Legislature(1993 - 1994)
02/16/1994 03:35 PM Senate RES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE
February 16, 1994
3:35 P.M.
MEMBERS PRESENT
Senator Mike Miller, Chairman
Senator Dave Donley
Senator Fred Zharoff
MEMBERS ABSENT
Senator Loren Leman, Vice Chairman
Senator Drue Pearce
Senator Al Adams
Senator Steve Frank
COMMITTEE CALENDAR
SENATE BILL NO. 215
"An Act relating to and redesignating the oil and hazardous
substance release response fund and to its use in the event of a
disaster emergency; repealing the authority in law by which marine
highway vessels may be designed and constructed to aid in oil and
hazardous substance spill cleanup in state marine water using money
in the oil and hazardous substance release response fund; amending
requirements relating to the revision of state and regional master
prevention and contingency plans; altering requirements applicable
to liens for recovery of state expenditures related to oil or
hazardous substances; amending the authority to contract to provide
personnel to respond to a release or threatened release of oil or
a hazardous substance and to contract to conduct spill related
research; reassigning responsibility for the oil and hazardous
substance response corps and for the emergency response depots to
the Department of Environmental Conservation, and for the operation
of the state emergency response commission and its attendant
responsibilities for the local emergency planning commissions to
the Department of Military and Veterans' Affairs; and modifying
definitions of terms relating to the preceding provisions;
terminating the nickel-per-barrel oil conservation surcharge;
levying and collecting two new oil surcharges; and providing for
the suspension and reimposition of one of the new surcharges; and
providing for an effective date."
PREVIOUS ACTION
SB 215 - See Resources minutes dated 11/19/93, 1/19/94, and
2/7/94.
WITNESS REGISTER
Jack Chenoweth
Legislative Affairs Agency
Goldstein Bldg., #406
Juneau, Ak. 99801-2105
POSITION STATEMENT: Commented on SB 215.
Mary Jacobs
P.O. Box 3080
Kodiak, Ak 99615
POSITION STATEMENT: Opposed SB 215.
Bob Brody
P.O. Box 296
Kodiak, Ak. 99615
POSITION STATEMENT: Opposed SB 215.
Mary Forbes
Kodiak Audubon Society
418 Mill Bay Road
Kodiak, Ak. 99615
POSITION STATEMENT: Opposed SB 215.
Chip Thoma
Juneau, Ak. 99801
POSITION STATEMENT: Opposed SB 215.
Stan Stephens, President
Prince William Sound Regional Citizens' Advisory Council
Valdez, Ak.
POSITION STATEMENT: Opposed SB 215.
James Studley
P.O. Box 1049
Haines, Ak. 99827
POSITION STATEMENT: Opposed SB 215.
Wayne Coleman
P.O. Box 1913
Kodiak, Ak. 99615
POSITION STATEMENT: Opposed SB 215.
Gerald Brookman
715 Muir Ave.
Kenai, Ak. 99611
POSITION STATEMENT: Opposed SB 215.
Paul Seaton
58360 Bruce Dr.
Homer, Ak. 99603
POSITION STATEMENT: Opposed SB 215.
Gail Parsons
P.O. Box 2397
Homer, Ak. 99603
POSITION STATEMENT: Opposed SB 215.
Mary McBurney
Cordova Fishermen United
P.O. Box 939
Cordova, Ak. 99574
POSITION STATEMENT: Opposed to SB 215.
James Mykland
P.O. Box 1241
Cordova, Ak. 99574
POSITION STATEMENT: Opposed to SB 215.
Nancy Bird
P.O. Box 1185
Cordova, Ak. 99574
POSITION STATEMENT: Opposed to SB 215.
Danny Carpenter
P.O. Box 1430
Cordova, Ak. 99574
POSITION STATEMENT: Opposed SB 215.
Krista Rogerson
P.O. Box 1386
Valdez, Ak. 99686
POSITION STATEMENT: Opposed SB 215.
Donna Lane
P.O. Box 1353
Valdez, Ak. 99686
POSITION STATEMENT: Opposed SB 215.
Randy McGovern
1611 Carr
Fairbanks, Ak. 99709
POSITION STATEMENT: Opposed SB 215.
