Legislature(2001 - 2002)

03/22/2002 08:40 AM House O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE SPECIAL COMMITTEE ON OIL AND GAS                                                                           
                         March 22, 2002                                                                                         
                           8:40 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Hugh Fate, Vice Chair                                                                                            
Representative Fred Dyson                                                                                                       
Representative Mike Chenault                                                                                                    
Representative Vic Kohring                                                                                                      
Representative Gretchen Guess                                                                                                   
Representative Reggie Joule                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Scott Ogan, Chair                                                                                                
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Ken Lancaster                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
CS FOR SENATE BILL NO. 343(RES)                                                                                                 
"An Act  clarifying the term  'best technology' required  for use                                                               
in  oil discharge  prevention  and  contingency plans;  affirming                                                               
existing  Department  of Environmental  Conservation  regulations                                                               
defining  'best  technology'  and oil  discharge  prevention  and                                                               
contingency   plans  approved   using   those  regulations;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSSB 343(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                              
BILL: SB 343                                                                                                                  
SHORT TITLE:BEST AVAILABLE TECHNOLOGY:DISCHARGE PLAN                                                                            
SPONSOR(S): RESOURCES                                                                                                           
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/27/02     2319       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/27/02     2319       (S)        RES                                                                                          
03/04/02                (S)        RES AT 3:30 PM BUTROVICH 205                                                                 
03/04/02                (S)        Moved CS(RES) Out of                                                                         
                                   Committee                                                                                    
03/04/02                (S)        MINUTE(RES)                                                                                  
03/04/02                (S)        MINUTE(RES)                                                                                  
03/06/02     2386       (S)        RES RPT CS 6DP 1NR SAME TITLE                                                                
03/06/02     2386       (S)        DP: TORGERSON, TAYLOR,                                                                       
                                   HALFORD,                                                                                     
03/06/02     2386       (S)        STEVENS, WILKEN, LINCOLN; NR:                                                                
                                   ELTON                                                                                        
03/06/02     2387       (S)        FN1: ZERO(DEC)                                                                               
03/13/02                (S)        RLS AT 11:00 AM FAHRENKAMP                                                                   
                                   203                                                                                          
03/13/02                (S)        MINUTE(RLS)                                                                                  
03/13/02     2416       (S)        RULES TO CALENDAR 3/13/02                                                                    
03/13/02     2417       (S)        READ THE SECOND TIME                                                                         
03/13/02     2417       (S)        RES CS ADOPTED UNAN CONSENT                                                                  
03/13/02     2417       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
03/13/02     2417       (S)        READ THE THIRD TIME CSSB
                                   343(RES)                                                                                     
03/13/02     2417       (S)        PASSED Y17 N1 E1 A1                                                                          
03/13/02     2418       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
03/13/02     2420       (S)        TRANSMITTED TO (H)                                                                           
03/13/02     2420       (S)        VERSION: CSSB 343(RES)                                                                       
03/15/02     2538       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
03/15/02     2538       (H)        O&G, RES                                                                                     
03/22/02                (H)        O&G AT 8:00 AM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
SENATOR JOHN TORGERSON                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 427                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Presented SB 343 on behalf of the Senate                                                                   
Resources Standing Committee, sponsor, which he chairs.                                                                         
                                                                                                                                
KURT FREDRIKSSON, Deputy Commissioner                                                                                           
Office of the Commissioner                                                                                                      
Department of Environmental Conservation (DEC)                                                                                  
410 Willoughby, Suite 303                                                                                                       
Juneau, Alaska  99801-1795                                                                                                      
POSITION STATEMENT:  Testified in support of SB 343 as an                                                                       
appropriate response to the recent supreme court ruling.                                                                        
                                                                                                                                
MARILYN CROCKETT, Deputy Director                                                                                               
Alaska Oil and Gas Association (AOGA)                                                                                           
121 West Fireweed, Number 207                                                                                                   
Anchorage, Alaska  99503                                                                                                        
POSITION STATEMENT:  Testified in support of SB 343 in order                                                                    
that the legislature can clarify the legislative intent.                                                                        
                                                                                                                                
DOUG MERTZ                                                                                                                      
Prince William Sound Regional Citizens' Advisory Council (RCAC)                                                                 
319 Seward Street                                                                                                               
Juneau, Alaska  99801                                                                                                           
POSITION  STATEMENT:    Expressed  concern about  the  amount  of                                                               
discretion under  SB 343; requested  amending it to  specify that                                                               
there shall  be a conference  on best available  technology every                                                               
five years.                                                                                                                     
                                                                                                                                
SUSAN SCHRADER                                                                                                                  
Alaska Conservation Voters (ACV)                                                                                                
P.O. Box 22151                                                                                                                  
Juneau, Alaska  99802                                                                                                           
POSITION STATEMENT:  Testified in opposition to SB 343.                                                                         
                                                                                                                                
BRECK C. TOSTEVIN, Assistant Attorney General                                                                                   
Environmental Section                                                                                                           
Civil Division (Anchorage)                                                                                                      
Department of Law                                                                                                               
1031 West 4th Avenue, Suite 200                                                                                                 
Anchorage, Alaska  99501-1994                                                                                                   
POSITION STATEMENT:  Testified on SB 343.                                                                                       
                                                                                                                                
TOM LAKOSH                                                                                                                      
P.O. Box 100648                                                                                                                 
Anchorage, Alaska  99510                                                                                                        
POSITION STATEMENT:  Testified on SB 343, requesting that it be                                                                 
amended and cautioning against haste.                                                                                           
                                                                                                                                
