Legislature(1993 - 1994)
03/03/1994 05:00 PM House O&G
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL & GAS
March 3, 1994
5:00 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Pete Kott (arrived at 5:30 p.m.)
Representative Harley Olberg (arrived at 5:25 p.m.)
Representative Gary Davis
Representative Joe Sitton
MEMBERS ABSENT
Representative Jerry Sanders
Representative Jerry Mackie
OTHER LEGISLATORS PRESENT
Representative Ronald L. "Ron" Larson
COMMITTEE CALENDAR
*HB 276: "An Act amending the purposes for which money in
the oil and hazardous substance release response
fund may be expended."
HEARD AND HELD OVER
(*First public hearing)
PREVIOUS ACTION
BILL: HB 276
SHORT TITLE: OIL SPILL RESPONSE FUND: FISHER LOSSES
SPONSOR(S): REPRESENTATIVE(S) LARSON BY REQUEST,Carney
JRN-DATE JRN-PG ACTION
04/07/93 1070 (H) READ THE FIRST TIME/REFERRAL(S)
04/07/93 1070 (H) OIL & GAS, STATE AFFAIRS,
RESOURCES, FIN
02/28/94 (H) O&G AT 05:00 PM CAPITOL 124
02/28/94 (H) MINUTE(O&G)
03/03/94 (H) O&G AT 05:15 PM CAPITOL 17
WITNESS REGISTER
JIM HERMAN
Commercial Fisherman
Kalgin Island, Alaska
POSITION STATEMENT: Testified in support of HB 276.
DAVID CHISSIK
Commercial Fisherman
Kalgin Island, Alaska
POSITION STATEMENT: Testified in support of HB 276.
MEAD TREADWELL, Deputy Commissioner
Alaska Department of Environmental Conservation
410 Willoughby Ave, Suite 105
Juneau, Alaska 99801
Phone: (907) 465-5050
POSITION STATEMENT: Testified in opposition to HB 276
ACTION NARRATIVE
TAPE 94-11, SIDE A
Number 002
CHAIRMAN GREEN called the meeting to order at 5:22 p.m.
HB 276 - OIL SPILL RESPONSE FUND: FISHER LOSSES
Number 012
REPRESENTATIVE RON LARSON stated his appreciation of this
opportunity to be heard before the committee. He indicated
he is co-sponsoring HB 276 with Representative Pat Carney.
Number 016
JIM HERMAN, COMMERCIAL FISHERMAN from Kalgin Island,
testified via teleconference. He referred to the 1988
salmon season when he and his neighbor, David Chissik, lost
several nets due to an unknown oil spill. Department of
Environmental Conservation (DEC) flew to the bay where they
were fishing and took samples of the oil. DEC was unable to
find the party responsible for the oil spill and told him,
at a later date, that the case was closed. He then wrote to
the Governor and was told the matter was referred to a
committee. He was informed that because there was no
legislation, no funds were available in the oil spill fund
to be drawn out for this investigation. He pointed out that
someone should be liable for unknown oil spills and that HB
276 would protect the fisherman from unknown oil spills in
the future.
Number 055
DAVID CHISSIK, COMMERCIAL FISHERMAN, testified via
teleconference from Anchorage. He referred to the same
incident during 1988 when he had to pull his nets to save
them from the oil spill. When DEC was contacted they were
unable to identify the source of the spill. He expressed
his desire for justice so that fisherman would be protected
in such situations. He spoke in support of HB 276.
Number 084
REPRESENTATIVE GARY DAVIS questioned if DEC actually
investigated the situation and determined that the source of
the oil remained unknown.
Number 090
MR. CHISSIK replied that immediately after identifying the
crude oil in the water, DEC was called on the VHF radio and
a helicopter was sent out. They took samples but were
unable to identify who spilled the oil and it remains a
mystery.
Number 094
REPRESENTATIVE DAVIS pointed out in that location, Kalgin
Island/Cook Inlet, the oil could have come from a tanker
coming from or heading to the docks up north, so the oil
could have come from a refiner as opposed to an oil company.
He asked if this was an obvious deduction.
Number 097
MR. CHISSIK replied in the affirmative.
Number 100
CHAIRMAN GREEN asked if the nets were located on the west or
east side, and upon hearing that the nets were on the east
side, he confirmed that this was on the main inlet side. He
inquired as to whether the crude oil was very widespread or
if it was contained to the east side of Kalgin Island.
MR. HERMAN answered that he did not know. However the oil
was in ten of his nets, two of which were destroyed. This
was mainly on the outside. Also, driftwood, which was
entangled in the nets, was covered with an eighth to a
quarter inch of oil.