Mike Walleri
122 first Ave., Suite 600
Fairbanks, Ak. 99708
POSITION STATEMENT: Opposed SB 215
Kevin Harun, Executive Director
Alaska Center for the Environment
519 W 8th, #201
Anchorage, Ak. 99501
POSITION STATEMENT: Opposed SB 215.
Patti Saunders
1233 W. 11th Ave.
Anchorage, Ak. 99501
POSITION STATEMENT: Opposed SB 215.
Marna Schwartz
1332 W 12th
Anchorage, Ak 99501
POSITION STATEMENT: Opposed SB 215.
Tom Lakosh
P.O. Box 100648
Anchorage, Ak. 99510
POSITION STATEMENT: Opposed SB 215.
Ivan Widom
P.O. Box 154
Seldovia, Ak. 99663
POSITION STATEMENT: Opposed SB 215.
Ervin Paul Martin, Director
Division of Emergency Service
Department of Military and Veterans Affairs
P.O. Box 5750
Ft. Richardson, Ak. 99505-0800
POSITION STATEMENT: Opposed SB 215.
Russell Heath, Executive Director
Alaska Environmental Lobby
P.O. Box 22151
Juneau, Ak. 99801
POSITION STATEMENT: Opposed SB 215
Dave Parish
Exxon
POSITION STATEMENT: Opposed SB 215.
John Sandor, Commissioner
Department of Environmental Conservation
410 Willoughby, Suite 301
Juneau, Ak. 99801-1795
POSITION STATEMENT: Opposed SB 215.
Richard Fineberg
P.O. Box 416
Ester, Ak. 99725
POSITION STATEMENT: Opposed SB 215.
Carl Pulliam
Seldovia, Ak.
POSITION STATEMENT: Opposed SB 215.
ACTION NARRATIVE
TAPE 94-9, SIDE A
Number 001
CHAIRMAN MILLER called the Resources Committee meeting to order at
3:35 p.m. and announced SB 215 (OIL/HAZARDOUS SUBS. RELEASE
RESPONSE FUND) to be up for consideration.
JACK CHENOWETH explained the changes in the CS. He took out use of
the money for marine highway ferry construction. On page 15 he
explained how the money in the $50 million account would be
accessed by the Commissioner.
SENATOR MILLER asked about appropriations to the fund and the
"blackmail clause." MR. CHENOWETH explained that the blackmail
clause, section 6, requires the legislature in each fiscal year to
appropriate at least an amount equal to the amount determined under
(b) of this section from the general fund to the $50 million
account (the rollover provision).
Number 147
SENATOR MILLER asked how section 34 related to section 6. MR.
CHENOWETH said he carried the language in section 34 forward from
the original 1989 bill, because he wanted to make sure nothing
would cut off the opportunity for the money to come in and be put
toward support of the fund. He also noted that there were some
drafting errors.
SENATOR ZHAROFF said he needed clarification on sections 1 and 31.
He wanted to know which account money would come out of for a
spill. He discussed with Mr. Chenoweth different conditions for
use of the money when there is a spill.
Number 368
MARY JACOBS, Kodiak, said they had made good progress toward
preparedness with use of the 470 funds. She thought legislative
efforts would be better spent improving manning requirements and
better equipment. She said with the budget shortfall we don't need
to be giving the oil industry a tax break and increasing taxes for
the fishing industry.
BOB BRODY, Kodiak, opposed SB 215. He said the purpose of the bill
is to give an undeserved windfall to the oil industry. He was
Chairman of the Oiled Mayors during the Exxon Valdez cleanup and
they worked very hard to adopt the legislation that this bill
unceremoniously tries to dismantle. As a result of Exxon's
negligence, all of their communities suffered tremendous financial
and social disruption. Establishing the 470 fund and the
legislation enabling DEC to properly plan, prepare, and deal with
subsequent pollution problems was one of the few positive things
resulting from the process. Enactment of it took over two years,
with the close cooperation of the legislature, the Governor's
office, DEC, the Mayors of the spill affected communities and the
oil industry.
In light of declining revenues it does not make sense to give the
oil industry a break and then turn to the people of Alaska to fund
the existing programs of planning and prevention, he concluded.
Number 462
MARY FORBES, Kodiak Audubon Society, strongly opposed SB 215. It's
confusing and difficult to understand. She said it would be very
difficult to continue response programs, if it passed.