ROSS COEN                                                                                                                       
Alaska Forum for Environmental Responsibility                                                                                   
P.O. Box 82718                                                                                                                  
Fairbanks, Alaska  99708                                                                                                        
POSITION STATEMENT:  Testified in opposition to SB 343.                                                                         
                                                                                                                                
DARWIN PETERSON, Staff                                                                                                          
to Senator John Torgerson                                                                                                       
Alaska State Legislature                                                                                                        
Capitol Building, Room 427                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:   Answered questions on behalf  of the Senate                                                               
Resources Standing  Committee, sponsor  of SB 343,  which Senator                                                               
Torgerson chairs.                                                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-17, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
VICE CHAIR  HUGH FATE reconvened  the House Special  Committee on                                                               
Oil and  Gas meeting at  8:40 a.m.  Present  at the call  back to                                                               
order were  Representatives Fate,  Chenault, Kohring,  and Joule;                                                               
Representatives Guess  and Dyson joined the  meeting in progress.                                                               
[For the  overview by XTO Energy,  see the 8:07 a.m.  minutes for                                                               
this date.]                                                                                                                     
                                                                                                                                
SB 343-BEST AVAILABLE TECHNOLOGY:DISCHARGE PLAN                                                                               
                                                                                                                                
VICE CHAIR  FATE announced that  the committee would hear  CS FOR                                                               
SENATE  BILL NO.  343(RES),  "An Act  clarifying  the term  'best                                                               
technology'  required for  use in  oil  discharge prevention  and                                                               
contingency    plans;    affirming   existing    Department    of                                                               
Environmental    Conservation    regulations    defining    'best                                                               
technology' and  oil discharge  prevention and  contingency plans                                                               
approved using those regulations;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
SENATOR JOHN  TORGERSON, Alaska State  Legislature, chair  of the                                                               
Senate   Resources  Standing   Committee,   sponsor  of   SB 343,                                                               
explained that  the bill responds  to the Alaska  Supreme Court's                                                               
February  1, 2002,  ruling in  Lakosh  v. DEC  by clarifying  and                                                             
affirming the  "best available technology" (BAT)  requirement for                                                               
oil spill contingency  plans ("C Plans").   It accomplishes three                                                               
things:     clarifies   that  the   1997  negotiated   rulemaking                                                               
regulations  that established  a  three-tiered  approach for  BAT                                                               
determinations  is  a  correct  interpretation  of  the  statute;                                                               
affirms   the  continued   validity  and   effect  of   the  1997                                                               
regulations utilized  in approving  over 100 C Plans  since April                                                               
1997;  and  affirms  the continued  effect  of  C-Plan  approvals                                                               
issued under the  1997 regulations and ensures  that plan holders                                                               
can continue to operate under those approvals.                                                                                  
                                                                                                                                
SENATOR TORGERSON said  the bill doesn't eliminate  or weaken the                                                               
BAT  requirement,  which  has  been   part  of  the  "contingency                                                               
statute"  since 1980,  long before  the Exxon  Valdez spill.   In                                                               
1990, the legislature amended the  existing law to avoid rigorous                                                               
oil  response-planning standards,  he said,  but the  legislature                                                               
didn't address  the relationship  between the  planning standards                                                               
and  the best  available  technology.   He  remarked, "This  bill                                                               
would  ensure  the  1997  consensus  criteria  developed  in  the                                                               
negotiated  rulemaking and  that has  been used  for making  best                                                               
available  technology determinations  for  the  last five  years,                                                               
criteria that  [have] ... resulted  in major improvements  to oil                                                               
spill  prevention  and  response."    He  informed  members  that                                                               
technical  questions could  be addressed  by staff  member Darwin                                                               
[Peterson] or consultant Patrick Coughlin.                                                                                      
                                                                                                                                
Number 0290                                                                                                                     
                                                                                                                                
KURT   FREDRIKSSON,   Deputy    Commissioner,   Office   of   the                                                               
Commissioner,  Department  of Environmental  Conservation  (DEC),                                                               
came  forward  to  testify, noting  that  he'd  provided  written                                                               
testimony.  He told members  DEC is responsible for reviewing and                                                               
approving  oil discharge  prevention  and  contingency plans  for                                                               
more  than 120  facilities  in Alaska,  including oil  terminals,                                                               
pipelines,   exploration   [and]  production   facilities,   tank                                                               
vessels, oil barges, nontank vessels, and the railroad.                                                                         
                                                                                                                                
MR.  FREDRIKSSON  said DEC  supports  passage  of  SB 343  as  an                                                               
appropriate response to the recent  supreme court ruling on "best                                                               
available technology" that's described in  C Plans.  At the heart                                                               
of  the  court's  ruling  is  the  legislative  intent  for  best                                                               
available technology requirements.  He told members:                                                                            
                                                                                                                                
     Following the  Exxon Valdez oil spill,  the legislature                                                                    
     established   the   toughest  spill-response   planning                                                                    
     standards in the world; DEC  interpreted the statute to                                                                    
     mean  that   meeting  Alaska   tough  response-planning                                                                    
     standards   also   satisfies    the   "best   available                                                                    
     technology"  requirement if  the  equipment has  proven                                                                    
     reliable  and  appropriate  for its  intended  use  and                                                                    
     [the]  magnitude of  the spill  it's addressing.   This                                                                    
     interpretation  was  developed   through  an  extensive                                                                    
     workgroup process  when the regulations  were developed                                                                    
     in 1997.                                                                                                                   
                                                                                                                                
