Legislature(1999 - 2000)
03/24/2000 09:09 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 24, 2000
9:09 AM
TAPES
SFC-00 # 63, Side A & B
SFC-00 # 64, Side A
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:09 AM
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Al Adams, Senator Lyda Green, Senator Randy
Phillips, Senator Donley, Senator P. Kelly
Also Attending: SENATOR PEARCE; PAT CARTER, Staff to
Senator Pearce; LARRY DIETRICK, Acting Director, Division
of Spill Prevention & Response, Department of Environmental
Conservation; PAUL FUHS, Representative, CSX Lines; SUSAN
MCGARRIGAN, Senior Analyst, Greens Creek Mine; CHARLIE
BUDDY, Vice President, Governmental Relations, Usibelli
Coal Mine; JOE KYLE, Alaska Steamship Association, and
Trident Seafood.
Attending via Teleconference: From Anchorage: TOM RUETER,
NorthStar Maritime Agency; DOUG DAVIS, maritime attorney,
[firm name inaudible]; BRECK TOSTEVIN, Assistant Attorney
General, Department of Law; SUSAN HARVEY, Spill Prevention
Response Section, Department of Environmental Conservation;
MIKE SYMANSKI, Fishing Company of Alaska; From Kenai: JIM
CARTER, Executive Director, Cook Inlet Regional Citizens
Advisory Council; From Ketchikan: JOSEPH LABEAU, Director,
Alaska Center for the Environment; From Petersburg: JOHN
SUND, Representative, Northwest Seafoods; From Vancouver:
JOHN HANSEN, Northwest Cruise Ship Association;
SUMMARY INFORMATION
SB 273-OIL SPILL RESPONSE; NONTANK VESSELS & RR
Larry Dietrick, Acting Director, Division of Spill
Prevention & Response, Department of Environmental
Conservation, along with industry representatives
testified. The bill was held in committee.
CS FOR SENATE BILL NO. 273(RES)
"An Act requiring oil discharge prevention and
contingency plans and proof of financial
responsibility for nontank vessels and railroad tank
cars; authorizing inspection of nontank vessels and
trains; and providing for an effective date."
SENATOR PEARCE outlined background information regarding
the drafting of HB 567, legislation that resulted from the
aftermath of the Exxon Valdez oil spill. She summarized
that this bill set up contingency plan requirements for
crude and non-crude oil tankers and carriers. She stated
that the legislature, at this time, neglected to add "non-
tanker" vessels to this legislation. She noted that in the
past year, the Alaska Railroad has had three spills, but
that they are not presently required by law to have
contingency plans in place for such incidents. She added
that SB 273 requires non-tanker vessels and the railroad to
provide oil discharge prevention and contingency plans for
the Department of Environmental Conservation consistent
with the requirements currently under law. She related
that these carriers were to provide proof of financial
responsibility to meet planning requirements to respond to
spills by containment, including cleanup in the most
expeditious manner. She outlined spill statistics for
regulated, as versus non-regulated carriers, and stressed
exactly what types of carriers would come under this new
legislation.
Senator Pearce detailed that the inspection criteria of
this legislation went to the spill drill component only.
She then outlined specifically what these inspections would
entail. She noted that contingency plans are already in
place for all of the barges that take fuel to rural
communities and that they come under alternative compliance
regulations generated by the Department of Environmental
Conservation via oil spill co-op auspices. She then
outlined the financial responsibility criterion for this
legislation and the effective dates that it would go into
affect.
Senator Phillips stated that he was concerned with the
legislation's fiscal note, allowing for three additional
positions to implement this program.
Senator Pearce outlined those numbers of vessels currently
plying waters in the state which would be affected by this
legislation. She continued that the funding source for
this legislation would be from the same one established as
a result of the Exxon Valdez incident. Senator Pearce
added that the classification of those vessels affected by
this legislation were established, based on what
requirements are currently in place. She noted that the
300 gross ton vessel size was an existing threshold.
Senator Green asked about the current federal Coast Guard
related requirements in lieu of this legislation, which
affects current operators in Alaska.
Senator Pearce stated that the Coast Guard does not require
contingency plans for these vessels in question, but noted
that this would be a state requirement. She then outlined
those vessels, which would be affected by this legislation
and noted that Oregon, Washington and California's
requirements were also considered when drafting this
legislation.
