response capability" so that a reduction in the
number of personnel earmarked as part of a planned response to a
theoretical spill would trigger the amendment process.
CHAIR OGAN added that committee staff requested fiscal notes but
the DEC fiscal note is the only one that was submitted. There
being no further questions of Mr. Dietrick, he took testimony
from Mr. Tostevin.
MR. BRECK TOSTEVIN, assistant attorney general, Department of
Law (DOL), said he would like to first speak to a proposed
amendment to SB 74 offered by DOL that addresses transition
scenarios that may arise after the legislation is enacted. He
explained that the amendment would add a new section to an
uncodified law provision, which would be in title transition.
Subsection (a) would allow DEC to administratively extend the
expiration date of oil discharge prevention and contingency
plans approved before the effective date of the act. There would
be two limitations on DEC's authority to extend the C-plan
renewal date: one would be that the plan would have to be in
effect on the day before the effective date of the act; the
second would occur if DEC had issued a notice of violation to
the C-plan holder concerning the C-plan. That violation would
have to be corrected to the satisfaction of DEC before the C-
plan expiration date can be extended. The intent of subsection
(a) would be to allow DEC to extend the expiration dates of
existing C-plans without going through new administrative review
or renewal procedures and without having to adopt new
regulations. Under subsection (a), DEC would upon the effective
date of the act administratively extend the expiration date of
the C-plan then in effect for up to two years. This would allow
the immediate benefits to DEC and the industry discussed earlier
by Mr. Dietrick. Subsection (b) gives DEC the ability to adopt
regulations implementing the transition provision if it so
chooses. However, adopting regulations would be optional.
Subsection (a) clearly provides that regulations are not
necessary in order for DEC to administratively extend the
expiration date.
MR. TOSTEVIN said in conclusion, the adoption of the amendment
creating the transition provision would clarify that, upon
enactment of this legislation, DEC could extend the expiration
date up to two years.
TAPE 03-7, SIDE B
CHAIR OGAN said the proposed amendment had not been offered yet
so he would take further testimony on the bill at this time and
address the amendment later.
SENATOR ELTON asked if DEC anticipates that the review process
for a five-year permit will be substantially similar to the
review process for a three-year permit.
MR. DIETRICK said the review process will remain the same.
SENATOR SEEKINS asked if DEC believes the process used over the
last three years is substantial enough to allow for the
automatic extension of permits for two more years.
MR. DIETRICK said DEC is comfortable with that process for
several reasons:
· The required amendment remains in place so if an operator
diminishes the operation at any time within the extension,
DEC must be notified.
· DEC also has a requirement of non-notification readiness so
an operator must immediately notify DEC if any equipment
has been taken off line.
· Subsection (b) of the proposed amendment will ensure that
an extension will not be granted to any existing plans that
are out of compliance.
SENATOR LINCOLN said Mr. Dietrick is assuming that with this
proposed change, DEC will have the same number of staff. She
asked if a budget cut to DEC staff could create a problem.
MR. DIETRICK said DEC has considered this change and prepared a
zero fiscal note with no change in the current level of
staffing.
SENATOR LINCOLN asked what a decrease in the number of DEC staff
would do to this whole process.
MR. DIETRICK said any reduction in staff would have to be
evaluated.
SENATOR ELTON asked what would happen in a situation if the best
available technology (BAT) has changed on a currently permitted
three-year plan. He noted the language in the proposed amendment
is permissive in that DEC may extend the expiration date. He
asked whether DEC will provide automatic extensions or whether
it will go through some kind of a review process. He pointed out
if DEC does a review process, it might be more expedient to
approve a new five-year plan rather than extend an existing plan
for two more years.
MR. DIETRICK said the operator does the BAT analysis at the time
of plan submission. Again, if there is no change to the
operation, DEC would likely conclude that the analysis continues
to be valid for another two years. DEC is also doing a BAT
review with funds awarded by the Legislature last year. A DEC
workgroup is comprehensively looking at spill prevention and
response technologies.