     The   court   recognized   that   this   approach   has                                                                    
     considerable  merit, but  only to  the extent  that the                                                                    
     legislature  actually granted  DEC authority  to define                                                                    
     best available  technology in terms of  reliance on ...                                                                    
     the response-planning standards.   The court has raised                                                                    
     a rather  narrow question regarding whether  or not our                                                                    
     regulatory   interpretation  meets   the  legislature's                                                                    
     intent in dealing with this issue.                                                                                         
                                                                                                                                
     The court  has interpreted the current  statute to mean                                                                    
     that the  legislature intended  to impose  two separate                                                                    
     best available technology  requirements that [preclude]                                                                    
     DEC   from  ...   relying   on  the   response-planning                                                                    
     standards  or  performance   standards  established  in                                                                    
     regulations  to satisfy  the best  available technology                                                                    
     requirements.   In their ruling, the  court has invited                                                                    
     the  legislature   to  clarify  its  intent   for  best                                                                    
     available  technology.    SB   343  would  clarify  the                                                                    
     legislature's intent,  consistent with our  current way                                                                    
     of doing business.                                                                                                         
                                                                                                                                
Number 0519                                                                                                                     
                                                                                                                                
MR.  FREDRIKSSON  advised the  committee  that  DEC believes  any                                                               
legislation  should meet  the following  five goals:   first,  it                                                               
must  be  limited to  what  is  necessary  to address  the  court                                                               
ruling; second,  to eliminate the  cloud of uncertainty  from the                                                               
court ruling  regarding the validity  of existing  plan approvals                                                               
made since  1997 for Alaskan  facilities, it must be  passed this                                                               
session;  third,  it  must   validate  existing  regulations  and                                                               
preserve  the  approach used  for  making  BAT determinations  as                                                               
envisioned  by the  1997 taskforce;  fourth, it  mustn't diminish                                                               
the  existing   response  capability   in  support   of  Alaska's                                                               
facilities today; and fifth, it  must continue to support [DEC's]                                                               
evaluation of new technologies and "best available" findings.                                                                   
                                                                                                                                
MR. FREDRIKSSON  said SB 343  meets the foregoing five  goals and                                                               
provides straightforward language  that clarifies the legislative                                                               
intent.    It  also  validates   the  best  available  technology                                                               
approach  taken   by  the  department  in   the  1997  negotiated                                                               
rulemaking process, and  affirms the continued effect  of C Plans                                                               
approved by the  department to date.  He offered  his belief that                                                               
the bill  doesn't reduce the  rigor of existing C-Plan  review or                                                               
diminish the response  readiness and capability of  industry.  He                                                               
said the bill provides for  the department's periodic examination                                                               
of  new  technologies   to  keep  Alaska  in   the  forefront  of                                                               
environmental protection statewide.   He reiterated DEC's support                                                               
for SB 343.                                                                                                                     
                                                                                                                                
Number 0692                                                                                                                     
                                                                                                                                
MARILYN   CROCKETT,  Deputy   Director,   Alaska   Oil  and   Gas                                                               
Association (AOGA), came forward to  testify, noting that AOGA is                                                               
a  trade association  whose 19  member  companies "represent  the                                                               
majority of  oil and gas  activities in Alaska."   Its membership                                                               
includes  the in-state  producers, the  three in-state  refiners,                                                               
and  Alyeska  Pipeline  [Service  Company];  all  must  have  oil                                                               
discharge  prevention   and  contingency   plans  in   place  and                                                               
therefore are heavily vested in this  issue.  She agreed that the                                                               
heart  of  the  matter  is  to respond  to  the  supreme  court's                                                               
decision  that eliminated  two  sections  in [DEC's]  regulations                                                               
dealing with  BAT determinations;  those were promulgated  by the                                                               
department  in 1997  after a  stakeholder group  was established.                                                               
She   said  AOGA   participated  along   with  others   including                                                               
municipalities,  environmental groups,  and  the RCACs  [Regional                                                               
Citizens' Advisory Councils].  Ms. Crockett stated:                                                                             
                                                                                                                                
     We  supported  the regulations  at  that  time, and  we                                                                    
     continue   to  support   them  today,   including  this                                                                    
     specific  provision in  the regulations  for the  "best                                                                    
     available technology"  conference; there seems  to have                                                                    
     been  some questions  about  whether industry  supports                                                                    
     that  conference,  and  we do,  in  fact,  support  the                                                                    
     conference  that's required  by the  regulations, which                                                                    
     we support.                                                                                                                
                                                                                                                                
MS.  CROCKETT  said the  court  decision  has placed  everyone  -                                                               
including AOGA's members,  the department, and the public  - in a                                                               
tenuous  position because  of the  inability  to complete  C-Plan                                                               
renewals  or new  plan approvals.   Potentially,  the department,                                                               
instead  of being  able  to  focus on  getting  the best  C Plans                                                               
possible, will have to go  through a rulemaking process that will                                                               
divert  its attention;  she suggested  that  absent the  specific                                                               
legislative intent  provided by  SB 343, that  rulemaking process                                                               
later  could be  called into  question through  litigation, which                                                               
AOGA hopes to avoid.                                                                                                            
                                                                                                                                
Number 0875                                                                                                                     
                                                                                                                                
MS.   CROCKETT  emphasized   that   AOGA's   only  objective   in                                                               
encouraging  support of  SB  343 is  to  clarify the  legislative                                                               
intent.  She explained:                                                                                                         
                                                                                                                                