Number 476
CHIP THOMA, Juneau, said he believed all the uses made thus far of
the 470 fund were proper. The audit, due in March, will
substantiate this claim. He opposed this bill which is the first
substantive attempt by Exxon and BP Oil to gut the proper functions
of DEC. He urged the Committee to withdraw the bill.
STAN STEPHENS, President, Prince William Sound Regional Citizens'
Advisory Council, said they had the bill for only a short time and
there were numerous drafting errors and inconsistencies between
sections. He said the proposal contains sections that were never
discussed in subcommittee.
MR. STEPHENS stated that the balance in the fund is $37 million,
not $0 as formerly thought. The clause that permanently suspends
the surcharge if the legislature doesn't appropriate the entire
balance of the spill reserve to the new catastrophic account is the
very reserve the legislation is supposed to protect. In this bill
it is jeopardized by the eleventh hour budget crap shoots of the
legislature facing a massive budget shortfall.
This bill is only a large tax break for the oil producers.
Another false premise this bill is based on is that this response
fund is a DEC slush fund that has been misused. The only access to
the fund DEC has is for spill response. They have used
approximately $1.5 million for this purpose in the last 4 years.
All other access and use of the funds is from appropriations made
by the legislature for programs authorized in statute.
The proposal is riddled with technical definition changes that
diminish Alaska Departments' of Law and Environmental Conservation
authority in unpredictable ways.
Some programs are close to being implemented, but if SB 215 passes
they would be impossible.
Number 534
JAMES STUDLEY, Vice Chairman for LAPC Association, said the bill
refers to emergencies and what's lacking is that the people that
are going to be there and work are not addressed. There is money
there if there is a problem. The 470 fund originally intended to
have the problems handled. The money does not get down to the
people who do the work as it does with some federal funding. If
the intent of the fund is to help the people of Alaska to prevent
a disaster, to plan and cope with a disaster, they need more money
at the working level.
WAYNE COLEMAN, Kodiak, opposed SB 215. He asked why they aren't
getting materials staged in strategic locations around the state to
allow the citizens to cope effectively with releases of oil and
other hazardous substances. He asked why in these times of serious
budget shortfalls does the state want to reduce taxes on some
segments of the economy, the oil industry, while proposing
increases on other segments, like commercial fishing.
TAPE 94-9, SIDE B
MR. COLEMAN asked why the state wanted to reduce taxes on the oil
industry while proposing to cut programs for socially and
economically disadvantaged citizens. He said that some parts of
the bill are confusing and vague, for instance section 11.
GERALD BROOKMAN, Kenai, opposed SB 215. He agreed with what he had
heard so far. He is particularly concerned with the smaller spills
that aren't catastrophic. To be prepared we need lots of drills
and equipment. He thought it more appropriate to increase the
funds. He said there are federal funds available for the
catastrophic spills.
PAUL SEATON, Homer, opposed SB 215. He said prevention, planning,
and preparedness is what we should be working on. Anything that
would restrict the fund for those mechanisms shouldn't even be
considered.
Number 532
GAIL PARSONS, Homer teacher, was very concerned with any changes
being made to the 470 fund. She would like to see the response and
volunteer corps in place which are called for under the fund. She
is concerned with the division of funds into different accounts.
She wasn't getting a tax break; she didn't see why the oil industry
should be given a tax break.
MARY MCBURNEY, Cordova District Fishermen United, opposed SB 215.
There is no reason to restructure the 470 fund. If there is a
problem with the way the funds have been spent, the legislature
should look at its own appropriation process. Section 32 was of
particular concern to her, because it provides a mechanism by which
the 5 cent surcharge can be suspended altogether.
JAMES MYKLAND, Cordova, said the 470 fund has been working and is
doing the job it is supposed to do. If something is working and
not broken, why fix it?
NANCY BIRD, Cordova, said she just looked at the original purpose
of the 470 fund and there is no need for a change. If anything,
they need more money available for DEC prevention and response
efforts. She supported increasing the surcharge to 10 cents a
barrel.
DANNY CARPENTER, Cordova commercial fisherman, said this bill would
complicate an already complex issue. Before oil started to flow
through the pipeline, preventive and mitigation measures were
compromised away due to the expense. The Exxon Valdez demonstrated
that a cleanup is not the viable solution.