SENATOR ELTON said if there is a review process on an extension,
he would think the private entity would prefer to apply for a
new five-year permit rather than a two-year extension.
MR. DIETRICK deferred to Mr. Tostevin for an answer to that
question, but said his understanding of the transition language
is that any three-year plan approved prior to the effective date
of the bill can be extended for up to two additional years. If a
plan was reviewed after the effective date, it would be eligible
for a five-year approval.
SENATOR ELTON said his concern is that if DEC has the discretion
to extend, it may be beneficial to the entity to request
approval of a five-year permit rather than a two-year extension.
MR. DIETRICK deferred to Mr. Tostevin for an answer.
MR. TOSTEVIN clarified that the way the transition is drafted, a
currently approved plan would get a two-year extension upon its
expiration date. When the two years expires, the operator would
have to apply for a renewal, which would last for five years. If
an operator wanted to voluntarily seek a renewal after the
effective date of the act, that would be legally permissible, as
it is right now.
SENATOR ELTON said it seems that DEC is taking an option away
from a facility manager by not offering the option of a five-
year renewal.
SENATOR SEEKINS said he understood it the other way around -
that an operator could voluntarily reapply for a new five-year
permit at any time.
4:30 p.m.
MR. TOSTEVIN said there is nothing to prevent an operator from
applying for a new five-year C-plan approval after the effective
date of the legislation.
CHAIR OGAN said common sense dictates that no one will apply
before the expiration date because it will cost that much more.
MR. DIETRICK said one reason a company might want to apply for a
five-year renewal rather than an extension is to align its
renewal date with the federal renewal cycle. He believes Mr.
Tostevin said that would be allowable.
CHAIR OGAN took testimony from members of the industry.
MS. MARILYN CROCKETT, Deputy Director of the Alaska Oil and Gas
Association (AOGA), told members that all of AOGA's 17 member
companies are required to carry C-plans as part of their
operations. AOGA has spent quite a bit of time during the last
year looking at possible opportunities to update and streamline
statutes and regulations to enhance resource development in
Alaska. AOGA used a guiding principle throughout that process,
based on the premise that it wanted to see streamlining of the
requirements occur without compromising environmental
protection. AOGA believes SB 74 is a perfect example of that
principle.
MS. CROCKETT said the current federal renewal cycle and West
Coast states' renewal cycles are based on five-years. AOGA found
the other oil producing states in the United States also have a
five-year renewal cycle. Therefore, it is a tried and true plan.
She noted the development of a C-plan and the renewal process is
very costly. The renewal process can run anywhere from $60,000
to $100,000. She said she could not provide the costs to DEC and
to the public of responding to those applications when they are
renewed every three years, but she assumes those costs are
substantial as well. SB 74 will save the private sector and
state money.
MS. CROCKETT pointed out that SB 74 will also free up DEC from
the paperwork exercise of reviewing plans every three years and
will allow them to get out and see the operations first hand and
conduct drills. AOGA's experience on C-plan reviews has been
that industry members must submit their renewal package 180 days
in advance of the three-year expiration date. AOGA found that
about the time the C-plan is finally approved, companies are
starting to prepare materials for the next three-year renewal
cycle. She said that SB 74 will at least let the ink dry on the
125 existing plans. She encouraged members to favorably consider
SB 74 and offered to answer questions.
CHAIR OGAN asked how many man-hours goes into preparing a
renewal.
MS. CROCKETT said that she would have to get that information,
but added that hundreds to thousands of man-hours are involved
in the development of plans. She noted the plans are several
volumes thick and consist of substantial and comprehensive
documents. She added that it probably costs hundreds of
thousands of dollars.
CHAIR OGAN took testimony from Tadd Owens.
MR. TADD OWENS, Executive Director of the Resource Development
Council (RDC), stated support for SB 74 for the following
reasons:
· The current three-year renewal cycle often does not result
in meaningful improvements in environmental protection or
regulatory compliance. Increasing the time between renewals
from three to five years will bring the program's benefits
in line with its costs.
