Legislature(2005 - 2006)BUTROVICH 205

04/26/2006 03:30 PM RESOURCES

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Audio Topic
03:40:18 PM Start
03:44:08 PM SJR17
04:34:36 PM HB484
04:39:35 PM Bp North Slope Oil Spills - Update
04:59:14 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSJR 17(RES) Out of Committee
Moved CSHB 484(FSH) Out of Committee
+ BP North Slope Spills - Update TELECONFERENCED
<Bill Hearing Postponed to 4/27/06>
<Bill Hearing Postponed to 4/27/06>
<Bill Hearing Postponed to 4/27/06>
<Bill Hearing Postponed>
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         April 26, 2006                                                                                         
                           3:40 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Thomas Wagoner, Chair                                                                                                   
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Ben Stevens                                                                                                             
Senator Fred Dyson                                                                                                              
Senator Bert Stedman                                                                                                            
Senator Kim Elton                                                                                                               
Senator Albert Kookesh                                                                                                          
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE JOINT RESOLUTION NO. 17                                                                                                  
Urging the  United States  Department of  Justice and  the Alaska                                                               
Department of Law  to identify all natural  resource damages from                                                               
the Exxon  Valdez oil spill  that were unanticipated at  the time                                                               
of the 1991  settlement, to develop plans to  remedy the damages,                                                               
and to present the ExxonMobil  Corporation with a request for the                                                               
full  $100,000,000 that  is available  through the  "Reopener for                                                               
Unknown Injury" clause of the  1991 civil settlement to carry out                                                               
these plans.                                                                                                                    
     MOVED CSSJR 17(RES) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 484(FSH)                                                                                                  
"An  Act   allowing  for  revenue   received  from   issuance  of                                                               
additional entry permits to be  appropriated for reimbursement to                                                               
salmon fishery associations."                                                                                                   
     MOVED CSHB 484(FSH) OUT OF COMMITTEE                                                                                       
BP North Slope Spills - Update                                                                                                  
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 57(FIN)                                                                            
"An Act  relating to the sale  of certain state land  to adjacent                                                               
     BILL HEARING POSTPONED TO 4/27/06                                                                                          
CS FOR HOUSE BILL NO. 415(JUD)                                                                                                  
"An  Act relating  to landowners'  immunity for  allowing use  of                                                               
land  without charge  for a  recreational  activity; relating  to                                                               
landowners'  liability  where  landowner conduct  involves  gross                                                               
negligence  or reckless  or intentional  misconduct; relating  to                                                               
claims  of  adverse  possession and  prescriptive  easements,  or                                                               
similar claims; and providing for an effective date."                                                                           
     BILL HEARING POSTPONED TO 4/27/06                                                                                          
HOUSE BILL NO. 419                                                                                                              
"An  Act repealing  the  Board of  Storage  Tank Assistance,  the                                                               
underground  storage  tank  revolving  loan fund,  and  the  tank                                                               
cleanup  loan program;  repealing certain  reporting requirements                                                               
relating to  underground petroleum  storage tank  systems; making                                                               
conforming amendments; and providing for an effective date."                                                                    
     BILL HEARING POSTPONED TO 4/27/06                                                                                          
SENATE BILL NO. 170                                                                                                             
"An Act  relating to the Department  of Fish and Game,  the Board                                                               
of Fisheries,  and the Board of  Game; relating to the  taking of                                                               
big game and to the disposition of  a mount, trophy, or part of a                                                               
fish or game  animal; setting fees for  certain trapping licenses                                                               
and  certain hunting  licenses, permits,  and tags;  setting fees                                                               
for the  resident combined hunting,  trapping, and  sport fishing                                                               
license  and  the resident  combined  hunting  and sport  fishing                                                               
license;  relating to  the resident  small game  hunting license;                                                               
setting application fees for certain  hunting permits and stamps;                                                               
establishing a surcharge on hunting,  trapping, and sport fishing                                                               
licenses;  relating  to  certain  hunting,  trapping,  and  sport                                                               
fishing  licenses, tags,  permits,  and stamps;  relating to  the                                                               
fish  and game  fund; relating  to  violations of  fish and  game                                                               
laws;  relating  to state  management  of  wildlife; relating  to                                                               
endangered  fish and  wildlife;  and providing  for an  effective                                                               
     BILL HEARING POSTPONED                                                                                                     
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SJR 17                                                                                                                  
SHORT TITLE: COLLECT MORE EXXON VALDEZ SPILL DAMAGES                                                                            
SPONSOR(s): SENATOR(s) FRENCH                                                                                                   
02/01/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/01/06       (S)       RES, JUD                                                                                               
04/19/06       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/19/06       (S)       Scheduled But Not Heard                                                                                
04/24/06       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/24/06       (S)       -- Meeting Canceled --                                                                                 
04/26/06       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
BILL: HB 484                                                                                                                  
SHORT TITLE: FISHERY ASSOCIATION REIMBURSEMENT                                                                                  
SPONSOR(s): REPRESENTATIVE(s) WILSON                                                                                            
02/13/06       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/06       (H)       FSH, RES, FIN                                                                                          