KRISTA ROGERSON, Valdez, opposed SB 215, because limiting funding
from the 470 fund would put us back to where we were before the
Exxon Valdez oil spill. She asked the committee to drop the bill,
so Alaskans could continue to protect the state's resources through
preparedness and prevention.
Number 354
DONNA LANE, Valdez charter boat owner, opposed SB 215, because it
decreases the state's ability to monitor the oil industry in
response to spills. It is fair that the ones who profit from the
production and transportation of oil be responsible for any damage.
The surcharge is fair. SB 215 restricts the availability of 470
funds or spills less than 4.2 million gallons. The majority of
spills in Alaska are of this size or less. Alaska's future is the
tourism industry and destroying our resources is a threat to it.
DONNA LANE testified for Nancy Lethcoe, President, Alaska
Wilderness Recreation and Tourism Association who was unable to
attend this teleconference. She said both the 2 cents and 2 1/2
cents surcharge are insufficient to pay for spill prevention,
response, and cleanup. She opposed SB 215 and supported Senator
Adams' proposal to raise the surcharge to 10 cents. It makes no
sense to give the oil industry a tax break and cut out funding for
volunteer response corps.
RANDY MCGOVERN, Fairbanks, said he spent three years on the State
Hazardous Substance Spill Technology Review Council. He said at a
time when the legislature is talking of reinstituting the income
tax, there is no sense in losing millions of dollars in revenue by
passing this bill. $1 of prevention is worth $100 in any response
or cleanup, he concluded.
MIKE WALLERI, General Council for Tanana Chiefs Conference, opposed
SB 215. A lot of people view this bill as tax relief for the oil
companies. They are concerned with the shifting of the burden of
paying for the spill prevention program to Alaska residents.
He noted there is room for improvement within the 470 fund.
Legislation could clarify in section 11 that the money could be
used to pay for municipal village contingency plans. The 2.5 cents
per barrel is really insufficient to fund prevention programs
currently, let alone to expand in needed areas.
He suggested defeating the bill or totally rewriting it to address
the problems in rural Alaska.
Number 204
KEVIN HARUN, Executive Director, Alaska Center for the Environment,
said we can't do much to cleanup a spill, but we can do a lot to
prevent by minimizing risk and containment. The bill, if enacted,
would not provide enough money to fund the state's core spill
prevention and response program. He said the 470 fund is
redundant, because OPA '90 has a $1 billion spill reserve. Another
lesson they learned from the spill is that they weren't prepared to
act. Putting the abatement funds into the catastrophic account
probably would result in DEC layoffs.
He was concerned that the definition of "relief" was redefined to
include injury to life or loss or damage to property. They are
concerned that property would exclude damage to environmental
values such as habitat. Hazardous waste prevention is important.
If we lose this money, what is the alternative, he asked.
Number 165
PATTI SAUNDERS, supported most of the previous testimony. She
noted that the drafter of the CS spent 1/2 hour trying to explain
a bill and did not succeed. She wondered if there was any hope of
it being implemented in an appropriate fashion. To stop funding a
program that gave them prevention improvements in the first place
is going backwards. There is no excuse for being complacent. She
asked why this bill was important other than to give the oil
companies a tax break.
Number 76
MARNA SCHWARTZ, Anchorage, opposed SB 215. She said the extent of
contaminated sites in Alaska is large. Taking care of the Alaska's
environment is a remarkable commitment. She urged the legislators
to maintain and strengthen the commitment.
TOM LAKOSH, Anchorage, supported previous testimony. By passing
the 470 fund bill, the legislature made a finding that hazardous
substances are threatening the citizens and resources of Alaska.
SB 215 exposes citizens to more hazardous substances and passing it
would be a violation of the oath of office the legislators took to
protect the people of Alaska and their resources.
TAPE 94-10, SIDE A
Number 001
IVAN WIDOM, Anchorage, Prince William Sound Regional Citizens
Advisory Council, opposed SB 215. He said the 470 fund was not set
up to be a temporary tax. It was set up so that money would always
be available for spill prevention and response. The surcharge was
never intended to fund emergency response only; it was intended to
cover permanent programs within DEC to prevent and respond to
spills. In reality the legislature is the only entity that can
control spending out of the 470 fund. DEC does not have an open
ended access to the fund. There is no positive result to splitting
the nickel, except to reduce taxes for the oil industry.