· A five-year renewal cycle will allow the state to focus its
resources on site inspections rather than the office work
associated with plan reviews and provide staff with a more
thorough understanding of industry operations. Staff can
better evaluate the effectiveness of existing plans, which
will allow for better oversight, incorporate more high-
value improvements, and be less vulnerable to legal
challenges.
· Industry can shift its resources away from the largely
administrative exercise of three-year renewals to
additional prevention activities.
[A copy of Mr. Owens' written testimony can be found in the
committee file.]
CHAIR OGAN announced that in an effort to provide a good public
process, he would like a member to offer Amendment 1 for the
purpose of discussion, and then he hold it and the bill in
committee until March 3. That will provide members and the
public more time to consider the amendment and measure.
SENATOR SEEKINS moved to adopt Amendment 1, which reads as
follows:
A M E N D M E N T 1
OFFERED IN THE SENATE RESOURCES BY SENATOR SEEKINS
COMMITTEE
TO: SB 74
Page 1, following line 10:
Insert a new bill section to read:
*Sec. 2. The uncodified law of the State of Alaska is amended
by adding a new section to read:
TRANSITION. (a) Notwithstanding any contrary provision
of AS 46.04, including the review procedures in AS 46.04.030,
and the regulations adopted under AS 46.04, the Department of
Environmental Conservation may extend, up to an additional two
years, the expiration date of an oil discharge prevention and
contingency plan approved by the department before the effective
date of this Act, if
(1) the plan is still in effect on the day before the
effective date of this Act; and
(2) the Department of Environmental Conservation has
not given notice of violation of this chapter to the holder of
the plan that has not been corrected to the satisfaction of the
Department of Environmental Conservation.
(b) The Department of Environmental Conservation may adopt
regulations under AS 44.62 to implement this section.
Renumber remaining sections accordingly.
SENATOR SEEKINS asked who drafted Amendment 1.
MR. DIETRICK told members that Mr. Tostevin drafted Amendment 1.
SENATOR SEEKINS pointed to the words "may" on line 7 and "up to"
and said that as a used car salesman, "...I think this
Philadelphia lawyer wrote those to give his client a lot of
wiggle room here because 'may' could be 'may not.' It implies
they may not, and 'up to' could be 'less than.'" He noted that
Mr. Dietrick has said the process is good enough and that the
plans can be extended for another two years, therefore he
believes this language should be specific rather than uncertain.
That way, if a company is running up against the time when this
bill is enacted, the company should have the certainty of
knowing its plan will be extended, barring any contingencies,
for two years.
In addition, SENATOR SEEKINS expressed concern that the word
"may" is used again on line 15, allowing DEC to adopt
regulations. He asked whether that language is necessary because
it is already implied that DEC has the right to adopt those
regulations once this bill passes.
MR. TOSTEVIN responded that he used the words, "may extend" to
provide flexibility when addressing a situation in which a plan
holder might want a shorter period than two years to address
coordinating the plan with the federal five-year renewal period.
He said the committee could certainly make the extension period
mandatory.
SENATOR SEEKINS said he was more interested in pinning DEC down,
rather than the applicant. He said he thought the applicant
already had that flexibility.
CHAIR OGAN said if the issue is alignment with federal permits,
the language could read, "shall extend up to two years."
SENATOR SEEKINS said he still doesn't like the words "up to"
because he believes DEC ought to extend it automatically and the
plan holder should be given the option of coordinating the
timing with the federal permit. He does not want DEC to be able
to extend a permit for one year.
CHAIR OGAN suggested asking industry people to comment on this
question.
SENATOR ELTON commented that "shall extend for two years" tells
DEC it can't work with a company if it wants something
different. He noted DEC already has the authority to mandate a
plan amendment so he'd be stunned to find this was designed to
do anything but give more flexibility to the applicant rather
than the department.
MR. DIETRICK said DEC thought, when it reviewed Amendment 1, the
intent of that language was to allow DEC the flexibility to
accommodate companies that want to synchronize their plans. He
pointed out that subsection (2)(a) is the other key provision.