     We are  in no way  supportive of any attempt  to reduce                                                                    
     the requirements  of the department, nor  are we asking                                                                    
     ... to be  relieved of many of the  requirements.  This                                                                    
     is a  very simple and straightforward  matter, from our                                                                    
     point  of view,  and  it's to  respond  to the  supreme                                                                    
     court  decision by  saying that  the  process that  the                                                                    
     department has used  following the stakeholder efforts,                                                                    
     is,  in   fact,  the   process  that   the  legislature                                                                    
     intended.                                                                                                                  
                                                                                                                                
MS.  CROCKETT suggested  this is  a  time-critical issue  because                                                               
some companies  have projects  for which  they cannot  get C-Plan                                                               
approval or  consistency determinations because of  the inability                                                               
to get the  plans approved.  She encouraged moving  SB 343 out of                                                               
committee that day.                                                                                                             
                                                                                                                                
Number 0933                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON announced  that  he had  to testify  before                                                               
another committee at  9 a.m.  Because he planned  to vote for the                                                               
bill, he asked  to hear next from anybody who  planned to testify                                                               
against it.                                                                                                                     
                                                                                                                                
VICE CHAIR FATE  agreed, offering his belief  that two testifiers                                                               
had concerns.                                                                                                                   
                                                                                                                                
Number 0998                                                                                                                     
                                                                                                                                
DOUG  MERTZ, Prince  William  Sound  Regional Citizens'  Advisory                                                               
Council (RCAC), came forward to  testify, noting that the RCAC is                                                               
a coalition  of 18  municipalities and other  groups in  the area                                                               
affected  by the  Exxon  Valdez  oil spill.    He  said the  RCAC                                                               
understands the  need for the  legislation to clarify  the intent                                                               
with   regard  to   the  BAT,   but  has   some  real   concerns.                                                               
Principally, the bill as written  gives DEC an enormous amount of                                                               
discretion on how  to implement the BAT  requirement.  Throughout                                                               
the bill, it  says "may" find, prepare,  require, administer, and                                                               
enforce;  this provides,  by implication,  the choice  not to  do                                                               
those things.  Therefore, DEC  could "make it terribly onerous or                                                               
can make it a meaningless walkthrough, or anything in between."                                                                 
                                                                                                                                
MR. MERTZ mentioned  reference to the 1997  regulations that were                                                               
done  cooperatively,  which he  said  almost  everybody is  still                                                               
pleased  with.   He  expressed particular  concern  that DEC  can                                                               
effectively gut  those under  this bill.   He explained  that one                                                               
"leg" that makes those regulations  meaningful is the requirement                                                               
of a  conference on BAT every  five years at which  the industry,                                                               
DEC,  and  other  "interested  and  expert  parties"  would  come                                                               
together  to  find  a  consensus  on what  the  current  BAT  is.                                                               
However, DEC  hasn't held  that conference in  the past  when the                                                               
deadline has come.                                                                                                              
                                                                                                                                
Number 1101                                                                                                                     
                                                                                                                                
MR. MERTZ  said that  right now  [DEC] supports  [the conference]                                                               
and has  an appropriation request  for it, and that  industry and                                                               
"basically everybody"  is supporting it.   He therefore requested                                                               
a reference  to that  regulatory requirement in  the bill,  to be                                                               
placed  in  the  findings  section,  as  suggested  in  a  letter                                                               
provided  to  the committee  from  Mr.  [John] Devens  [Executive                                                               
Director, Prince  William Sound RCAC].   That would  clarify that                                                               
DEC  really  does  have  to  hold this  conference,  as  its  own                                                               
regulations now say.                                                                                                            
                                                                                                                                
Number 1180                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS  asked  whether,  if the  statute  were  to                                                               
specify [a conference every five  years], the state perhaps would                                                               
be  unable  to review  the  best  available technology  within  a                                                               
shorter amount of time.                                                                                                         
                                                                                                                                
MR. MERTZ answered that the current  law and that proposed in the                                                               
bill  give DEC  authority to  make an  interim definition  at any                                                               
time if  new technology comes  along that clearly is  superior to                                                               
"what they  had a consensus  on the last  time that they  met and                                                               
conferred and declared something to be  a BAT."  However, he said                                                               
the every-five-year  conference would be the  opportunity and the                                                               
place where all parties would know they'd reexamine it all.                                                                     
                                                                                                                                
REPRESENTATIVE DYSON  expressed appreciation for the  work of the                                                               
RCAC.                                                                                                                           
                                                                                                                                
Number 1270                                                                                                                     
                                                                                                                                
SUSAN SCHRADER,  Alaska Conservation  Voters (ACV),  came forward                                                               
to  testify in  opposition to  SB  343, noting  that her  written                                                               
testimony was  in members'  packets.   She advised  the committee                                                               
that ACV  respectfully disagrees  with the views  of DEC  and the                                                               
administration,  and   with  the  assistant   attorney  general's                                                               
interpretation  of  the [Lakosh  v.  DEC]  court decision.    She                                                             
explained  that  ACV believes  the  bill  does  two things:    it                                                               
creates a  major disincentive for  the oil industry to  put money                                                               
into  research  and  development   for  BAT  technology,  and  it                                                               
provides  a "major  way to  let DEC  off the  hook" for  taking a                                                               
close look at alternative technologies.  She said:                                                                              
                                                                                                                                