Number 62
ERVIN PAUL MARTIN, Director, Division of Emergency Services,
requested language that would allow the Division access to pay
costs incurred by that Division to maintain a state coordination
capability in support of DEC for responses to disaster spills and
releases. They have previously enjoyed authorization to that
effect. It would seriously impair their ability to support spill
response capabilities.
RUSSELL HEATH, Executive Director, Alaska Environmental Lobby, said
the draft CS is a far cry from what the citizens at the table and
most of the public testimony had requested in the subcommittee.
They opposed splitting the nickel creating an artificial
distinction between a catastrophic account and a mitigation account
which limits DEC's flexibility in planning for and responding to
oil spills.
With the legislature facing a $1 billion deficit, it is a wonder to
him why the 5 cents per barrel surcharge is being reduced.
Number 171
DAVE PARISH, Exxon, said the industry has supported some funding
from the 470 fund for the state prevention and response programs
and continue to do so. However, they could not support splitting
the existing account into two 2 1/2 cent accounts.
He referred to a chart he passed to the Committee explaining the
financial break down of the Governor's budget which totalled $13.5
million for all the DEC agencies. The 2 1/2 cent split into the
contingency and mitigation account would generate $19 million; and
they can't support that, because that is almost $6 million surplus
funding beyond what the Governor has requested of the legislature
this year.
He added that they adamantly oppose a 3/2 split reversed.
Number 238
JOHN SANDOR, Commissioner, DEC, said he was very pleased with the
testimony from the last hour and a half which accurately reflects
the concerns of the Department. With the proposed 2 1/2 cent
split, they would run out of abatement monies within 11 months. He
said he was puzzled that so much misinformation had been spread.
He emphasized that at the direction of the Governor, they took
control of the account, did an internal audit, they raised the fund
balance from $6 to $12 to $24 to $37 million. It is ironic that
while it is professed there is a negative balance, indeed the
proposal in the CS is to transfer all of the reserves making it
possible for the catastrophic fund to be capped off in the first
year.
He said it is in the best interest of Alaska and the oil companies
to reexamine this legislation.
Number 297
RICHARD FINEBERG, Fairbanks, opposed restructuring the 470 fund
without clear recognition of the importance of prevention in the
state's oil spill program and the incredible magnitude of North
Slope profits.
Number 341
SENATOR ZHAROFF said he still had a number of concerns starting
with section 1 and the tie in to section 31, as well as the ferry
exemption. In section 11 he was concerned with the purpose section
and the hazardous substance section. In section 16 he had
questions about the financing of the catastrophic oil release.
What disturbed him the most is section 32, the "blackmail clause."
Also another question he had was regarding the activities of DEC
and their ability to be able to perform the mandated functions with
the 2 1/2 cents without passing some of the costs on to, in
particular, rural areas.
SENATOR ZHAROFF was also concerned with the deviation from
hazardous substances, a number of which are utilized by the oil
industry. He was concerned with the 5 days or 120 hours and how
that fit in with having the Commissioner responding in a timely
manner and then having an executive order in place in time to
continue the response. He thought someone from the Department of
Law should advise them on that issue.
SENATOR MILLER inserted that the 5 days was a suggestion from DEC.
CARL PULLIAM, SOS Response Team at Seldovia (a local oil spill
response group formed from legislation as a result of the Exxon
Valdez oil spill), opposed SB 215. He said it would cut the funds
for local spill response depots and volunteer response corps. It
negates any previous legislative attempt. It deals a severe blow
to a community's ability to be responsible for its own area. He
concluded saying if you can't make a positive change, don't change
anything at all.
Number 449
SENATOR MILLER said he was mystified that some people had said if
the fund were left in place the $50 million would go off, but they
turn around and say they need money for the fund which is what the
2 1/2 cents would do. If the nickel completely went off, there
would be no money coming in. The other confusing thing is that if
they take DEC numbers and give them enough money and they can't do
the job, it's not the legislature's concern.
SENATOR MILLER adjourned the meeting at 5:40 p.m.
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