Legislature(2001 - 2002)

03/04/2002 03:40 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                    
                   SENATE RESOURCES COMMITTEE                                                                                 
                          March 4, 2002                                                                                         
                            3:40 p.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator John Torgerson, Chair                                                                                                   
Senator Gary Wilken, Vice Chair                                                                                                 
Senator Rick Halford                                                                                                            
Senator Robin Taylor                                                                                                            
Senator Ben Stevens                                                                                                             
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All Members Present                                                                                                             
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
SENATE BILL NO. 343                                                                                                             
"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                                                                                     
                                                                                                                                
SENATE BILL NO. 308                                                                                                             
"An Act relating to the Alaska coastal management program and the                                                               
responsibilities of the Alaska Coastal Policy Council."                                                                         
                                                                                                                                
     MOVED CSSB 308(RES) OUT OF COMMITTEE                                                                                       
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
SB 343 - No previous action to consider.                                                                                        
                                                                                                                                
SB 308 - No previous action to consider.                                                                                        
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Darwin Peterson                                                                                                             
Staff to Senator Torgerson                                                                                                      
Alaska State Capitol                                                                                                            
Juneau AK 99801-1182                                                                                                            
POSITION STATEMENT: Commented on SB 343 for the sponsor.                                                                      
                                                                                                                                
Mr. Tom Lakosh                                                                                                                  
P.O. Box 100648                                                                                                                 
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Commented on SB 343.                                                                                      
                                                                                                                                
Mr. Larry Dietrick, Director                                                                                                    
Division of Spill Prevention and Response                                                                                       
Department of Environmental Conservation                                                                                        
410 Willoughby Ave., Ste. 105                                                                                                   
Juneau AK 99801                                                                                                                 
POSITION STATEMENT:  Supported SB 343.                                                                                        
                                                                                                                                
Mr. Breck Tostevin, Assistant Attorney General                                                                                  
Department of Law                                                                                                               
1031 W 4th Ave #200                                                                                                             
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Commented on SB 343.                                                                                      
                                                                                                                                
Mr. Doug Mertz                                                                                                                  
Counsel to the Regional Citizens Advisory Council                                                                               
POSITION STATEMENT: Supported SB 343.                                                                                         
                                                                                                                                
Ms. Marilyn Crockett, Deputy Director                                                                                           
Alaska Oil and Gas Association                                                                                                  
121 W. Fireweed Lane #207                                                                                                       
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supported SB 343.                                                                                         
                                                                                                                                
Mr. Ross Coen                                                                                                                   
Alaska Forum For Environmental Responsibility                                                                                   
P.O. Box 82718                                                                                                                  
Fairbanks AK 99708                                                                                                              
POSITION STATEMENT: Opposed SB 343.                                                                                           
                                                                                                                                
Mr. Jim Carter, Executive Director                                                                                              
Cook Inlet Regional Citizens Advisory Council (CIRCAC)                                                                          
POSITION STATEMENT: Supported SB 343.                                                                                         
                                                                                                                                
Mr. Dennis Dooley                                                                                                               
3724 Campbell Airstrip Rd.                                                                                                      
Anchorage AK 99504                                                                                                              
POSITION STATEMENT: Commented on SB 343.                                                                                      
                                                                                                                                
Mr. Gary Carlson, Senior Vice President                                                                                         
Forest Oil Corporation                                                                                                          
310 K St No. 700                                                                                                                
Anchorage AK 99501                                                                                                              
POSITION STATEMENT: Supported SB 343.                                                                                         
                                                                                                                                
Mr. Walt Parker                                                                                                                 
No address provided                                                                                                             
POSITION STATEMENT: Opposed SB 308.                                                                                           
                                                                                                                                
Mr. Ken Donajkowski                                                                                                             
Manager for Permitting                                                                                                          
Phillips Alaska, Inc.                                                                                                           
POSITION STATEMENT: Supported SB 308.                                                                                         
                                                                                                                                
Mr. Patrick Galvin, Director                                                                                                    
Division of Governmental Coordination                                                                                           
Office of the Governor                                                                                                          
P.O. Box 110020                                                                                                                 
Juneau AK 99811-0020                                                                                                            
POSITION STATEMENT: Supported SB 308.                                                                                         
                                                                                                                                
Mr. John Shively                                                                                                                
Alaska N. W. Natural Gas Transportation Company                                                                                 
1336 W. 12th Ave.                                                                                                               
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT: Supported SB 308.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-6, SIDE A                                                                                                             
Number 001                                                                                                                      
                                                                                                                                
         SB 343-BEST AVAILABLE TECHNOLOGY:DISCHARGE PLAN                                                                    
                                                                                                                              
CHAIRMAN  JOHN TORGERSON  called  the Senate  Resources  Committee                                                            
meeting to  order at 3:40 p.m. and  announced SB 343 to  be up for                                                              
consideration. He said  that Tom Lakosh, the person  who filed the                                                              
lawsuit that this  legislation would overturn, will  comment after                                                              
a brief explanation.                                                                                                            
                                                                                                                                
MR. DARWIN PETERSON, staff to Senator Torgerson, explained:                                                                     
                                                                                                                                
     The State of  Alaska is widely recognized  as having one                                                                   
     of  the  most comprehensive  oil  spill  prevention  and                                                                   
     response requirements in the  world. This recognition is                                                                   
     due  to  actions  taken  by  the  legislature  and  ADEC                                                                   
     [Alaska  Department  of Environmental  Conservation]  to                                                                   
     ensure  that companies  operating in  Alaska have  taken                                                                   
     the  appropriate steps  to prevent  discharges and  have                                                                   
     access  to the  resources necessary  to rapidly  respond                                                                   
     and clean up discharges should they occur.                                                                                 
                                                                                                                                