Number 127
MEAD TREADWELL, DEPUTY COMMISSIONER, ALASKA DEPARTMENT OF
ENVIRONMENTAL CONSERVATION, stated that he was not with the
Department in 1988, and although he is not familiar with the
incident under discussion, he indicated he would check into
it. He said there are routine investigations in spills of
this sort, including matching the spill in question to basic
samples previously identified. Because of this, he was
surprised it was not determined as to whether this was North
Slope or Cook Inlet crude oil.
MR. TREADWELL explained that under the Response Fund,
revenue comes in at a nickel a barrel and is put aside
either to respond to spills or to use for operation
prevention. As this bill is written, if this incident had
occurred and this law was on the books at the time, the
fishermen would still have needed to contact DEC to make a
claim and DEC would then perform the job of an insurance
adjuster so to speak, and investigate the spill. Also, an
allocation would be necessary, ahead of time, to determine
the amount of funding to be set aside for these spills.
When this bill was introduced last year, DEC signaled
opposition because there were areas that needed to be
studied before moving ahead. He suggested that perhaps
Legislative Research, Regional Citizens' Advisory Council,
Fish and Game, and/or the Division of Insurance could be
involved in further researching this bill. He stated that
it would be very hard at this time to give any kind of
fiscal note. He said DEC is aware of a large numbers of
oils spills that are either crude oil spills or spills that
are caused by the fishing industry itself and that they need
more information before getting further into the insurance
adjustment business. He said some jurisdictions have
tackled this problem and he mentioned Greenland as an
example. Greenland has something similar to an uninsured
motorist policy, and takes out a 10 million dollar insurance
policy every year to cover phantom oil spills that affect
resources. He said under the Oil Pollution Act of 1990
and/or Damage Assessment Claims, there may be some other way
to address this issue. He further stated, in attempts to
build a consensus on the Response Fund, since it has been
said that fines should be more discretionary in their use,
the use of fines might be considered. Finally, another idea
worthy of study is to look at this in combination with the
limited entry fees in order to cover the cost of uninsured
coverage. He said since the time of this incident of 1988,
the capacities of the laboratory used to identify different
types of oil have been expanded. As a point of discussion,
he mentioned that some of the tar balls in Prince William
Sound were identified as coming, not from the Exxon Valdez,
but from oil spills during the 1964 earthquake. In short,
there is technology available today that was not available
in 1988.
MR. TREADWELL mentioned the two demonstration projects that
are in the field right now, both of which depend on local
response vehicles. He pointed out that if a fishing vessel
is involved in a response and gets its gear damaged, gear
can be replaced under that provision. He said under the
circumstances described by the testifiers, there is no
provision for gear replacement.
Number 217
MR. HERMAN assured the commissioner that the spill was real.
It was noted to be about three miles long and several
hundred yards wide. He said Fish and Game and possibly the
Coast Guard should have records of this. He further stated
a man with the first name of Paul, possibly with DEC, was
present during the spill investigation. This incident
occurred during the first part of August or last part of
July 1988.
Number 235
CHAIRMAN GREEN questioned whether the department had the
means to identify a sample through spectrographic analysis
to determine the origin of the sample.
MR. TREADWELL confirmed that the department has a good track
record of matching samples. He re-stated that he was not
familiar with this particular incident before today and did
not, at this time, know why there was difficulty in
identifying the source of the spill. He pointed out from
the example of Exxon Valdez, that oil that is spilled even
hundreds of miles away can show up in a tide rip.
Therefore, the spill could have been from a tanker cleaning
its bilges as it approached the Gulf Coast of Alaska,
inbound from Valdez. He stated there have been problems
with this in the past and those problems have stopped as a
result of strong enforcement from DEC and also from federal
laws like the International Convention for the Prevention of
Marine Pollution, which have come into effect since 1988.
He suggested it was possible that DEC was able to identify
the source of the crude but not determine, with any
certainty, what ship it was.
Number 254
REPRESENTATIVE DAVIS asked if the setnet fleet was notified
in addition to the driftnet fleet which apparently was
alerted by Fish and Game.
MR. HERMAN stated they did not alert Fish and Game. His
brother called the Federal Aviation Administration (FAA).
Evidently Fish and Game saw the oil and alerted fishermen on
the VHF radio. He said he just happened to pick up the
message on the radio. He explained that because the drift
was about five miles away, he did not realize oil was going
to get into his nets.
Number 271
REPRESENTATIVE JOE SITTON inquired as to the replacement
costs of the nets.