03/22/06       (H)       FSH AT 8:30 AM CAPITOL 124                                                                             
03/22/06       (H)       Moved CSHB 484(FSH) Out of Committee                                                                   
03/22/06       (H)       MINUTE(FSH)                                                                                            
03/24/06       (H)       FSH RPT CS(FSH) 3DP 2NR                                                                                
03/24/06       (H)       DP: WILSON, ELKINS, THOMAS;                                                                            
03/24/06       (H)       NR: HARRIS, KAPSNER                                                                                    
03/31/06       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
03/31/06       (H)       Moved CSHB 484(FSH) Out of Committee                                                                   
03/31/06       (H)       MINUTE(RES)                                                                                            
04/03/06       (H)       RES RPT CS(FSH) 4DP 1NR                                                                                
04/03/06       (H)       DP: SEATON, ELKINS, CRAWFORD, RAMRAS;                                                                  
04/03/06       (H)       NR: OLSON                                                                                              
04/10/06       (H)       FIN RPT CS(FSH) 3DP 7NR                                                                                
04/10/06       (H)       DP: KERTTULA, FOSTER, CHENAULT;                                                                        
04/10/06       (H)       NR: HAWKER, HOLM, KELLY, STOLTZE,                                                                      
                         WEYHRAUCH, MOSES, MEYER                                                                                
04/10/06       (H)       FIN AT 9:00 AM HOUSE FINANCE 519                                                                       
04/10/06       (H)       Moved CSHB 484(FSH) Out of Committee                                                                   
04/10/06       (H)       MINUTE(FIN)                                                                                            
04/19/06       (H)       TRANSMITTED TO (S)                                                                                     
04/19/06       (H)       VERSION: CSHB 484(FSH)                                                                                 
04/20/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/20/06       (S)       RES, FIN                                                                                               
04/24/06       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/24/06       (S)       -- Meeting Canceled --                                                                                 
04/26/06       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
WITNESS REGISTER                                                                                                              
SENATOR HOLLIS FRENCH                                                                                                           
State Capitol                                                                                                                   
Juneau AK                                                                                                                       
POSITION STATEMENT: Sponsor of SJR 17.                                                                                        
STACY STUDEBAKER, Vice Chair                                                                                                    
Public Advisory Committee (PAC)                                                                                                 
Exxon Valdez Trustee Council                                                                                                    
Kodiak, AK                                                                                                                      
POSITION STATEMENT: Supported SJR 17.                                                                                         
MIKE MAXWELL                                                                                                                    
Cordova, AK                                                                                                                     
POSITION STATEMENT: Supported SJR 17.                                                                                         
PATIENCE ANDERSON FAULKNER                                                                                                      
Cordova, AK                                                                                                                     
POSITION STATEMENT: Supported SJR 17.                                                                                         
ROXY ESTES                                                                                                                      
Cordova, AK                                                                                                                     
POSITION STATEMENT: Supported SJR 17.                                                                                         
NANCY BIRD, President                                                                                                           
Prince William Sound Science Center                                                                                             
Cordova, AK                                                                                                                     
POSITION STATEMENT: Supported SJR 17.                                                                                         
STANLEY RICE, Senior Scientist                                                                                                  
National Marine Fisheries Service                                                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SJR 17.                                                                                         
PEGGY WILSON                                                                                                                    
Alaska State Capitol                                                                                                            
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT:  Sponsor of HB 484                                                                                        
LINDA MILLER, staff                                                                                                             
Representative Peggy Wilson                                                                                                     
Alaska State Capitol                                                                                                            
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT:  Introduced HB 484 on behalf of the sponsor.                                                              
LARRY DIETRICK, Director                                                                                                        
Division of Spill Prevention and Response                                                                                       
Department of Environmental Conservation                                                                                        
410 Willoughby                                                                                                                  
Juneau, AK 99801-1795                                                                                                         
POSITION STATEMENT:  Presented the North Slope Oil Spill Update.                                                              
ROBYNN WILSON, Director                                                                                                         
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION STATEMENT:   Provided information  related to  the North                                                             
Slope Oil Spill Update.                                                                                                         
MS. DENISE HAWS, Economist                                                                                                      
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
PO Box 110400                                                                                                                   
Juneau, AK  99811-0400                                                                                                          
POSITION  STATEMENT: Provided  information related  to the  North                                                             
Slope Oil Spill Update.                                                                                                         
ACTION NARRATIVE                                                                                                              
CHAIR  THOMAS  WAGONER  called   the  Senate  Resources  Standing                                                             
Committee meeting to order at 3:40:18  PM. Present at the call to                                                             
order  were Senators  Bert Stedman,  Fred Dyson,  Albert Kookesh,                                                               