     Alaska   law   and  regulation   require   vessels   and                                                                   
     facilities   to  have  oil   discharge  prevention   and                                                                   
     contingency  plans approved  by ADEC.  Plan holders  are                                                                   
     required  to utilize best  available technology  as part                                                                   
     of    these    plans.    The    regulations    governing                                                                   
     determinations  of  'best  available  technology'  [BAT]                                                                   
     were  developed  through  a   comprehensive  stakeholder                                                                   
     process  and were adopted  by ADEC  in 1997. Since  that                                                                   
     time over  100 C Plans  have been approved  implementing                                                                   
     the BAT requirement.                                                                                                       
                                                                                                                                
     As a result of these requirements  and industry efforts,                                                                   
     significant  advances  have  been made  in  technologies                                                                   
     utilized and  in place in  Alaska. The regulations  have                                                                   
     served  Alaska well  in the five-year  period they  have                                                                   
     been in effect.                                                                                                            
                                                                                                                                
     On  February 1, 2002,  the Alaska  Supreme Court  struck                                                                   
     down  two  provisions  in the  regulations  ruling  that                                                                   
     these  provisions were  inconsistent  with that  Court's                                                                   
     interpretation of the legislature's  intent. At the same                                                                   
     time,  the Court  emphasized  the limited  scope of  its                                                                   
     ruling and acknowledged that  the legislature had vested                                                                   
     ADEC with broad discretion to define BAT.                                                                                  
                                                                                                                                
     This  ruling jeopardizes  timely issuance  of new  plans                                                                   
     and timely renewals of existing  plans. Immediate action                                                                   
     by the legislature  is needed to address  this ruling to                                                                   
     ensure  continued   plan  administration   and  preclude                                                                   
     negative  consequences  on development  of  the  state's                                                                   
     resources. SB  343 affirms the 1997 regulations  and the                                                                   
     three-tiered  process encompassed in  them do,  in fact,                                                                   
     meet  legislative  intent with  regard  to  BAT and  are                                                                   
     consistent with  the statute. The bill also  affirms the                                                                   
     validity of the regulations and the C-Plans.                                                                               
                                                                                                                                
MR. TOM LAKOSH  said he could  provide a dissertation on  why this                                                              
bill will  not revise the proposed  or desired negative  effect on                                                              
resource development, but he would  rather say that the permitting                                                              
system was so convoluted before the  new regulations were written,                                                              
and afterward as well. He said the  Supreme Court decision neither                                                              
made  the  situation  worse  nor corrected  it.  He  proposed  the                                                              
creation of  a DEC  response authority  to provide spill  response                                                              
services  and a  permit  package that  would  allow applicants  to                                                              
provide  more comprehensive  and response  capabilities than  they                                                              
could  otherwise afford  or  arrange logistically.  The  authority                                                              
would  conduct  research  to  improve  response  capability  under                                                              
problematic  conditions  in  the  Alaskan  environment  and  would                                                              
develop a statewide  system of response. It would  have regulatory                                                              
authority similar to the Federal Republic of Germany.                                                                           
                                                                                                                                
The  response agency  would provide  fee-generating services  like                                                              
the  Alaska  Railroad does.  It  would  develop its  own  response                                                              
depots, subcontract with established  spill response providers and                                                              
streamline    terminal   facilities    that   utilize    expensive                                                              
transportation corridors.  The ability  of the authority  to gauge                                                              
and  organize subcontractors  that  utilize the  best tactics  and                                                              
equipment  will  help  ensure  that   fly-by-night  permitees  and                                                              
contractors  won't be used.  A centralized  system would  ensure a                                                              
more  economic distribution  of  response  resources along  entire                                                              
transportation  corridors  and at  individual  locations.  Current                                                              
equipment  and personnel  would be more  effectively utilized  and                                                              
gaps in protection  would be minimized. Redundant  and ineffective                                                              
equipment  would  be  reallocated  to  where it  was  designed  to                                                              
operate.  He  suggested the  use  of  470  Funds for  capital  and                                                              
operational  costs for  DEC response authority  that provides  BAT                                                              
response and  coverage in unprotected  areas or other  problematic                                                              
circumstances. He  suggested that  the authority would  maintain a                                                              
centralized  system  of  publicly  and  privately  owned  response                                                              
depots  or ones  appropriately positioned  in hazardous  substance                                                              
transportation corridors.  He advised that the  response authority                                                              
must be authorized  to purchase and operate capital  equipment and                                                              
contract for operating for total response services.                                                                             
                                                                                                                                
MR. LAKOSH  suggested that the main  source of funding would  be a                                                              
charge for services,  but the establishment of  an authority would                                                              
require an initial capitalization  that could be prorated from the                                                              
470 Fund.  He proposed  that $5  million be  appropriated for  the                                                              
purpose of  technology assessment  and design  and $25  million to                                                              
start the  response depots  and get  the one-stop permit  shopping                                                              
system in place.  The $30 million could be repaid  to the 470 Fund                                                              
once the  payment for  services generates  a sufficient  amount to                                                              
maintain   operating   and  capital   improvement   budgets.   The                                                              
legislation  should  clarify  what  BAT really  is.  The  response                                                              
authority should:                                                                                                               
   · maximize the ability to safely work in high seas;                                                                          
   · substantially improve spill recovery rates in and improve                                                                  
     the ability of skimmers to work in high water and to improve                                                               
     the ability to respond without causing additional impacts to                                                               
     resources;                                                                                                                 
   · minimize the health and safety impacts of response to the                                                                  
     spill and spill responders and the public;                                                                                 
   · provide response capability in unprotected areas;                                                                          
   · define problematic response circumstances;                                                                                 
   · develop logistic and technical solutions to response                                                                       
     limitations; and                                                                                                           
   · expedite permitting and coordinate communications with                                                                     
     response depots, contractors and aerial surveillance.                                                                      
                                                                                                                                