Senator Green responded that she would like to see this
information. She wondered what the economic impact of this
legislation would have on current users.
Senator Pearce countered that she had received various
responses about this legislation, mostly from the fishing
community. She then outlined other specific users that
would be affected by this legislation. She continued that
the fishing industry has been the most vocal about related
costs and added that her offices did research these cost
ramifications. She outlined some of these, including co-op
member services. She specified that the actual carriers
would only be required to contain and control 15 percent of
a spill under ideal conditions, along with a speedy cleanup
once the spill was contained. She affirmed that by
including non-tanker vessels into regulation that this
should bring the cost of compliance down for every member.
Senator Green stated that she was concerned this
legislation would generate inspection fees that no one can
afford to pay, once these regulation powers are handed over
to the Department of Environmental Conservation.
Senator Pearce responded that this legislation does not
authorize the charging of fees and that this was not a
present practice now under contingency plan requirements.
She stated that the vessels transporting petroleum products
to Togiak come under present law jurisdiction. She noted
that this present law has a higher planning standard than
that of the draft legislation. She continued to outline
how this proposed legislation would affect the industry,
those carriers that are currently in compliance and those
that have yet to come under the state's jurisdiction. She
noted that these new carriers would come under less strict
requirements than those attributed to Prince William Sound.
PAT CARTER, Committee Aide to Senator Pearce responded to
the cost issues raised. He noted that cost concerns are
always addressed when negotiating these types of spill
response regulations. He pointed out that this was new
ground for the oil spill response cooperatives and that
they are considering fee schedules, which would take into
consideration all vessels navigating Alaskan waters. He
used an example of cargo ships transiting Cook Inlet.
LARRY DIETRICK, Acting Director, Division of Spill
Prevention & Response, Department of Environmental
Conservation gave an overview of costs outlined in the
related fiscal note. He stated that the department
supports this legislation.
Co-Chair Torgerson asked if the department planned to do
all the enforcement of this bill, including the boarding of
vessels if necessary.
Mr. Dietrick responded affirmatively, but noted that the
current number of inspections conducted is small, from five
to ten per year. He continued that the department conducts
this work in conjunction with the Coast Guard to keep costs
down.
Co-Chair Torgerson asked if Mr. Dietrick would anticipate
seizing a vessel that neglected to carry a contingency
plan.
Mr. Dietrick noted that an inspection is conducted as a
prevention measure, but that a shore based, oil spill
response facility such as the existing co-ops would be
equipped with the bulk of equipment necessary to respond to
a spill. He continued that inspections are conducted to
make sure a vessel has adequate equipment to contain a
spill in its initial stages.
Co-Chair Torgerson asked what the penalty for those without
a contingency plan would be.
Mr. Dietrick stated that the normal remedies would include
a request for correction in 30 days through a notice of
violation. He continued to outline other penalty
possibilities as well.
Co-Chair Torgerson asked if the dept thought the fiscal
note would cover the amount of necessary inspections
anticipated by this legislation in years to come.
Mr. Dietrick asserted that he did not see the number of
necessary positions changing in years to come.
Co-Chair Torgerson asked why the environmental experts
noted in this legislation would be situated in Anchorage.
Tape: SFC - 00 #63, Side B, 9:56 a.m.
Mr. Dietrick commented that the department anticipates
positioning two of these employees situated in Anchorage
and one in Juneau. He continued that the Anchorage
employees would travel to Alaskan locations as necessary.
He noted that it is necessary for these employees to travel
to various locations around the state and the placement of
these individuals in Anchorage would be most cost
effective.
Co-Chair Torgerson asked what type of interaction the
department would have with the existing advisory
committees.
Mr. Dietrick stated that the department's relationship with
the Citizen's Advisory Committee would not be changed by
this legislation. He noted that these two agencies were
established under the Oil Pollution Act to provide
oversight for the crude oil industry and that he did not
anticipate a change with this existing relationship.
TOM RUETER, NorthStar Maritime Agency testified via
teleconference from Anchorage on behalf of various shipping
tramps and vessels operating in the fisheries trade, as
well as the bulk cargo trade in Alaska. He noted that his
agency has had input into this draft legislation, but
pointed out that his agency is concerned about the
financial ramifications involved. He declared that the
related costs of this legislation were still unclear at
this point, particularly for individually owned tramp
vessels. He gave specific details of this legislation's
cost requirements.