     Our reading of the bill suggests that under the bill's                                                                     
        language, simply the first technology that [an]                                                                         
      applicant proposes in a C Plan to meet the response-                                                                      
     planning standard  could easily  be written off  by DEC                                                                    
     as  best available  technology -  that that  would meet                                                                    
     the  definition of  "best available  technology."   And                                                                    
     ...  in  our  view,  this   is  not  looking  for  best                                                                    
     available technology; it's  looking merely for whatever                                                                    
     will meet the  planning standard, second-best available                                                                    
     technology,  or bare-minimum  technology,  as the  case                                                                    
     may be, depending on DEC's wishes.                                                                                         
                                                                                                                                
     We would  suggest that  at this  point there  are draft                                                                    
     regulations  out  for  comment  to  address  the  court                                                                    
     decision,  that that  process be  continued.   We think                                                                    
     it's  appropriate  for   DEC's  regulatory  process  to                                                                    
     address the  court decision.  We  further disagree with                                                                    
     statements from  the administration that there  must be                                                                    
     a  statutory  response  to  the  court  decision.    We                                                                    
     believe it can be handled  in regulation.  And we think                                                                    
     that DEC needs to make and  take a complete look at all                                                                    
     the  alternatives,  to   do  the  alternative  analysis                                                                    
     before determining best available  technology.  And ...                                                                    
     that  type of  analysis  needs to  have  ... plenty  of                                                                    
     opportunity for public review and comment.                                                                                 
                                                                                                                                
Number 1494                                                                                                                     
                                                                                                                                
BRECK  C.  TOSTEVIN,  Assistant Attorney  General,  Environmental                                                               
Section,   Civil  Division   (Anchorage),   Department  of   Law,                                                               
testified  via  teleconference.     He  paraphrased  his  written                                                               
testimony [in packets] as follows:                                                                                              
                                                                                                                                
     I'd  like to  cover two  topics in  my testimony.   The                                                                    
     first  is  the  reasoning  and effect  of  the  supreme                                                                    
     court's recent decision  concerning the statutory "best                                                                    
     available   technology"   requirement   for   oil-spill                                                                    
     C Plans.    And  the  second is  how  this  legislation                                                                    
     responds to  the supreme court's decision  in a focused                                                                    
     and measured way.                                                                                                          
                                                                                                                                
     The legislation  before you today seeks  to clarify the                                                                    
     statutory requirement that  oil spill contingency plans                                                                    
     use best  available technology, in light  of the Alaska                                                                    
     Supreme Court's ruling in the  Lakosh v. DEC case.  The                                                                  
     best  available  technology  requirement  had  been  in                                                                    
     place  since 1990  for  response  equipment which  [is]                                                                    
     used in C  Plans.  And because of the  addition of oil-                                                                    
     spill  prevention to  the C-Plan  statute in  1990, the                                                                    
     BAT  requirement ...  became  applicable to  prevention                                                                    
     equipment  at  that  point.    In  addition,  the  1990                                                                    
     amendments  added  the   rigorous  oil-spill  response-                                                                    
     planning  standards  to  the C-Plan  statute,  but  the                                                                    
     legislature  did not  address the  relationship between                                                                    
     those planning standards and the BAT requirement.                                                                          
                                                                                                                                
     In its  recent ruling,  the Alaska Supreme  Court found                                                                    
     two  parts   of  DEC's  regulatory  ...   criteria  for                                                                    
     determining  whether  a  C  Plan  uses  best  available                                                                    
     technology  ... to  be inconsistent  with the  statute.                                                                    
     And these  regulatory criteria  were developed  as part                                                                    
     of the  1997 negotiated  rulemaking, and  that included                                                                    
     numerous stakeholders from throughout  the state with a                                                                    
     broad range of interests.                                                                                                  
                                                                                                                                
     In  the  Lakosh  case,  the Alaska  Supreme  Court  was                                                                  
     confronted   with   a    general   challenge   to   the                                                                    
     regulations.   The  court's ruling  was a  narrow legal                                                                    
     decision  which   focused  on   the  language   of  the                                                                    
     regulations,  as opposed  to a  technical determination                                                                    
     of  whether  any  particular   piece  of  equipment  or                                                                    
     technology is indeed "best available."                                                                                     
                                                                                                                                
     In finding  parts of the regulations  inconsistent with                                                                    
     the  statute,  the  court relied  upon  the  dictionary                                                                    
     definition of  the term "best,"  and concluded  that in                                                                    
     the  absence of  legislative history  to the  contrary,                                                                    
     the  BAT   regulations  could  not  ...   rely  on  the                                                                    
     stringent  response-planning  standards in  determining                                                                    
     BAT or rely on performance  standards, which are set in                                                                    
     regulation,   for   determining   BAT   for   oil-spill                                                                    
     prevention  technology.     The  Alaska  Supreme  Court                                                                    
     concluded that while  reliance on performance standards                                                                    
     for  determining BAT  had considerable  ... theoretical                                                                    
     merit  and  was  used in  other  federal  environmental                                                                    
     statutes    in    lieu   of    the    one-size-fits-all                                                                    
     technological   rule,    the   absence    of   specific                                                                    
     legislative  history  on  the interplay  between  those                                                                    
     standards and the BAT requirement  led the court to its                                                                    
     conclusion  that the  criteria  were inconsistent  with                                                                    
     the statute.                                                                                                               
                                                                                                                                
Number 1658                                                                                                                     
                                                                                                                                
MR. TOSTEVIN continued:                                                                                                         
                                                                                                                                