MR. HERMAN estimated the nets to be about $750 each.
Number 280
REPRESENTATIVE LARSON commented that the purpose of this
bill was to bring up a concern. He asked if either Mr.
Herman or Mr. Chissik wanted to comment on the ideas
mentioned by Mr. Treadwell.
Number 284
MR. HERMAN said they knew it was not regular oil. He also
mentioned that samples were taken, so the Coast Guard and/or
DEC must have records of this incident.
Number 294
REPRESENTATIVE LARSON said he was referring specifically to
Mr. Treadwell's suggestions.
Number 300
MR. HERMAN wondered what the purpose of an oil fund is if it
is not going to be used for an oil spill such as this one.
MR. TREADWELL said there is discussion in other legislation
regarding the word, "restoration." He said he wonders what
opinion the attorney general might have rendered and also
what information DEC has about the source of this oil spill.
He said it is possible that the current definition of
"restoration" might already cover this particular incident.
He pointed out the Governor has made a very strong case with
Exxon Valdez civil trustees, that true restoration does
cover restoring economic as well as environmental damages.
Number 322
REPRESENTATIVE HARLEY OLBERG asked if it was relatively easy
to differentiate between crude and bunker fuel from a ship's
bilges.
MR. TREADWELL replied that it involved how weathered the
crude or bunker was, and also how convoluted the mixture
was. He said there has been a lot of success in this
identification process.
Number 335
REPRESENTATIVE OLBERG asked if there were representative
samples of all the crude produced in Alaska.
MR. TREADWELL confirmed that all samples are kept. He also
mentioned that the composition of crude does change over the
years.
Number 338
REPRESENTATIVE OLBERG said the possibility of insurance is
perhaps something that a Regional Citizen's Advisory Council
(RCAC) could pursue as a more localized function.
NUmber 342
REPRESENTATIVE DAVIS said that RCACs may include the local
fishing organizations.
Number 345
MR. TREADWELL informed the committee that RCACs include as
ex-officio members, DEC and other agencies, and they work
together to try to identify problems ahead of time.
MR. TREADWELL stated the proposed solution, although simple,
is complicated in its application. He said although he is
sympathetic to the fishermen's situation, he can imagine the
possibility of fraudulent situations. He pointed out that
going into the fraud protection business is not a mission to
assume right now if there are other ways to address the
problem.
Number 371
REPRESENTATIVE DAVIS stated he felt sympathetic for
fishermen who suffer economic losses through no fault of
their own. He said having lived in the Cook Inlet area for
30 years and knowing the fishing groups and oil groups, he
thinks there will be a group that can address this concern
and arrive at a solution if the legislature does not. He
explained to Mr. Chissik and Mr. Herman that the 470 Fund,
the fund being considered for compensating this type of
loss, is currently undergoing close scrutiny and discussion
in the Capitol.
Number 390
CHAIRMAN GREEN was informed by the long-distance operator
that there was difficulty with the telephone system and the
teleconference calls may not be on-line for approximately
five minutes.
Number 400
REPRESENTATIVE SITTON questioned a citizen's possible
recourse when no regulatory avenue is available for use in
recovering losses. He wondered if one's recourse was to go
to court and sue the state; the state being the party
responsible for ensuring there is a safe environment to
operate in.
Number 412
MR. TREADWELL expressed uncertainty that a third party would
prevail against the state in that circumstance. He
illustrated this point by drawing an analogy to a wild fire
in which case the source is unknown, but there is much
damage that ensues. He said in this case, we do have an oil
spill fund, we do try to restore damages to the environment,
and we do generally try to help citizens. He further stated
although we have a responsibility to stand up for our
citizens, the solution that is drafted in this bill at this
point would open it up a little bit too much.
Number 440
CHAIRMAN GREEN mentioned that this issue might be addressed
elsewhere, on the 470 Fund. He asked for the wish of the
committee.
Number 422
REPRESENTATIVE LARSON stated that Mr. Treadwell brought up
valuable ideas regarding the need for further research of
this incident and possibly the problems which existed in
1988 have already been addressed.
Number 465
CHAIRMAN GREEN agreed that the ramifications of this
research would be important information for the committee to
have and he asked that Mr. Treadwell address this issue.
Number 473
REPRESENTATIVE OLBERG said his particular interest was with
the insurance aspect of this concern.
Number 475
REPRESENTATIVE LARSON thanked the committee and said he is
looking forward to continued work on this issue.
Number 480
CHAIRMAN GREEN stated the committee would hold HB 276 in
abeyance.
CHAIRMAN GREEN adjourned the meeting at 5:59 p.m.
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