Kim Elton  and Chair  Wagoner. Senator  Ben Stevens  arrived soon                                                               
         SJR 17-COLLECT MORE EXXON VALDEZ SPILL DAMAGES                                                                     
CHAIR THOMAS WAGONER announced SJR to be up for consideration.                                                                  
SENATOR  HOLLIS FRENCH,  sponsor of  SJR 17,  explained that  the                                                               
resolution asks the attorneys general  for Alaska and the U.S. to                                                               
pursue a reopener  clause seeking up to $100  million for damages                                                               
that  were  not  anticipated  when the  Exxon  Valdez  oil  spill                                                               
litigation was  settled in 1991.  He directed  committee member's                                                               
attention  to  copies of  a  1991  New  York Times  article  that                                                               
provides a  glimpse at the  confrontational litigation  that took                                                               
place  in settling  the claims  and the  role the  transportation                                                               
secretary played as a critical go between.                                                                                      
The article mentions President  Bush's EPA administrator, William                                                               
Riley, who  insisted that the  settlement contain  some provision                                                               
for future and  as yet unforeseen injuries. The  figure Mr. Riley                                                               
put  forth  initially  was  $300  million,  but  the  figure  was                                                               
eventually reduced to $100 million.                                                                                             
SENATOR FRENCH noted  that in 2003 the  National Research Council                                                               
conducted a study  that said one of the profound  outcomes of the                                                               
1989 Exxon Valdez oil spill was  that the affect of oil spills on                                                               
marine resources  is largely unpredictable.  It found  that there                                                               
is  a lack  of understanding  of  the structure  and function  of                                                               
complex ecosystems.                                                                                                             
SENATOR FRENCH  outlined the  six legal  steps that  are required                                                               
before the state could get money from Exxon.                                                                                    
   1. Populations, habitats and species must have suffered losses                                                               
     or declines of the spill area.                                                                                             
   2. Losses have to be substantial.                                                                                            
   3. Losses have to have resulted from the oil spill.                                                                          
   4. Losses could not have reasonably been known or anticipated                                                                
     at the time the Trustees settled the case.                                                                                 
   5. Restoration projects must be identifiable.                                                                                
   6. Costs of the projects must not be grossly disproportionate                                                                
     to the magnitude of the benefits anticipated from the                                                                      
3:44:08 PM                                                                                                                    
SENATOR BEN STEVENS arrived.                                                                                                    
SENATOR FRENCH  highlighted the groups that  support the measure.                                                               
Notably  the  City  of Cordova,  Kodiak  Island  Borough,  Alaska                                                               
Municipal  League,  Kenai  Peninsula   Borough,  and  the  Prince                                                               
William Sound Science Center  have issued supporting resolutions.                                                               
Also,  the  United  Cook  Inlet  Drift  Association,  the  United                                                               
Fishermen of  Alaska, the Chugach Regional  Resources Commission,                                                               
and the Cordova District Fishermen  United have issued letters of                                                               
3:45:13 PM                                                                                                                    
CHAIR WAGONER asked  how much money is left in  the current Exxon                                                               
Valdez Oil Spill (EVOS) account.                                                                                                
SENATOR FRENCH said he did not know.                                                                                            
3:45:29 PM                                                                                                                    
STACY STUDEBAKER,  Vice Chair,  Public Advisory  Committee (PAC),                                                               
Exxon Valdez Trustee Council, Kodiak,  reported that she has been                                                               
a member  of the  EVOS PAC  for the  last 10  years and  has been                                                               
following   the  restoration   process  and   scientific  studies                                                               
carefully. She  urged the  committee to  supported SCR  17, which                                                               
encourages  the  state  and  federal  government  to  reopen  the                                                               
settlement with Exxon  and to seek $100 million  for projects and                                                               
damaged resources  that could  not have  been anticipated  at the                                                               
time of the settlement.                                                                                                         
MS.  STUDEBAKER  related  that  lingering oil  was  found  at  58                                                               
percent of  91 test  sites. That  is estimated  to have  a linear                                                               
shoreline equivalent of  at least 6 miles of  shoreline in Prince                                                               
William Sound. Seventeen years ago  it wasn't possible to predict                                                               
that so  much oil would still  be present below the  surface in a                                                               
form that resembles  that encountered in 1989.  The lingering oil                                                               
is bio-available and continues to  impede the recovery of species                                                               
that live  and or  feed in the  oiled areas.  Furthermore, recent                                                               
studies  show  that   lingering  oil  is  more   toxic  than  was                                                               
anticipated in  1991 and it's  possible that organisms  are being                                                               
exposed  to  sources  of  lingering  oil  that  have  yet  to  be                                                               
Adding to the list that  Senator French highlighted, she said the                                                               
Kodiak Island  Borough, the  City of Kodiak,  the City  of Homer,                                                               
the City  of Cordova,  and the Kenai  Peninsula Borough  have all                                                               
passed  resolutions  supporting  SJR   17.  Essentially  all  the                                                               
communities  within the  spill  region  as well  as  a number  of                                                               
organizations  support reopening  the settlement.  She emphasized                                                               
that  list includes  the EVOS  Trustees  Council Public  Advisory                                                               