     Now,  given  that  the Alaska  Supreme  Court's  ruling                                                                    
     overturning the  1997 workgroup's use of  the statutory                                                                    
     response-planning   standard    and   the   performance                                                                    
     standards  in  determining best  available  technology,                                                                    
     the BAT  statutory requirement is ripe  for legislative                                                                    
     clarification.                                                                                                             
                                                                                                                                
     The  legislation  you  have   before  you  today  would                                                                    
     restore  the regulatory  criteria adopted  in the  1997                                                                    
     negotiated  rulemaking and  that has  been utilized  in                                                                    
     approving over a  hundred C Plans since  April of 1997.                                                                    
     This  legislation does  not weaken  the best  available                                                                    
     technology  requirement, but  rather  is  an effort  to                                                                    
     restore the  consensus criteria  that [have]  been used                                                                    
     for making BAT determinations  for the last five years,                                                                    
     criteria that [have] resulted  in major improvements in                                                                    
     oil-spill prevention and response. ...                                                                                     
                                                                                                                                
     Senate  Bill   343  accomplishes  three  things.     It                                                                    
     clarifies   that   the   1997   negotiated   rulemaking                                                                    
     regulations, which establish  a three-tier approach for                                                                    
     making   BAT    determinations,   is    a   permissible                                                                    
     interpretation of the statute.   Second, it affirms the                                                                    
     continued validity and effect  of the 1997 regulations.                                                                    
     If  Senate  Bill  343  is enacted,  DEC  would  not  be                                                                    
     required to revise its BAT  regulations.  And third and                                                                    
     finally,  the legislature  would  affirm the  continued                                                                    
     effect  of contingency  plan's  approvals issued  under                                                                    
     the 1997 regulations, and assure  that the plan holders                                                                    
     can continue to operate under those approvals.                                                                             
                                                                                                                                
Number 1741                                                                                                                     
                                                                                                                                
MR.  TOSTEVIN responded  to testimony  that this  gives too  much                                                               
discretion  to DEC;  he said  as currently  written, the  statute                                                               
simply  says  the C  Plan  must  use best  available  technology,                                                               
without defining what it is.   Thus the legislation is an attempt                                                               
to  clarify  that  the regulations'  approach  is  a  permissible                                                               
interpretation of  the statute.  He  said the role of  the C-Plan                                                               
review process  is to provide  a certain amount of  discretion to                                                               
DEC in  making those determinations.   This  legislation attempts                                                               
to allow the 1997  criteria to be used.  In  essence, he said, it                                                               
doesn't diminish the statutory requirement at all.                                                                              
                                                                                                                                
Number 1830                                                                                                                     
                                                                                                                                
TOM LAKOSH testified  via teleconference, noting that  he was the                                                               
successful  pro per  litigant before  the supreme  court in  this                                                               
matter.   He  told  members that  the  parties' positions  really                                                               
aren't that far apart; it's just  a matter of having "more timely                                                               
reviews of plans  consistent with other sections  of the statute,                                                               
which you're  not considering here  today," and  implementing the                                                               
breakthrough  technology and  integrating it  into systems  in an                                                               
orderly and incremental manner.                                                                                                 
                                                                                                                                
MR. LAKOSH noted  that he'd sent suggested  amendment language to                                                               
the committee  [in an e-mail  dated March 18, 2002]  to emphasize                                                               
that the parties  really aren't that far apart and  that it would                                                               
be  "much  more  appropriate  for this  committee  to  provide  a                                                               
solution for the  court as far as a  reasonable interpretation of                                                               
law, rather  than one that is  clearly still at odds  with entire                                                               
... other sections of the statute and constitutional mandates."                                                                 
                                                                                                                                
MR. LAKOSH informed members of what  he was hoping to obtain from                                                               
the still-pending [court] case:   for the breakthrough-technology                                                               
symposium and analysis process to  happen every two years instead                                                               
of every five, to be  more consistent with statutory language for                                                               
adoption of BAT response and  prevention equipment at the time of                                                               
permit renewal.   In addition, he was hoping  the committee could                                                               
amend  the bill  to clarify  "exactly what  we're looking  for in                                                               
best technology."                                                                                                               
                                                                                                                                
Number 1960                                                                                                                     
                                                                                                                                
MR. LAKOSH  said the equipment deemed  best elsewhere, worldwide,                                                               
isn't designed for Alaska's severe conditions.  He explained:                                                                   
                                                                                                                                
     The  best  response inventory  in  the  state, held  by                                                                    
     Alyeska  [Pipeline Service  Company], is  quite ...  an                                                                    
     array  of equipment,  but because  ... of  the products                                                                    
     that they  selected and  the way that  they have  to be                                                                    
     operated,  they ...  have to  stop  responding in  seas                                                                    
     over six feet  because of hazard to  crews of operating                                                                    
     the  types  of  equipment that  require  over-the-board                                                                    
     crane  operations and  so forth.   The  best technology                                                                    
     that they have there can  work in ten-foot seas, but it                                                                    
     can only  operate at ...  its maximum capacity  ... for                                                                    
     15  minutes, because  it  then would  have  to stop  to                                                                    
     lighter "storage."                                                                                                         
                                                                                                                                