DOUG DAVIS, maritime attorney, [firm name inaudible]
testified via teleconference from Anchorage. He gave an
overview of the insurance system in place to cover large
ship transits in Alaska for a total of $1 billion dollars
for spill prevention. He noted that the proposed
legislation would require non-tank vessels exceeding 400
gross tons to demonstrate financial responsibility for
possible spills to the state, including an oil spill
contingency plan approved by Department of Environmental
Conservation. He felt as though the committee substitute
went far to fix one big problem, which is to allow non-tank
ship owners to use the funds as outlined above as proof of
financial ability. He pointed out though that this bill
attempts to place the non-tank vessel owners under existing
state law, more specifically AS 46.04.040. He felt as
though this was a "bad fit" for these non-tank vessels and
explained why in specific detail. He suggested that a
separate financial responsibility statute should be drafted
clearly stating that Alaska will accept coverage with a
member of the international group of insurers to meet
financial responsibility in the event of an oil spill. He
then outlined what would happen with non-tank ship oil
spills if this legislation were not passed in its present
form.
BRECK TOSTEVIN, Assistant Attorney General, Department of
Law testified via teleconference from Anchorage. He stated
that the department supports this legislation.
SUSAN HARVEY, Spill Prevention Response Section, Department
of Environmental Conservation testified via teleconference
from Anchorage. She stated that she was available to
answer any questions, which might be forthcoming.
MIKE SYMANSKI, Fishing Company of Alaska testified via
teleconference from Anchorage representing fishing vessels,
which would be affected by this legislation. He stated
that his main concern with this legislation was the
uncertainty of the oil spill requirements for 50 percent
containment and the related costs. He felt as though this
was an unattainable standard, with unknown financial
ramifications.
JIM CARTER, Executive Director, (RCAC) Cook Inlet Regional
Citizens Advisory Council testified via teleconference from
Kenai. He disagreed with the analysis about the RCAC not
participating in the OPA 90 (Oil Pollution Act of 1990)
program. He referenced a previous related conference in
Homer regarding safety issues and gave an overview of
issues discussed there. He clarified that as long as the
oil industry money is not expended on unrelated activities,
the RCAC can participate in other programs.
JOSEPH LABEAU, Director, Alaska Center for the Environment,
testified via teleconference from Ketchikan. He encouraged
the passage of this legislation, along with increased
financial responsibility requirements for the railroads.
He specified that contingency planning for hazardous
substances, in conjunction with the railroad, was in order
as well.
JOHN SUND, Representative, Northwest Seafoods testified via
teleconference from Petersburgh. He stated that this
legislation would increase the cost of doing business,
although this figure was nebulous. He noted that passing
this cost onto the consumer was improbable. He outlined
the present cost of doing business under the existing
regulations, not to mention the cost of spill prevention
equipment on hand for any operators beyond that provided by
the co-ops. He noted that this legislation would create a
third set of regulations to consider, not to mention, the
cost of membership to a co-op organization. He pointed out
that fishing opportunities usually take place in remote
locations, making it difficult for spill response efforts.
JOHN HANSEN, Northwest Cruise Ship Association testified
via teleconference from Vancouver. He explained that this
association consisted of eight cruise lines that operate in
Alaska. He spoke to the nature of the response
capabilities of these cruise lines and suggested that he
send some written comments to this effect. He specifically
spoke to a response plan, which the association is
currently drafting, in conjunction with SEAPRO. He noted
that the association has committed to instituting response
barges as part of this response plan at the cost of $1.3
million dollars. He clarified that the association has no
dispute with the objectives of this legislation, but that
they did have some concerns with specific aspects in its
present form, namely, to financial responsibility and the
contingency plan requirements. He then spoke to the
relationship between the ship owners and the response
organizations, specifically the difficulty of reaching term
agreements regarding response capabilities and the
delineation of responsibilities.
PAUL FUHS, Representative, CSX Lines, formally known as
Sealand stated that this legislation would result in
additional costs which would be passed onto consumers. He
noted that the company was concerned about the requirement
for different sea plans depending on the region of
operation, not to mention the added cost to implement. He
wondered about the ramifications of spreading the cost of
spill response by requiring additional vessels to comply,
as well as the amount of equipment necessary for response.