MR. LAKOSH said, "These policies have been adopted in one shape                                                                 
or another, but had never been put into a comprehensive system."                                                                
                                                                                                                                
He  said this  system would  allow respondents  to amortize  their                                                              
costs of equipment  by more efficiently distributing  them among a                                                              
greater number of  permitees. The public would be  assured of more                                                              
competence  and more  capable responses  statewide  and DEC  could                                                              
help amortize the cost of equipment already acquired.                                                                           
                                                                                                                                
MR. LARRY DIETRICK, Director, Division of Spill Prevention and                                                                  
Response, DEC stated support for SB 343 and said:                                                                               
                                                                                                                                
     The  department   is  responsible   for  approving   oil                                                                   
     discharge prevention and contingency  plans for over 120                                                                   
     facilities  in  Alaska.  These  facilities  include  oil                                                                   
     terminals,   pipelines,   exploration   and   production                                                                   
     facilities,  tank vessels, oil  barges, nontank  vessels                                                                   
     and the railroad.                                                                                                          
                                                                                                                                
     The Department  of Environmental  Conservation has  been                                                                   
     working  with the  Department  of Law  since the  recent                                                                   
     Supreme Court  ruling to devise a remedy  that meets the                                                                   
     requirements of  the court. At issue is  the legislative                                                                   
     intent  for  meeting  the  'best  available  technology'                                                                   
     statutory  requirement.  The court  noted  that when  an                                                                   
     agency  has adopted  regulations under  a delegation  of                                                                   
     authority  from the legislature,  and using the  process                                                                   
     prescribed  by  the  Administrative  Procedure  Act,  we                                                                   
     presume that  the regulations  are valid and  the review                                                                   
     is  limited to  whether the  regulations are  consistent                                                                   
     with and reasonably necessary  to carry out the purposes                                                                   
     of the statutory provisions  and whether the regulations                                                                   
     are reasonable and too arbitrary.                                                                                          
                                                                                                                                
     The  legislature  established   what  are  arguably  the                                                                   
     toughest response planning standards  in the world. When                                                                   
     reviewing  a contingency plan,  DEC has interpreted  the                                                                   
     statute  to mean  that meeting  Alaska's tough  response                                                                   
     planning  standards also  satisfies  the best  available                                                                   
     technology  requirement  if  the  equipment  is  proven,                                                                   
     reliable and  appropriate for  its intended use  and the                                                                   
     magnitude   of  the   spill  it   is  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  and that  agency  judgment in  this                                                                   
     regard deserves  considerable deference 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                                                                   
     intent   and  lies  within   the  limits  of   authority                                                                   
     delegated  by the  legislature. It  is not an  expansive                                                                   
     inquiry  and  recognizes  the   task  of  defining  best                                                                   
     available technology  is well  outside the scope  of the                                                                   
     judiciary's  responsibility  and falls  squarely  within                                                                   
     DEC's areas of authority and expertise.                                                                                    
                                                                                                                                
     Because 'best  available technology' was not  defined by                                                                   
     the   legislature,  the   court   has  interpreted   the                                                                   
     statutory   language  to  mean   that  the   legislature                                                                   
     intended  to  impose two  separate  requirements,  which                                                                   
     precludes  DEC from  relying  on the  response  planning                                                                   
     standards,  or  performance   standards  established  in                                                                   
     regulations to establish BAT.                                                                                              
                                                                                                                                
     The  court  has ruled  in  the  absence of  any  further                                                                   
     supporting  legislative history  clarifying the  intent.                                                                   
     Clearly  the  court  in their  ruling  has  invited  the                                                                   
     legislature to  clarify their intent if they  so choose.                                                                   
     We  believe  it  is  the  legislature's  prerogative  to                                                                   
     clarify  the  intent  and  appreciate  your  efforts  to                                                                   
     expedite  a solution. The  department believes  that any                                                                   
     legislation should meet the following goals:                                                                               
                                                                                                                                
        · First and foremost, because of the timing of the                                                                      
          release  of   the  court  decision  and   the  time                                                                   
          remaining  during this  session,  it is  imperative                                                                   
          that  any legislation  be limited  to only what  is                                                                   
          necessary  to address  the court  ruling. There  is                                                                   
          simply not  enough time to entertain  other changes                                                                   
          to  the  statute  and   do  credible  research  and                                                                   
          coordination  with  the   regulated  community  and                                                                   
          other stakeholders.                                                                                                   
        · Second, to ensure continued operation of Alaska's                                                                     
          facilities and  eliminate the cloud  of uncertainty                                                                   
          from  the court  ruling regarding  the validity  of                                                                   
          existing  plan  approvals   made  since  1997,  the                                                                   
          legislation must be passed this session.                                                                              
        · Third, the legislation must validate the existing                                                                     
          regulations  and  preserve  the approach  used  for                                                                   
          making BAT determinations as envisioned by the                                                                        
          1997 Task Force.                                                                                                      
        · Fourth, the legislation must sustain the same                                                                         
          level of rigor for plan review as now practiced                                                                       
          and not diminish the existing response capability.                                                                    
        · Fifth, the legislation must continue to support                                                                       
          the ability of the department to evaluate new                                                                         
          technologies and make BAT findings.                                                                                   
                                                                                                                                