     We  have virtually  no ability  ... to  respond to  the                                                                    
     response-planning-standard  levels  in  broken  ice  or                                                                    
     sheet ice.   And ...  despite the improvements  that we                                                                    
     had,  we're  still  a  very long  way  from  trying  to                                                                    
     eliminate  the types  of hazards  to  our resource  use                                                                    
     that  our  constitution  was specifically  designed  to                                                                    
     prohibit, ... because there's  no difference between an                                                                    
     oil spill  and a fish  trap, that our Article  VIII ...                                                                    
     specifically tried to make it  impossible to ever allow                                                                    
     again ...  where one  ... user  of a  natural resource,                                                                    
     whether they're transporting  a hazardous cargo through                                                                    
     or otherwise exploiting the  environment, has the right                                                                    
     to exploit it  to the exclusion of everyone  else.  And                                                                    
     that's exactly what a catastrophic oil spill does.                                                                         
                                                                                                                                
     And we all know the seas  get higher than six feet.  We                                                                    
     all know that there's ice  out in front of the glaciers                                                                    
     and in  Cook Inlet and  on the  North Slope and  on the                                                                    
     ...  rivers  along   the  TAPS  [Trans-Alaska  Pipeline                                                                    
     System]  right-of-way.    We  now  have  a  25-year-old                                                                    
     pipeline, ...  TAPS.  We have  40-year-old pipelines on                                                                    
     the peninsula.  We  have aging platforms and underwater                                                                    
     pipes.                                                                                                                     
                                                                                                                                
Number 2096                                                                                                                     
                                                                                                                                
MR. LAKOSH continued:                                                                                                           
                                                                                                                                
     And now  is not the time  to shy away from  the problem                                                                    
     that is  confronting the legislature at  this time, ...                                                                    
     that DEC  has been caught  not enforcing the law.   And                                                                    
     this  legislation  does  not   wipe  away  the  damages                                                                    
     sustained  by  the  Alaska citizens  for  the  last  21                                                                    
     years.  ...   The  best  clause  in   this  legislation                                                                    
     actually grew  out of the circumstance  that arose from                                                                    
     Chevron [U.S.A.,  Inc.] v. Hammond,  where in  fact ...                                                                  
     the state  tried to  set what  [were] clear  limits for                                                                    
     double-hulled  tankers;   the  industry   balked,  even                                                                    
     though  they had  promised us  the  best technology  in                                                                    
     double-hulled  tankers  in their  right-of-way  leases.                                                                    
     And  so, we  were  ...  stuck with  having  to try  and                                                                    
     enforce the "through ...  best technology" provision in                                                                    
     our statute that was passed in '80, repassed in 1990.                                                                      
                                                                                                                                
     But what  the legislature  doesn't seem  to comprehend,                                                                    
     and  no  one  is  really setting  forth,  is  that  our                                                                    
     standards have always been highest.   The ... response-                                                                    
     planning  standards ...  and spill-prevention  measures                                                                    
     that  were  put  in  place   along  the  pipeline  were                                                                    
     supposed to be the best,  and ... they were supposed to                                                                    
     recover 200,000 barrels  of oil in 48  hours, which, if                                                                    
     you  ...  average out,  is  exactly  the same  or  more                                                                    
     demanding  than  the  present  regulatory  standard  of                                                                    
     300,000 barrels in 72 hours.                                                                                               
                                                                                                                                
Number 2185                                                                                                                     
                                                                                                                                
MR. LAKOSH continued:                                                                                                           
                                                                                                                                
     So ...  I beg  the committee  ... to  not make  a hasty                                                                    
     move  to  try and  correct  a  situation that  is  near                                                                    
     resolution  between  the parties  in  any  event.   The                                                                    
     comments  of  the  Alaska Conservation  Voters  clearly                                                                    
     [indicate] that there's  an ongoing regulatory process.                                                                    
     The prior negotiated process ...  didn't involve all of                                                                    
     the parties, and there was  obviously no attention paid                                                                    
     to the  very clear  statement that won  me the  case in                                                                    
     the  supreme court:   this  regulation is  inconsistent                                                                    
     with statute; you cannot put this into play. ...                                                                           
                                                                                                                                
     Unfortunately,  it  took  five judges  of  the  supreme                                                                    
     court ...  to drive that point  home.  And now  that we                                                                    
     have that point  home and we know that we  have to face                                                                    
     an  additional 250  to 500  permittees in  the nontank-                                                                    
     vessel category,  I think  it's time  that we  sat down                                                                    
     among  the   affected  communities  and   allowed  this                                                                    
     process  to go  forward  with ...  a  rewriting of  the                                                                    
     regulations,  not simply  to try  and make  up for  the                                                                    
     poor  job that  DEC's  done  in advancing  technologies                                                                    
     over the  last 21 years, but  also to try and  make the                                                                    
     system more streamlined for industry.                                                                                      
                                                                                                                                
     It's clear  ... that the  type of response  system that                                                                    
     is necessary  to address the some-thousand  vessels and                                                                    
     numerous  pipelines,  platforms, and  other  production                                                                    
     facilities ...  that the department  has ...  to permit                                                                    
     is, in  itself, ... an  inherent monopoly; it's  like a                                                                    
     cable  company   or  a  telephone  company   ...  or  a                                                                    
     circumstance  where you  have  to cover  such [a]  wide                                                                    
     area with such  a capital-intensive infrastructure that                                                                    
     ... to  try and allow ...  competitive private services                                                                    
     to  fill   the  niches   will  invariably  lead   to  a                                                                    
     misallocation  of resources  ... by  overreplication of                                                                    
     the  equipment.    That  drives  the  average  cost  of                                                                    
     coverage high.                                                                                                             
                                                                                                                                