MS. STUDEBAKER said local people  don't consider the oil spill to                                                               
be over  because they  are living with  the long-term  impacts to                                                               
fisheries, subsistence food,  and wildlife populations. Long-term                                                               
monitoring  must  go  hand-in-hand  with  short-term  restoration                                                               
projects, she concluded.                                                                                                        
3:50:34 PM                                                                                                                    
MIKE MAXWELL,  Cordova, said he  was born and raised  in Cordova.                                                               
He has been  a commercial fisherman for 37 years  and he is still                                                               
very angry  with Exxon because  after 17  years there is  still a                                                               
lot of  lingering oil on the  beaches. He asked the  committee to                                                               
support  SJR  17  and  help revitalize  the  once  great  herring                                                               
PATIENCE ANDERSON  FAULKNER, Cordova, stated support  for SJR 17.                                                               
[Abbreviated testimony due to audio difficulty.]                                                                                
ROXY  ESTES, Cordova,  said she  is  a second-generation  Cordova                                                               
fisherman who is  no longer able to fish because  of the collapse                                                               
in  the herring  fishery.  Although the  reopener won't  directly                                                               
affect  fishermen, it  would benefit  both the  human and  animal                                                               
species that  depend on herring  as a  part of their  food chain.                                                               
Pointing out that  scientists are talking about  a 100-year clean                                                               
up, she said we need help in a desperate fashion.                                                                               
NANCY  BIRD,  President,  Prince William  Sound  Science  Center,                                                               
Cordova,  spoke   to  the  resolution   the  board   passed  last                                                               
September. It urges support for  reopening the claim and suggests                                                               
that the funds  be used to endow long-term programs  to study and                                                               
monitor the long-term effects of  the lingering oil on the marine                                                               
environment  as   well  as  to  assess   remediation  techniques.                                                               
Programs   should  specifically   include  a   long-term  herring                                                               
research  and restoration  program  that  would advise  fisheries                                                               
management entities on further restoration efforts.                                                                             
She  noted  that  others  have highlighted  the  main  issues  of                                                               
lingering oil on  the beaches and the decline  of herring species                                                               
both of which provide a link  to unanticipated damages. As far as                                                               
how  the money  is  used, she  said the  issues  before us  don't                                                               
necessarily  have  specific  plans.  No one  has  ever  tried  to                                                               
enhance  herring   populations  on   the  scale  that   is  under                                                               
discussion. In  the same vein  there aren't any  known techniques                                                               
for  beach  remediation on  the  scale  that is  necessary  here.                                                               
However, small projects  can be started and the  lack of detailed                                                               
plans should not inhibit forward movement.                                                                                      
MS.  BIRD emphasized  the importance  of herring  to all  species                                                               
throughout Prince William  Sound. At this point  the ecosystem is                                                               
changing because of the lack of herring.                                                                                        
3:57:51 PM                                                                                                                    
SENATOR RALPH SEEKINS arrived.                                                                                                  
MS. BIRD advised that the  restoration reserve fund currently has                                                               
about  $120  million. Those  funds  are  specifically to  restore                                                               
damages that were  known at the time of the  settlement while SJR
17 addresses damages that were unanticipated in 1991.                                                                           
CHAIR WAGONER inquired about the clam and muscle populations.                                                                   
MS. BIRD  replied she  isn't aware  of the  details, but  she has                                                               
seen  indications that  bivalves in  the oiled  areas are  having                                                               
difficulty.   She   elaborated   that  herring   are   having   a                                                               
particularly hard time  because so many species  are dependent on                                                               
4:00:33 PM                                                                                                                    
SENATOR  FRED DYSON  asked how  many  miles of  beach were  oiled                                                               
MS. BIRD replied she understands it was 1,500 miles.                                                                            
SENATOR DYSON asked how many miles of beach have lingering oil.                                                                 
MS.  BIRD  replied between  6  and  15  miles,  but it  covers  a                                                               
deceptively  wide   region  because  the  oiling   doesn't  occur                                                               
continuously. It's more like a  few hundred yards here and there.                                                               
She related  that when she recently  visited the Bay of  Isles on                                                               
the north end of Knight Island  it was easy to find lingering oil                                                               
that came to  surface. It still sheens and looks  and smells like                                                               
fresh  oil. It's  not  everywhere but  it's  still impacting  the                                                               
ecosystem, she said.                                                                                                            
SENATOR DYSON  asked about  the status of  the beaches  that were                                                               
left as test sites.                                                                                                             
MS. BIRD  replied she believes  it's been a mixed  bag. Initially                                                               
it took  longer for  species to  come back  on beaches  that were                                                               
treated  because  the treatment  killed  so  much. The  untreated                                                               
beaches have  a lot  of residual  oil and the  result of  that is                                                               
that the critters have been slow to come back.                                                                                  
SENATOR DYSON  asked if the  untreated test beaches  are included                                                               
in the shoreline estimate for lingering oil.                                                                                    
MS. BIRD said  she didn't know. She elaborated on  aspects of the                                                               
SENATOR DYSON  said he'd  like to  know specifically.  He changed                                                               
topics  and  noted  that  the  last  report  he  saw  on  herring                                                               