     SB 343  meets these  goals and provides  straightforward                                                                   
     language   clarifying  the   legislative  intent.   This                                                                   
     language  validates  the  interpretation   made  by  the                                                                   
     department  in the  1997  regulations.  We believe  this                                                                   
     language is  responsive to the Supreme Court  ruling and                                                                   
     eliminates  the existing ambiguity  and therefore  is an                                                                   
     acceptable remedy.                                                                                                         
                                                                                                                                
     This  bill  does  not  reduce   the  rigor  of  existing                                                                   
     contingency  plan   review  or  diminish   the  response                                                                   
     readiness and capability of industry.                                                                                      
                                                                                                                                
     Legislative clarification  of the law will  validate the                                                                   
     BAT  approach taken  by the  1997 negotiated  rulemaking                                                                   
     process,  and   affirm  the  continued  effect   of  the                                                                   
     contingency   plan   approvals    issued   under   those                                                                   
     regulations.  No  revisions  to the  existing  stringent                                                                   
     regulations will  be necessary. The legislation  is also                                                                   
     narrowly focused  on language that is responsive  to the                                                                   
     court ruling.                                                                                                              
                                                                                                                                
     This  bill   will  also   reaffirm  the  importance   of                                                                   
     continuing  research  into best  available  technologies                                                                   
     via studies,  findings and conferences every  five years                                                                   
     to ensure that oil discharge  prevention and contingency                                                                   
     plans employ  technologies that continue to  keep Alaska                                                                   
     in the forefront of environmental  protection worldwide.                                                                   
     It also eliminates  the cloud of uncertainty,  which now                                                                   
     exists.                                                                                                                    
                                                                                                                                
     Subject to some edits, which  the Department of Law will                                                                   
     discuss, the department supports SB 343.                                                                                   
                                                                                                                                
4:10 p.m.                                                                                                                       
                                                                                                                                
SENATOR  ELTON  asked what  happens  to  plans  that are  "in  the                                                              
pipeline"  awaiting approval  by  the department.  He asked,  "Are                                                              
they just on hold until this legislation  passes or doesn't pass?"                                                              
                                                                                                                                
MR. DIETRICK replied that since the Supreme Court ruling, DEC has                                                               
been looking at administrative, regulatory  and statutory remedies                                                              
to  comply  with the  ruling.  The  first  step  it took  was  the                                                              
administrative   regulatory   approach   and   it   has   proposed                                                              
regulations that are out for public review now. He explained:                                                                   
                                                                                                                                
     Basically, we're maintaining  that the plans continue to                                                                   
     be valid  at this  time. The Supreme  Court did  not say                                                                   
     they were invalid. We believe  that could potentially be                                                                   
     challenged.  The Supreme  Court  has yet  to remand  the                                                                   
     decision back  to the Superior Court and  whether or not                                                                   
     there are some additional actions  that may come up that                                                                   
     would  further  question  the  findings.  That's  what's                                                                   
     causing the uncertainty.                                                                                                   
                                                                                                                                
DEC has advised  all plan holders  in the state of  their options.                                                              
One   would  be   to  perform   the   best  available   technology                                                              
requirements  that the  court  required up  front  right now  even                                                              
though [DEC]  hasn't gone  through the  rule making process.  That                                                              
would be  a risk that  the plan holders  would assume,  because if                                                              
the regulations  turn out  to be something  else, they  would have                                                              
spent some time and energy perhaps needlessly.                                                                                  
                                                                                                                                
Second,  they could wait  until the  regulations are  promulgated.                                                              
The regulations are out for public  notice now. Plan holders would                                                              
have  60 days  after the  regulations come  out to  take steps  to                                                              
amend the  plans to  comply with  the regulations.  DEC feels  the                                                              
regulatory approach  may not  be the absolute  fix to  the Supreme                                                              
Court question and that a statutory change is much more certain.                                                                
                                                                                                                                
SENATOR ELTON  said Mr. Dietrick  testified that the  bill doesn't                                                              
reduce  the rigor  of  existing contingency  plans,  but some  may                                                              
characterize the  regulations as having  reduced the rigor  of the                                                              
legislative language  that was adopted  in the 1990s. He  asked if                                                              
the  department is  comfortable with  the  existing approach  that                                                              
would  be  codified   by  this  approach  that  uses   a  pool  of                                                              
technologies rather than the best technology.                                                                                   
                                                                                                                                
MR. DIETRICK  replied that the  department participated in  a very                                                              
extensive  rule making  task force  process  in 1997  and is  just                                                              
saying  that it's  incumbent on  DEC  to meet  the obligation.  If                                                              
[DEC] wanted  to deviate from that  and make it more  rigorous, it                                                              
would  want  to  do  that  with all  the  players  at  the  table.                                                              
Otherwise the 1997 process that everyone  validated is the process                                                              
that DEC  needs to  continue until  it goes  through another  rule                                                              
making process to increase the intensity, if that is the desire.                                                                
                                                                                                                                
SENATOR ELTON  asked if  he is considering  this legislation  as a                                                              
stopgap until DEC gets more rigorous regulations.                                                                               
                                                                                                                                