The "may" is contingent upon whether it is prior to the
effective date of the act and that a company has no prior
violations.
SENATOR SEEKINS said that he has been on the receiving end of
that kind of language and that is not how the court perceives
it. He said he has no problem providing more flexibility to the
applicant, but he does not feel comfortable giving the
bureaucracy flexibility.
CHAIR OGAN asked Ms. Crockett and Mr. Owens to comment.
MS. CROCKETT expressed concern about a misinterpretation of the
words, "may extend" because they will open up opportunities for
legal challenges. She wondered whether there is a way to make
this a simple, self-implementing provision that says
notwithstanding the contingency provisions, the expiration date
of a C-plan previously approved by DEC before the effective date
will be extended by two years. That way, if no violations have
occurred and the plan was approved prior to the effective date,
DEC will not be required to jump through hoops to demonstrate
that a plan should be extended.
MS. CROCKETT said with regard to a situation where an applicant
may want to have a C-plan review for coordination purposes prior
to the two years, she is hard pressed to imagine that DEC would
turn down a request of that nature. She said she would support
language that makes it abundantly clear that the legislature's
intent is to extend the plans in place today and operating under
the requirements of the laws and regulations.
CHAIR OGAN asked Ms. Crockett to comment on DEC's "we're here to
help you" argument about why it needs the flexibility to assist
the industry.
MS. CROCKETT said the real issue is the attention this could get
in the courts because the language is unclear.
CHAIR OGAN said ambiguous statutory language is ripe for
litigation.
SENATOR SEEKINS noted if the words "shall" and "for" are
substituted for "may" and "up to," it will have no effect on the
"if" provisions of line 9.
CHAIR OGAN told members he drafted proposed language for a new
amendment.
SENATOR ELTON asked if anyone is sponsoring the amendment.
SENATOR SEEKINS agreed to be the sponsor of Amendment 1.
SENATOR ELTON said he wants to make sure that what the committee
is doing will accomplish something without putting handcuffs on
somebody. He said it is his understanding that an operator with
an existing plan can request a plan renewal at any time. He
questioned what would happen if an operator wanted an extension
for a year. He asked if the language says shall extend for two
years, will DEC be able to work with them or whether the
operator can apply for a new permit.
MR. DIETRICK said it would be DEC's desire to allow companies
the opportunity to synchronize the federal plan review cycle
with the state plan review cycle. DEC normally does not like to
renew plans in a cycle shorter than three years because it is
more work. However, with this change, he can see the need to
grant a request for a shorter duration in order to allow a
company to make that alignment.
SENATOR ELTON said his concern is that this language will create
a problem for a company that needs to be aligned three months
after their permit expiration.
MR. DIETRICK said this language could create a time crunch
problem of some operators. The bigger operators and more
complicated reviews are for the larger facilities: TAPS, the
Valdez Marine Terminal, and the Prince William Sound crude oil
tanker traffic. DEC can approve the plans of the smaller
operators in a shorter time period.
CHAIR OGAN said he had language prepared to amend Amendment 1
and would like to move the amendment but hold it in committee to
provide time for consideration.
SENATOR SEEKINS moved to adopt the amendment to Amendment 1,
which reads as follows:
AMENDMENT TO AMENDMENT 1
Lines 5-9
TRANSITION: (a) Notwithstanding any contrary provision of AS
46.04, including the review procedures in AS 46.04.030, and the
regulations adopted under AS 46.04, the expiration date of an
oil discharge prevention and contingency plan approved by the
Department of Environmental Conservation before the effective
date of this Act shall be extended for two years if
Lines 15-16: Delete paragraph (b).
SENATOR ELTON asked if this bill will be rescheduled for next
Monday's meeting.
CHAIR OGAN announced a brief at-ease. When he reconvened the
meeting, he announced SB 74 and its amendments would be heard on
Monday, March 3, 2003. He then adjourned the meeting at 5:05
p.m.
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