indicated that  the petroleum could  cause genetic damage  in the                                                               
species. He  asked Ms. Bird  if oil is  the certain cause  of the                                                               
herring population  demise as  opposed to  other causes  or long-                                                               
term cycles.                                                                                                                    
MS. BIRD  clarified that  she is  not a  scientist and  then said                                                               
that  despite the  fact that  strong correlations  can be  drawn,                                                               
there is  no scientific  way to definitively  make the  link that                                                               
the oil spill caused the demise  of the herring. She related that                                                               
recent acoustic surveys indicate that  the demise of herring most                                                               
likely began in 1990 right after  the oil spill, but the evidence                                                               
isn't definitive because  acoustic studies were not  done in 1990                                                               
through 1993.  She offered to  send further study  information as                                                               
well as the specific beach information.                                                                                         
SENATOR  DYSON  asked  if  the marine  animal  species  that  are                                                               
troubled in  Prince William Sound  are also troubled in  areas of                                                               
Alaska that were not oiled.                                                                                                     
MS. BIRD said Stellar Sea Lions  are stressed in areas other than                                                               
Prince William Sound and that  species relies heavily on herring.                                                               
Harbor Seals were  on the decline, but they  are stabilizing now.                                                               
She didn't  know about populations  in other areas.  Killer Whale                                                               
populations in Prince  William Sound have dropped  but that's not                                                               
the case in other areas such as Southeast.                                                                                      
4:10:15 PM                                                                                                                    
CHAIR WAGONER closed the public hearing.                                                                                        
SENATOR RALPH  SEEKINS asked  if there are  natural oil  seeps in                                                               
the Prince William Sound area.                                                                                                  
SENATOR DYSON  said insignificant amounts occur  in the northeast                                                               
corner.  He then  said  he  would like  to  get more  information                                                               
before voting on the resolution.                                                                                                
CHAIR WAGONER  commented on  the amount in  the EVOS  account and                                                               
said the money is going  further since Governor Murkowski stopped                                                               
the  previous  spending practices.  He  suggested  that the  $120                                                               
million  that's left  in the  fund should  go a  long way  toward                                                               
doing some of the studies that are indicated.                                                                                   
He  stated that  he would  like to  see the  resolution move;  it                                                               
simply asks  that the  reopener clause  be considered  before the                                                               
June 2 deadline.                                                                                                                
4:13:15 PM                                                                                                                    
SENATOR  KIM  ELTON suggested  that  not  passing the  resolution                                                               
expeditiously could  be interpreted to mean  that the legislature                                                               
doesn't support pursuit of the reopener clause.                                                                                 
SENATOR BERT  STEDMAN referenced  page 3, line  10, and  asked if                                                               
the March 24, 2006 date should be changed.                                                                                      
SENATOR  FRENCH  responded  the  date has  passed  so  it  should                                                               
probably be removed from the resolution.                                                                                        
SENATOR DYSON declared  a potential conflict of  interest. He has                                                               
participated  in  seven  or  eight  marine  science  projects  in                                                               
Southcentral and is actively pursuing more of that work.                                                                        
4:16:29 PM                                                                                                                    
SENATOR  ALBERT KOOKESH  said  he would  like  the resolution  to                                                               
SENATOR DYSON said he would  like more information, but he didn't                                                               
want to impede progress.                                                                                                        
CHAIR  WAGONER  asked Mr.  Rice  to  respond to  Senator  Dyson's                                                               
SENATOR DYSON asked  what science has said about  the damage that                                                               
was done to the herring populations.                                                                                            
STANLEY RICE, senior scientist for  oil spill studies at the Auke                                                               
Bay  Lab, National  Marine  Fisheries  Service, Juneau,  provided                                                               
information on  the herring decline  in Prince William  Sound. He                                                               
explained  that in  1989  most  eggs were  not  spawned in  oiled                                                               
zones,  but  just  about  all the  herring  larvae  that  hatched                                                               
drifted  into the  oiled areas  so there  was a  very significant                                                               
effect in  the 1989  year-class. The  damage was  cellular rather                                                               
than  reproductive  cell genetic  damage  so  it did  not  affect                                                               
successive generations. Nevertheless it  was a significant impact                                                               
to the  1989 year-class even  though the population  didn't crash                                                               
until sometime later.                                                                                                           
One researcher suggests  that the population may  have started to                                                               
decline as early as 1989 while  other evidence says it started in                                                               
1993. Clearly, by that time a  lot of disease issues were evident                                                               
and now  the population is  confronted with  either a viral  or a                                                               
fungal  disease   on  an  annual   basis.  One   disease  affects                                                               
recruiting  year classes  and the  other affects  the older  year                                                               
classes  and   probably  terminates  life  one   to  three  years                                                               
prematurely at the most reproductively capable age.                                                                             
When  compared to  other populations,  the  Prince William  Sound                                                               
herring population is not showing  signs of recovery. Up and down                                                               