MR.  DIETRICK  replied  that  DEC would  follow  the  same  review                                                              
process that was developed in 1997  with the same degree of rigor.                                                              
If someone  wanted to make the  process more rigorous,  they would                                                              
have  to go  through another  1997 style  process to  do that.  He                                                              
maintained,  "This  legislation  preserves  the status  quo  since                                                              
1997."                                                                                                                          
                                                                                                                                
CHAIRMAN  TORGERSON said  there has  been  a motion  filed in  the                                                              
Supreme Court that would throw out  the C Plans as they are today.                                                              
                                                                                                                                
MR. DIETRICK replied that there has  been a rehearing request made                                                              
to the Supreme Court and the Department  of Law could provide more                                                              
specifics on it.                                                                                                                
                                                                                                                                
SENATOR  TAYLOR  said  he  remembered  going  through  this  whole                                                              
process  and  he  was  concerned  about  using  the  phrase  "best                                                              
available  technologies"  for  fear  it would  be  a  never-ending                                                              
target  out  in  the  future so  that  if  somebody  invented  new                                                              
technology six months  after a plan came out, the  plan would have                                                              
to be modified  and new equipment purchased. The  five-year review                                                              
process reassured him. He is concerned  now that the Supreme Court                                                              
has  basically  said  that best  available  technology  cannot  be                                                              
defined in a vacuum by itself. In  essence, they are saying to the                                                              
Supreme Court  that they  can define  it that  way because  of the                                                              
rigorous standards the  state has set up. He is not  sure they are                                                              
truly answering their question. It  is a definition that comes out                                                              
of the process  after analyzing various technologies  and he wants                                                              
to make sure there isn't another appeal after this one.                                                                         
                                                                                                                                
MR.  DIETRICK responded  that  they  believe the  second  sentence                                                              
answers that  question with a degree  of certainty that  makes the                                                              
department comfortable. He stated,  "The intent is to provide that                                                              
certainty  in this  bill  to remove  the  ambiguity  that you  are                                                              
talking about."                                                                                                                 
                                                                                                                                
SENATOR TAYLOR  said, "I  want it clear  in this record  that that                                                              
language does provide a definition  of 'best available technology'                                                              
and  that  is not  some  vague  standard  and  I want  it  clearly                                                              
understood that we intended that to be the case."                                                                               
                                                                                                                                
MR. DIETRICK said that is the intent.                                                                                           
                                                                                                                                
CHAIRMAN TORGERSON  noted that two short amendments  were proposed                                                              
to  delete  "modified  or"  and   insert  "until  it"  and  delete                                                              
"technologies" and insert "technology."                                                                                         
                                                                                                                                
MR.  BRECK TOSTEVIN,  Assistant  Attorney  General, Department  of                                                              
Law, said he wanted to cover two  topics: the reasoning behind and                                                              
the effect  of the  Supreme Court's  decision concerning  the best                                                              
available technology  requirement for  contingency plans;  and how                                                              
the  legislation responds  to the  Supreme Court's  decision in  a                                                              
focused and measured way. He told the committee:                                                                                
                                                                                                                                
     SB 343 seeks  to clarify the statutory  requirement that                                                                   
     C Plans  use best available  technology in light  of the                                                                   
     Alaska Supreme  Court's February 1 ruling in  the Lakosh                                                                   
     v. DEC case.                                                                                                               
                                                                                                                                
     The best  available technology  requirement has  been in                                                                   
     place  since  1980 for  response  equipment  used in  C-                                                                   
     plans. Because  of the addition of oil  spill prevention                                                                   
     to the C-plan  statute in 1990, the BAT  requirement was                                                                   
     expanded to  prevention as well.  In addition,  the 1990                                                                   
     amendments  added   the  rigorous  oil   spill  response                                                                   
     planning  standards  in AS  46.04.030(k)  to the  C-plan                                                                   
     statute,  but  the  legislature   did  not  address  the                                                                   
     relationship between the planning standards and BAT.                                                                       
                                                                                                                                
     In  its recent  ruling,  the Court  found  two parts  of                                                                   
     DEC's  regulatory criteria  for  determining whether  an                                                                   
     oil discharge prevention and  contingency plan uses best                                                                   
     available  technology to be  inconsistent with  statute.                                                                   
     These   regulations  were   developed  as   part  of   a                                                                   
     negotiated  rulemaking in  1997  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 focusing                                                                   
     on  the language  of  the regulations  as  opposed to  a                                                                   
     technical  determination   of  whether  any   particular                                                                   
     equipment  or technology  is indeed  best available.  In                                                                   
     finding  parts  of  the  regulations  inconsistent  with                                                                   
     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                                                                   
     plannning standards for oil  spill response technologies                                                                   
     in determining BAT or rely on  performance standards set                                                                   
     forth in  regulation for determining  BAT for  oil spill                                                                   
     prevention technologies.                                                                                                   
                                                                                                                                
     The Alaska  Supreme Court concluded that  while reliance                                                                   
     on  performance   standards  for  determining   BAT  had                                                                   
     considerable  theoretical merit  and are  used in  other                                                                   
     federal environmental statutes  in lieu of one-size fits                                                                   
     all  technological   rules,  the  absence   of  specific                                                                   
     legislative   history   on   interplay   between   these                                                                   
     standards and  the BAT requirement led the  Court to the                                                                   
     conclusion that the 1997 BAT  regulatory criteria should                                                                   
     be invalidated as inconsistent with statute.                                                                               
                                                                                                                                