He voiced a concern about specific co-op member liability
for any spill incident and the possibility of being sued
for other member mishaps.
SUSAN MCGARRIGAN, Senior Analyst, Greens Creek Mining,
testified that the company supports the concepts of this
legislation, yet they are concerned that in its current
form it will not adequately cover the charter vessels that
Greens Creek uses to transport their ore into international
markets. She referenced similar Washington State law which
allows for charter vessels to meet contingency plan and
spill response requirements through a per trip fee paid to
a Washington State spill response organization. She
continued that Greens Creek has received no assurances from
SEAPRO what the cost of coverage for similar services would
be and whether or not the proposed legislation explicitly
requires that SEAPRO provide these services to independent
vessel operators.
CHARLIE BUDDY, Vice President, Governmental Relations,
Usibelli Coal Mine, stated the same concerns as the Greens
Creek Mine. He pointed out that of the 1.6 million tons of
ore that their mine produces a year, 600,000 - 800,000 tons
is shipped via the Alaska Railroad. He continued that once
this cargo reaches Seward, they contract with 10 to 12
ships per year for transport to South Korea. He pointed
out that these ships would be required to pay a much higher
rate of fees per shipload. He asserted that these
additional fees could contribute to an already fragile
contract for product with South Korea. He concluded that
Usibelli could not support this legislation in its current
form.
Senator Pearce countered that currently petroleum charter
ships are required to provide contingency plans for review
by the Department of Environmental Conservation. She noted
that independent spill prevention companies cover these
ships.
Mr. Buddy agreed with this assessment but pointed out that
the financial feasibility of Usibelli mines being able to
conduct business per usual would hang in the balance. He
continued that the cost of spill prevention services should
be ascertained and provided to the mine, in order to
determine additional business costs.
Senator Pearce pointed out that Seward is a high-risk area
for possible mishaps. She remarked that over the years she
has supported a number of initiatives, which end up being,
direct subsidies to Usibelli Mine. She stated that she
found it unacceptable that these shippers transit Alaska
waters, but are not willing to comply with regulations that
are reasonably drafted.
Co-Chair Parnell noted that somewhere short of absolute
assurances for economic certainty, he asked for
suggestions.
Mr. Buddy stressed that the independent spill response
companies should come forward to explain how they intend to
handle the costs of services provided. A discussion
regarding tonnage and frequency of transport from these
mining endeavors ensued.
JOE KYLE, Alaska Steamship Association, and Trident Seafood
stated that 24 Trident vessels would be affected by this
legislation. He stressed that this bill was a major
concern to the corporation. He added that Alaska Steamship
would be greatly affected and reiterated the unknown cost
concerns presented by previous testifiers. He also
wondered if the spill response co-ops had adequate
equipment to respond to possible mishaps.
Senator Pearce stated that she understood all the concerns
presented, but noted that there should be a cost of "doing
business" in Alaska for these companies, while the state
does all it can to protect Alaskan waters.
Senator Phillips raised the issue of instituting a delayed
effective date to this legislation in order to work out
some of the necessary details and concerns as raised. A
discussion regarding the dynamics of this issue ensued
between Senator Pearce, Senator Phillips, Co-Chair
Torgerson and Senator Green.
Co-Chair Torgerson decided, with the input of Mr. Dietrick,
that March 1, 2001 would be the effective date for this
legislation. Co-Chair Torgerson stated that he would also
draft an amendment regarding page 6, line 4 to delete the
word "interpret" from this section. The bill was HELD in
committee.
Senator Pearce summarized the issue of financial
responsibility of responding to an oil spill and noted that
in prior committee hearings the members had already made
concessions regarding these concerns. She pointed out that
there was $1 billion dollars in a federal OPA 90 money
fund, but the state is unsure whether they could be
reimbursed for spill efforts through this avenue. She
stated that Alaska should not have to bear this
responsibility of cost reimbursement.
ADJOURNED
Senator Torgerson adjourned the meeting at 11:08 AM.
SFC-00 (10) 03/24/00
| Document Name | Date/Time | Subjects |
|---|