fluctuations are normal,  but for a population to  stay down this                                                               
long  is relatively  unusual. It  is  also fairly  unusual for  a                                                               
population  to be  limited by  disease for  this length  of time.                                                               
Although the links  aren't hard and fast, the  suggestion is that                                                               
the depressed population is oil related.                                                                                        
SENATOR  DYSON asked  about the  report that  six miles  of beach                                                               
still have profound  residual oil and asked if  that includes any                                                               
of the beaches that were deliberately not remediated.                                                                           
MR. RICE  explained that when  the beaches were selected  as part                                                               
of  the  2001   survey,  they  were  chosen   randomly  within  a                                                               
population of  heavily and moderately oiled  beaches. The beaches                                                               
that were in  the selection pool did not include  those that were                                                               
set aside to receive no remediation.                                                                                            
He  elaborated  that the  statistical  measure  of oil  indicates                                                               
about six  miles of beach  inside Prince William Sound  only. The                                                               
distribution  of  oil  is  patchy  so the  six  miles  is  spread                                                               
throughout   the   sound   with  some   areas   showing   heavier                                                               
concentration than others.                                                                                                      
One  thing that  surely wasn't  known in  1989 or  1991 when  the                                                               
settlement occurred  is that  the distribution  of oil  went down                                                               
into  the beach  in  depth as  well as  tidal  height. Today  the                                                               
majority of  oil is in the  mid zone. Mussels and  clams start in                                                               
that zone and  move down the beach meaning that  a lot of biology                                                               
and prey resources are in the oiled zone.                                                                                       
SENATOR DYSON asked if there is  a consistent pattern of tide and                                                               
storm surges on the beaches that aren't recovering.                                                                             
MR.  RICE replied  it's a  bit mixed,  but it's  not the  exposed                                                               
rocky beaches. It's  the more protected environments  such as the                                                               
Bay  of Isles,  Herring Bay,  Lower Pass,  and Northwest  Bay. In                                                               
those places you can dig four  or five inches down and after that                                                               
the oil  seeps in and  sometimes fills  the hole with  oil that's                                                               
the same  consistency as it  was in  1989. That's why  it's still                                                               
referred to  as toxic and mobile.  If an otter or  Harlequin Duck                                                               
disturbs that  sort of  environment it will  receive an  oil dose                                                               
exposure, he said.                                                                                                              
4:24:20 PM                                                                                                                    
SENATOR DYSON asked which fish and mammals feed on herring.                                                                     
MR. RICE replied if there is  a single most important fish, it is                                                               
herring  because   almost  everything  feeds  on   that  species.                                                               
Although most  birds feed  on herring, it's  the chicks  that are                                                               
dependent on  herring for  survival. Many  of the  marine mammals                                                               
are  in  the same  situation.  Humpback  Whales feed  on  herring                                                               
heavily in the winter, as do  sea lions and seals. Sea otters are                                                               
one  of the  rare species  not  connected to  herring; they  feed                                                               
almost exclusively on invertebrates.                                                                                            
Herring is important  because it has a biology  that takes energy                                                               
from phytoplankton  and zooplankton, which is  unavailable to the                                                               
larger  species,  and absorbs  it  into  their bodies.  Then  the                                                               
herring makes itself available to predators.                                                                                    
[LARRY  DIETRICK,  Director,  Division of  Spill  Prevention  and                                                               
Response,   Department  of   Environmental  Conservation   (DEC),                                                               
advised that a comprehensive synthesis  of all the science on the                                                               
condition of  the injured  resources in  Prince William  Sound is                                                               
available on the EVOS website. The list is sorted by species.]                                                                  
4:26:20 PM                                                                                                                    
CHAIR WAGONER suggested amending  the resolution to remove "March                                                               
24, 2006, the  17th anniversary of the spill," from  page 3, line                                                               
10, and to insert "June 2, 2006" in its place.                                                                                  
SEEKINS  moved  Amendment  1  as outlined  above.  There  was  no                                                               
objection and it was adopted.                                                                                                   
4:27:33 PM at ease 4:29:07 PM                                                                                               
SENATOR ELTON moved  to report CSSCR 17(RES)  from committee with                                                               
individual recommendations. There was no  objection and it was so                                                               
4:29:53 PM at ease 4:31:12 PM                                                                                               
        CSHB 484(FSH)-FISHERY ASSOCIATION REIMBURSEMENT                                                                     
CHAIR WAGONER announced HB 484 to be up for consideration.                                                                      
PEGGY WILSON, sponsor of HB 484, introduced Linda Miller.                                                                       
LINDA  MILLER, staff  to Representative  Peggy Wilson,  explained                                                               
that  in  2002  the  Alaska Legislature  created  salmon  fishery                                                               
associations to encourage fleet  reduction. She said associations                                                               
may be  formed throughout the  state to facilitate a  permit buy-                                                               
back  program, which  allows a  group  of fishermen  to buy  back                                                               
permits  in a  particular fishery.  The Southeast  Alaska Seiners                                                               
formed an  association for that  purpose, and then asked  about a                                                               
reimbursement  provision   if  the  Commercial   Fisheries  Entry                                                               