     Given the Alaska Supreme Court's  ruling overturning the                                                                   
     1997 workgroup's use of the  statutory response planning                                                                   
     standards   and   regulatory    oil   spill   prevention                                                                   
     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  by the  1997  negotiated rulemaking  group  and                                                                   
     that  has been utilized  in approving  over 100  C-plans                                                                   
     since April  1997. This legislation does not  weaken the                                                                   
     best available  technology requirement  but, rather,  is                                                                   
     an  effort to restore  the consensus  criteria that  has                                                                   
     been  used for making  BAT determinations  for the  last                                                                   
     five  years:   criteria  that  has  resulted   in  major                                                                   
     improvements in oil spill prevention and response.                                                                         
                                                                                                                                
     SB 343 accomplishes three things.  It clarifies that the                                                                   
     1997    negotiated   rulemaking    regulations,    which                                                                   
     established  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 SB 343  is enacted,                                                                   
     DEC   would  not   be  required   to   revise  its   BAT                                                                   
     regulations.  Third and finally,  the legislation  would                                                                   
     affirm   the  continued  effect   of  contingency   plan                                                                   
     approvals issued under 1997  regulations and ensure that                                                                   
     plan  holders  could  continue to  operate  under  those                                                                   
     approvals.                                                                                                                 
                                                                                                                                
     There  are two  technical  drafting amendments  that  we                                                                   
     recommend  in sections  2 and  4.  The first  is to  the                                                                   
     second  sentence of  the amended language  in section  2                                                                   
     [bottom of page  3, top of page 4]. The  change would be                                                                   
     to  insert  the  word  'any'  after  'that'  and  change                                                                   
     'technologies'  to 'technology'  and the  word 'are'  to                                                                   
     'is' so that the sentence reads:                                                                                           
                                                                                                                                
          The  department   may  find  that   any  technology                                                                   
          meeting the  response planning standards  in (k) of                                                                   
          this section  or a prevention performance  standard                                                                   
          established  under AS 46.04.070  is best  available                                                                   
          technology.                                                                                                           
                                                                                                                                
     Again, the purpose  of the amended language  is the same                                                                   
     as the original  language, which is to allow  DEC to use                                                                   
     the criteria  adopted in the 1997 regulations  at 18 AAC                                                                   
     75.445(k)(1)-(3) to determine BAT.                                                                                         
                                                                                                                                
     The  second  correction  would   be  to  the  transition                                                                   
     provision in section  4 of the bill on page  4, lines 21                                                                   
     -27  that ensures  the  continued validity  of  existing                                                                   
     contingency  plan approvals. The  amendment would  be to                                                                   
     delete  the words  'modified or' and  insert 'until  it'                                                                   
     before  the word 'expire'  so that  the sentence  reads:                                                                   
     'the  plan holder  may continue  to  operate under  that                                                                   
     plan until the plan is revoked  under AS 46.04.030(f) or                                                                   
     until it expires, whichever  first occurs.' As currently                                                                   
     written,  this section  could be  read to  imply that  a                                                                   
     modified plan  does not remain  in effect and  would not                                                                   
     be   covered   by   section  4.   Such   an   unintended                                                                   
     interpretation   would   clearly   be   incorrect.   The                                                                   
     amendment  would  clarify  that a  modified  plan  which                                                                   
     utilized  the 1997  regulations would  remain in  effect                                                                   
     under  this  legislation  and   the  plan  holder  could                                                                   
     continue  to operate under  the original approved  plan,                                                                   
     as modified.                                                                                                               
                                                                                                                                
SENATOR TAYLOR asked why they didn't  just delete the word "best".                                                              
Mr. Lakosh thinks it means the cutting  edge of science and that's                                                              
the standard  the department  has set. He  noted, "By  us adopting                                                              
it,  it  becomes  the  best  because   they  go  straight  to  the                                                              
dictionary  to  define  best  and we're  defining  'best'  by  the                                                              
standard we've  already set, which  is existing technology  within                                                              
current plans."                                                                                                                 
                                                                                                                                
He suggested inserting  something like "useful technology"  or any                                                              
other  technology  that  the  department  feels  meets  a  certain                                                              
standard.                                                                                                                       
                                                                                                                                
MR. TOSTEVIN said  the legislative approach here is  to attempt to                                                              
define the  parameters of  what "best" means  and to  clarify that                                                              
"best" can rely on the response planning  standards. The workgroup                                                              
regulations  say,  "if  the  technology   as  a  whole  meets  the                                                              
response-planning  standard and  is reliable  and appropriate  for                                                              
its  intended use  as well."  It's focused  on a  certain type  of                                                              
spill  technology near  open water  and also  on the  size of  the                                                              
spill.                                                                                                                          
                                                                                                                                
MR. DOUG  MERTZ, Prince William  Sound Regional Citizens  Advisory                                                              
Council  (RCAC), said  this  group  exists in  the  area that  was                                                              
affected by  the Exxon Valdez  spill. It  was one of  the entities                                                              
involved  in creating  the existing  regulations  and approach  to                                                              
implementing the BAT standard. The  Advisory Council's position on                                                              
this bill is  that the concept of best available  technology is an                                                              
extremely beneficial  one, not  only because  it provides  us with                                                              
the   best  prevention   and  response,   but   also  because   it                                                              
demonstrates  to the world  that Alaska  is the  best there  is at                                                              
extracting  and moving  oil  and other  petroleum  products in  an                                                              
environmentally  safe  and  sound   manner.  They  understand  the                                                              
concern  caused   by  the  recent  Supreme  Court   decision,  the                                                              
uncertainty  among plan holders  and people  who have applied  for                                                              
plan approval as to what this means  for them, and they understand                                                              
the need for  certainty. The Advisory Council has  no objection to                                                              
the way this bill sets out the manner  in which DEC would continue                                                              
to apply the  concept of best available technology  as long as DEC                                                              
has  a   sufficient  basis   for  declaring   that  that   certain                                                              
technologies are  the best available  technology when it  does so.                                                              
DEC based  its determination on  an every five-year  conference on                                                              
best available  technology that included  not only  the regulators                                                              
and industry,  but also  everybody  who could  define what  is the                                                              
best technology for this purpose. He added:                                                                                     
                                                                                                                                