     The  response capability  in the  state today  does not                                                                    
     cover  ...  the  permittees, and  leaves  them  exposed                                                                    
     because they  are not capable  of responding  in severe                                                                    
     Alaska  conditions.     And  everybody  still   has  to                                                                    
     transport their oil - has  to transport their hazardous                                                                    
     cargo  - in  those  conditions.   So we  need  to do  a                                                                    
     better  job   both  for  the  industry   that  must  be                                                                    
     permitted and  the citizens,  who deserve  the mandated                                                                    
     protections of  Article VIII and  ... the  whole system                                                                    
     of statutes and regulations that  have been built up to                                                                    
     support  a  regular  and timely  advancement  of  spill                                                                    
     prevention and response technologies.                                                                                      
                                                                                                                                
Number 2365                                                                                                                     
                                                                                                                                
ROSS  COEN,   Alaska  Forum  for   Environmental  Responsibility,                                                               
testified  via teleconference  in  opposition to  SB 343,  noting                                                               
that his nonprofit organization  is dedicated to holding industry                                                               
and   government   accountable    to   environmental   laws   and                                                               
regulations.   He reported that  at this bill's first  hearing on                                                               
March  4  before the  Senate  Resources  Standing Committee,  his                                                               
testimony  "apparently   caused  such   a  stir   that  assistant                                                               
[attorney   general]  Tostevin   was  compelled   to  write   the                                                               
committee's chair  and rebut arguments  made by myself  and other                                                               
testifiers."   Surmising  that the  present committee  would pass                                                               
the bill  regardless of  opposing testimony,  he offered  what he                                                               
characterized as two broad points:                                                                                              
                                                                                                                                
     While   the   Alaska    Department   of   Environmental                                                                    
     Conservation claims that their  current BAT standard is                                                                    
     adequate,  one  must  consider  just  how  strong  that                                                                    
     argument  is  -  or  is  not -  when  a  nonlawyer  who                                                                    
     researches this  issue as an  avocation, not  a career,                                                                    
     is able  to argue  the case  before the  Alaska Supreme                                                                    
     Court  and win.   Additionally,  I wish  to express  my                                                                    
     frustration that [DEC] is  foregoing the opportunity to                                                                    
     strengthen  BAT requirements  and  instead is  choosing                                                                    
     the   path   of   least  resistance.      Environmental                                                                    
     protection  has never  been achieved  by following  the                                                                    
     path of least resistance.  [DEC] should be ashamed.                                                                        
                                                                                                                                
VICE  CHAIR  FATE  announced that  testimony  was  concluded  and                                                               
requested  that any  written  testimony be  submitted.   He  also                                                               
noted that Representative Dyson had rejoined the hearing.                                                                       
                                                                                                                                
Number 2487                                                                                                                     
                                                                                                                                
VICE CHAIR  FATE called an  at-ease at 9:18  a.m.  He  called the                                                               
meeting back to order at 9:19 a.m.                                                                                              
                                                                                                                                
Number 2496                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOHRING,  noting that Senator Torgerson  no longer                                                               
was present, asked  his staff to address  the testimony conveying                                                               
concern  about the  discretion allowed  DEC  by use  of the  word                                                               
"may" throughout the bill.                                                                                                      
                                                                                                                                
Number 2528                                                                                                                     
                                                                                                                                
DARWIN PETERSON,  Staff to Senator  John Torgerson,  Alaska State                                                               
Legislature, speaking on behalf  of the Senate Resources Standing                                                               
Committee, sponsor  of the bill, which  Senator Torgerson chairs,                                                               
responded:                                                                                                                      
                                                                                                                                
     I believe the intent of  the legislation in 1990 was to                                                                    
     give  DEC that  discretion  so that  they could  define                                                                    
     what ...  the best spill-response  and spill-prevention                                                                    
     standards  are, and  use that  as their  definition for                                                                    
     best available technology.  They've  done a really good                                                                    
     job of that;  ... we do have the best  standards in the                                                                    
     world.   So, we don't  have any illusions that  DEC ...                                                                    
     would  fall  back  ...  on   that  and  ...  promulgate                                                                    
     regulations  that  would   ...  weaken  the  standards.                                                                    
     That's not the intent of this legislation at all.                                                                          
                                                                                                                                
REPRESENTATIVE  KOHRING asked  whether  it opens  up a  situation                                                               
that could be  detrimental to the industry  by having regulations                                                               
that would be too stringent or unreasonable to the industry.                                                                    
                                                                                                                                
MR. DARWIN answered, "We don't  believe so."  He suggested asking                                                               
someone from the department.   He then reiterated his belief that                                                               
[DEC] has  done a fine job  with the regulations.   He added that                                                               
the 1997  negotiated rulemaking process  involved all  members of                                                               
the industry,  environmental groups, public interest  groups, and                                                               
the  department; the  standards  developed through  that are  the                                                               
best available technology, he said.                                                                                             
                                                                                                                                
Number 2612                                                                                                                     
                                                                                                                                
REPRESENTATIVE  DYSON  moved to  report  [CSSB  343(RES)] out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal note.   There being no objection, CSSB  343(RES) was moved                                                               
out of the House Special Committee on Oil and Gas.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special  Committee  on  Oil  and Gas  meeting  was  adjourned  at                                                               
9:21 a.m.   [For the overview  by XTO  Energy, see the  8:07 a.m.                                                               
minutes for this date.]                                                                                                         
                                                                                                                                

Document Name Date/Time Subjects