Commission (CFEC)  were to re-issue  permits the  association had                                                               
previously bought back.                                                                                                         
MS.  MILLER  said  CSHB  484(FSH)  makes it  clear  that  in  the                                                               
unlikely event  that the CFEC  sells permits that  an association                                                               
previously purchased, the legislature  may appropriate money back                                                               
to the  association. The change  from the original  version makes                                                               
it clear that  the association that actually did  the buy-back is                                                               
the one  that may receive  the payback.  She said that  the state                                                               
has a  responsibility to monitor  each limited entry  fishery. In                                                               
the  event   that  more  permits   are  needed  through   a  CFEC                                                               
determination or a  court action, the provisions of  HB 484 would                                                               
4:34:36 PM                                                                                                                    
SENATOR STEDMAN asked for clarification  that the market value of                                                               
the  permit would  go to  the  association and  not the  purchase                                                               
MS.  MILLER said  her understanding  is that  the money  that the                                                               
association expended originally would be returned.                                                                              
SENATOR RALPH  SEEKINS noted  that the  word "may"  on line  9 is                                                               
permissive so it is at the will of the legislature.                                                                             
4:36:30 PM                                                                                                                    
SENATOR SEEKINS moved  to pass CSHB 484(FSH)  from committee with                                                               
individual  recommendations and  attached  fiscal note(s).  There                                                               
being no objection, it was so ordered.                                                                                          
4:37:14 PM at ease 4:38:19 PM                                                                                               
              ^BP North Slope Oil Spills - Update                                                                           
CHAIR THOMAS WAGONER  announced the next order of  business was a                                                               
North Slope Oil Spill update.                                                                                                   
LARRY  DIETRICK,  Director,  Division  of  Spill  Prevention  and                                                               
Response,   Department  of   Environmental  Conservation   (DEC),                                                               
reported  that   the  GC-2  oil  spill   cleanup  is  essentially                                                               
completed  and that  includes the  revegetation process.  He said                                                               
the  environmental impacts  have been  minimal and  there are  no                                                               
wildlife impacts. DEC will be  monitoring the recovery during and                                                               
post spring break-up, he said.                                                                                                  
4:39:35 PM                                                                                                                    
The  bypass  line  from  GC-2  is  still  in  use  and  yesterday                                                               
production was back  to 87,000 barrels per day.  The corroded 34-                                                               
inch line is still out of  service and the assessment and testing                                                               
on  it  will continue  for  a  matter  of weeks  before  delivery                                                               
through it resumes.                                                                                                             
The  final BP  investigation report  is out  and currently  under                                                               
independent review  by outside engineering consultants.  Once the                                                               
review is  complete the state  will determine  corrective action.                                                               
The federal  Office of  Pipeline Safety also  issued an  order of                                                               
corrective action  and meetings  between that office,  the state,                                                               
and BP  are ongoing to  respond to the federal  corrective action                                                               
MR. DIETRICK  noted that DEC  is making arrangements to  hold the                                                               
Arctic  Pipeline  Integrity  Conference that  Governor  Murkowski                                                               
called  for. Corrosion  experts  from around  the  world will  be                                                               
brought  to  Alaska  to  consult and  give  advice  on  corrosion                                                               
management. The  target date for  completion is prior  to October                                                               
4:41:40 PM                                                                                                                    
The governor also announced the  formation of the Arctic Pipeline                                                               
Technology Team,  which includes the Department  of Environmental                                                               
Conservation,  the Alaska  Oil and  Gas Conservation  Commission,                                                               
and the  Department of Natural  Resources. It will be  a standing                                                               
body that  pools the  state's pipeline  expertise to  address the                                                               
issues that  may arise.  The work group  will bring  in academia,                                                               
other federal agencies, industry and private expertise.                                                                         
4:42:41 PM                                                                                                                    
SENATOR FRED DYSON asked where the hole was located in the pipe.                                                                
MR. DIETRICK replied it was in the six o'clock position.                                                                        
SENATOR DYSON asked if the hole was near a bend in the line.                                                                    
MR.  DIETRICK responded  the BP  investigation report  attributes                                                               
the  hole to  internal corrosion  and  it occurred  at a  caribou                                                               
crossing. He  elaborated that the  line is elevated but  it drops                                                               
at  caribou crossings  and  goes through  what  is essentially  a                                                               
gravel covered  culvert. It  provides a ramp  for the  caribou to                                                               
SENATOR DYSON  asked if  the hole  was near one  of the  turns at                                                               
either end.                                                                                                                     
MR.  DIETRICK replied  it was  located  in a  straight section  a                                                               
number of feet inside either end of the culvert.                                                                                
SENATOR KIM ELTON noted that  the evidence shows bacterial growth                                                               
in GC-2.  He also noted  that a  change in the  emulsion breaking                                                               
chemicals in the pipeline appears  to coincide with the period of                                                               
increased  corrosion.  He  asked  if  the  company  adjusted  the                                                               
chemicals it uses or if the  state or federal government asked BP                                                               