     The system  of regulations  that is set  up in the  bill                                                                   
     this would perpetuate makes  sense only if an event such                                                                   
     as this conference  actually occurs every five  years or                                                                   
     some  other  logical  period  of time  and  is  actually                                                                   
     funded and happens in a way  that people have confidence                                                                   
     that  what comes  out of  it,  hopefully, the  consensus                                                                   
     among all  participants truly does represent  the wisest                                                                   
     judgment   of  everybody  involved   on  what   is  best                                                                   
     available  technology. Our  own preference  is that  the                                                                   
     bill actually refers to such  a conference, which is now                                                                   
     in the  regulation, but  not in  the statute, that  this                                                                   
     bill put into  statute the department's ability  to hold                                                                   
     these  every five-year  conferences.  A  bill like  this                                                                   
     continuing that promise should  be coupled with adequate                                                                   
     funding   and  the  authority   to  actually  hold   the                                                                   
     conference as soon as possible.                                                                                            
                                                                                                                                
     Our  other  concern is  one  that  has been  alluded  to                                                                   
     already by Mr. Dietrick that  this bill is a vehicle for                                                                   
     maintaining   the  current   process  and  the   current                                                                   
     commitment  to the highest  quality of spill  prevention                                                                   
     and spill response and we are  concerned that as it goes                                                                   
     through the  legislative process it could be  amended to                                                                   
     either remove  or weaken  the best available  technology                                                                   
     standard  as   it  actually  is  implemented.   That  is                                                                   
     something  that  would be  a  grave error,  we  believe,                                                                   
     particularly with the atmosphere  in Washington D.C. and                                                                   
     with  the concern  about how Alaska  implements its  oil                                                                   
     spill  laws   and  how  Alaska  goes   about  extracting                                                                   
     resources here. We can't afford  as a state in the views                                                                   
     of  the rest of  the world  to lower  our standards.  We                                                                   
     must  maintain  the  highest standard,  which  means  we                                                                   
     really should  be maintaining visibly our  commitment to                                                                   
     doing the  best possible job  of applying technology  to                                                                   
     oil spill prevention and response.                                                                                         
                                                                                                                                
4:30 p.m.                                                                                                                       
                                                                                                                                
SENATOR ELTON asked if, under this  bill and existing law, a five-                                                              
year conference  to examine best available technology  isn't held,                                                              
that will cloud existing or future plans.                                                                                       
                                                                                                                                
MR. MERTZ replied there is no end to the creativity of lawyers.                                                                 
                                                                                                                                
TAPE 02-6, SIDE B                                                                                                             
                                                                                                                              
MR. MERTZ said if the conference  was ignored for a long time that                                                              
would make the requirement more vulnerable.                                                                                     
                                                                                                                                
CHAIRMAN  TORGERSON  asked if  C-Plans  are reviewed  every  three                                                              
years and whether different ideas are laid on the table.                                                                        
                                                                                                                                
MR. MERTZ replied yes.                                                                                                          
                                                                                                                                
CHAIRMAN TORGERSON  asked if  the Council knows  about all  the C-                                                              
Plans from  the other  places. He remarked,  "You have  an ongoing                                                              
process that you're ignoring."                                                                                                  
                                                                                                                                
MR. MERTZ  replied, "The  problem there is  if you rely  solely on                                                              
the individual C-Plan approval process,  that's when you went back                                                              
to the situation in the Supreme Court."                                                                                         
                                                                                                                                
CHAIRMAN TORGERSON said:                                                                                                        
                                                                                                                                
     You're hinting that the other  person doesn't know about                                                                   
     this other person's  technology, so we've got  to have a                                                                   
     conference  to  sit  down  and talk  about  it  and  I'm                                                                   
     telling you I don't know if  you really need to do that.                                                                   
     You already  review each other's  plans…I find  your 'no                                                                   
     objections,  as  long  as  we  get  the  money  for  our                                                                   
     conference,'   to  be  somewhat   of  an   overqualified                                                                   
     statement in support of the bill.                                                                                          
                                                                                                                                
MS.  MARILYN  CROCKETT,  Deputy   Director,  Alaska  Oil  and  Gas                                                              
Association (AOGA),  said that all of the producers  in Cook Inlet                                                              
and the North  Slope and the operators of the  crude oil pipelines                                                              
and three state  refineries are all members of  AOGA. They clearly                                                              
have a  vested interest in this  particular issue. On  February 1,                                                              
the Supreme Court  overturned two provisions in  DEC's regulations                                                              
that govern how best available determinations  are made. The court                                                              
did not take issue with other sections  in those regulations, only                                                              
those two.  Over 100  C-Plans have  been approved  under the  1997                                                              
regulations.                                                                                                                    
                                                                                                                                