to adjust them.                                                                                                                 
MR. DIETRICK  replied a number of  issues potentially contributed                                                               
to  the corrosion.  One  suggestion  in the  report  is that  the                                                               
interaction  between  the  emulsion  breaker  and  the  corrosion                                                               
inhibitor  contributed  to  the  problem.  BP  is  continuing  to                                                               
analyze  that possibility  but the  most recent  information does                                                               
not indicate that  the interaction of the two  agents cancels the                                                               
effectiveness  of the  corrosion inhibitor.  The state  will also                                                               
review that issue independently, he said.                                                                                       
SENATOR ELTON asked  if that same mix is used  in other pipelines                                                               
or just in this one.                                                                                                            
MR. DIETRICK  recalled the report  said the emulsion  breaker was                                                               
used  at just  GC-2, but  the corrosion  inhibitor is  used field                                                               
4:47:37 PM                                                                                                                    
CHAIR  WAGONER  asked Ms.  Wilson  to  review the  Department  of                                                               
Revenue report dated April 10, 2006.                                                                                            
ROBYNN  WILSON, Director,  Tax Division,  Department of  Revenue,                                                               
reported that the  revenue impact is estimated to  be $27 million                                                               
through April  10, 2006  and assumes  77,000 barrels  of deferred                                                               
production for 33 days and then 36,000 barrels for 6 days.                                                                      
She understands  that a bypass  line was installed April  3, 2006                                                               
and as a result, the production  is backup to about 75 percent of                                                               
what the main line would have been.                                                                                             
CHAIR  WAGONER  said he  understands  that  if  an oil  spill  is                                                               
determined to  be catastrophic,  which is  interpreted to  be any                                                               
spill  that is  greater than  100,000 gallons,  then the  company                                                               
would  not be  able to  use the  PPT credits  for clean-up  costs                                                               
associated with the spill. He asked if that is correct.                                                                         
MS.  WILSON read  AS 46.04.900  that defines  a catastrophic  oil                                                               
spill. The  definition requires  that it be  an oil  discharge of                                                               
100,000 barrels or  that it is a spill that  presents a grave and                                                               
substantial threat. She  noted that oil is required  in the first                                                               
criteria but it doesn't say that in the second criteria.                                                                        
Under  the  PPT  bill  that that  passed  the  Senate  yesterday,                                                               
deductions  are  denied for  expenditures  incurred  to clean  up                                                               
catastrophic oil spills. That language  is specific to oil spills                                                               
that  affect inland  waters, but  it doesn't  necessarily address                                                               
oil spills on land.                                                                                                             
4:53:17 PM                                                                                                                    
Neither the House Resource Committee  CS nor the governor's bill,                                                               
as  originally drafted,  have any  language about  an oil  spill.                                                               
That  means it  could  be  interpreted that  a  deduction is  not                                                               
precluded if  it happens on  a lease. If  a spill happens  on the                                                               
lease,  it would  be upstream  and would  fall under  the general                                                               
basket  of   lease  expenditures,  which  makes   it  deductible.                                                               
However, expenditures incurred as a  result of negligence are not                                                               
deductible.  Ms. Wilson  suggested  that  that possibility  would                                                               
elicit litigious discussion.                                                                                                    
Ms.  Wilson  explained  that  for  a  typical  business  facility                                                               
repairs are  deductible, but  a major  overhaul that  extends the                                                               
life of the  asset is capitalized. The difference in  PPT is that                                                               
if  the  expenditure is  currently  expensed,  then it  would  be                                                               
available  for  a  deduction.  If  the  expenditure  is  a  major                                                               
overhaul that  extended the life  of the pipeline or  asset, then                                                               
it  would  be capitalized.  That  means  that  it would  be  both                                                               
deducted and then subject to a credit.                                                                                          
CHAIR  WAGONER remarked  as it  stands now,  the state  would pay                                                               
about 47.5 percent.                                                                                                             
MS.  WILSON replied  if  it was  a  capitalized expenditure  that                                                               
extended  the life  of  the pipeline  under  discussion then  the                                                               
answer is yes.  It would enjoy a 22.5 percent  tax reduction rate                                                               
plus the credit rate of 25 percent.                                                                                             
4:56:04 PM                                                                                                                    
MS. DENISE  HAWS, Economist, Tax Division,  Department of Revenue                                                               
(DOR), reviewed  the DOR FY  2006 Revenue Sensitivity  Matrix for                                                               
Lost ANS Production.  She reported that the April  1-25, 2006 ANS                                                               
price is  $67.47. The average  oil production for the  same dates                                                               
is  819  million barrels  per  day.  Based  on  33 days  of  loss                                                               
production in March  and 6 days of loss production  in April, the                                                               
revenue impact is about $26 million.                                                                                            
MS.  WILSON said  she would  provide the  committee with  updated                                                               
reports that would include the amounts that Ms. Haws mentioned.                                                                 
MS HAWS  advised that  the fiscal  year-to-date price  is $60.01,                                                               
which is $1.29 over the spring forecast.                                                                                        
There being  no further  business to  come before  the committee,                                                               
Chair Wagoner adjourned the meeting at 4:59:14 PM.                                                                            

Document Name Date/Time Subjects