     This  decision has  placed everyone  from my  membership                                                                   
     and others in the regulated  community to the department                                                                   
     in  an extremely  tenuous  position.  Companies who  are                                                                   
     seeking new  plan approvals and those going  through the                                                                   
     renewal process  on their existing  plans, all  of which                                                                   
     incorporate  best available  technology, are faced  with                                                                   
     the prospect  of unnecessary  delays and  uncertainties.                                                                   
     In  fact, the department  will instead  have to  refocus                                                                   
     its  resources  away  from   the  immediate  process  of                                                                   
     working   with  plan  holders   to  ensure   appropriate                                                                   
     provisions are  in place and instead go  through another                                                                   
     rule  making  process, which  at  the  end of  the  day,                                                                   
     absent legislative intent language  could be called into                                                                   
     question, as well.                                                                                                         
                                                                                                                                
     While the Supreme Court decision  emphasized the limited                                                                   
     scope of its ruling and acknowledged  that it had vested                                                                   
     the department  with broad discretion  on how  to define                                                                   
     BAT,  the  Court,  however,   was  unable  to  point  to                                                                   
     specific   legislative   intent  which   justified   the                                                                   
     approach in  the '97 regulations  and it's this  lack of                                                                   
     specificity  that's the heart  of the matter  before you                                                                   
     today. In our view, SB 343 provides  the specificity the                                                                   
     Court  was  searching  for  when  they  considered  this                                                                   
     matter. With  a very limited  amendment to AS  46.04.030                                                                   
     (e), the legislature makes it  clear that the regulatory                                                                   
     approach  taken   by  the  department   after  extensive                                                                   
     stakeholder   deliberation   meets   the   legislature's                                                                   
     expectations  when  it  vested this  authority  in  this                                                                   
     department....                                                                                                             
                                                                                                                                
MS. CROCKETT continued:                                                                                                         
                                                                                                                                
     I want to  make it absolutely clear here  today that the                                                                   
     only objective  being sought by  the Alaska Oil  and Gas                                                                   
     Association and  its members is legislative  affirmation                                                                   
     of the rules, which are in place  today. SB 343 does not                                                                   
     in  any way  diminish  the department's  authorities  in                                                                   
     determination   of   BAT   nor  does   it   reduce   the                                                                   
     requirements  on plan  holders. It  simply provides  DEC                                                                   
     with  the flexibility  and ownership  to administer  the                                                                   
     program  and  provides  the ability  to  recognize  best                                                                   
     available   technology    with   respect    to   diverse                                                                   
     environmental and operational  considerations that exist                                                                   
     throughout the  state. Further, it affirms  the validity                                                                   
     of existing C-Plans, which have  been approved under the                                                                   
     regulations  and removes  the  obstacles facing  pending                                                                   
     approval. In summary, action  by the legislature through                                                                   
     SB  343 is  critical to  continue C-Plan  administration                                                                   
     within   the  state.   It   clearly   responds  to   the                                                                   
     uncertainty  voiced by the  Supreme Court by  specifying                                                                   
     the legislature's  intent with regard to  best available                                                                   
     technology requirements in C-Plans.                                                                                        
                                                                                                                                
MS.  CROCKETT  said they  supported  SB  343  along with  the  two                                                              
clarifying amendments.                                                                                                          
                                                                                                                                
MR.  ROSS COEN,  Alaskan Forum  For Environmental  Responsibility,                                                              
opposed SB 343, because it contains  two messages. The first is if                                                              
you don't win,  change the rules, even if that  means undercutting                                                              
the  environmental standards  promised  to the  people of  Alaska.                                                              
When  the Supreme  Court  ruled that  the  ADEC's regulations  for                                                              
determining  BAT   in  oil  spill   contingency  plans   were  not                                                              
consistent  with  state  statute,  one would  assume  the  logical                                                              
solution would  be to amend the  regulation or take  the necessary                                                              
steps  to  comply with  state  law.  Instead,  he said  this  bill                                                              
attempts to change the rules. He commented:                                                                                     
                                                                                                                                
     Next, it should be noted that  immediately following the                                                                   
     Exxon  Valdez,  the 16th  legislature  strengthened  the                                                                   
     statute  that governed  oil spill  contingency plans  by                                                                   
     mandating  that such  plans  must provide  for the  best                                                                   
     technology available.  This was certainly a  popular and                                                                   
     politically  expedient stance  at  the time  considering                                                                   
     the  public  outrage  over  the  Exxon  Valdez.  SB  343                                                                   
     retracts  that mandate and  effectively steps back  from                                                                   
     the  forthright stance  taken by  the 16th  legislature.                                                                   
     This bill  frees ADEC from matching that  high standard.                                                                   
     To claim on  lines 25 - 26 on page 2, "that  the Supreme                                                                   
     Court's  ruling has  little or no  positive benefits  to                                                                   
     the  environment  or the  state,"  is laughable  on  its                                                                   
     face.  The additional  comment period  for the  proposed                                                                   
     changes to their oil pollution  control regulations that                                                                   
     bring  them into  compliance  with the  Supreme  Court's                                                                   
     decision  in Lakosh  v. Adak.  SB 343  absolved ADEC  of                                                                   
     that responsibility."                                                                                                      
                                                                                                                                
MR. COEN said  it appears that ADEC  is playing both sides  of the                                                              
fence. In a March  1 teleconference with the Prince  William Sound                                                              
RCAC, Larry  Dietrick admitted that  the ADEC cooperated  with the                                                              
AOGA to write the  bill they are discussing. On one  hand, ADEC is                                                              
asking  for public  comment  on how  to  comply  with the  court's                                                              
ruling and  at the same time it  helped to write this  bill, which                                                              
would remove  its responsibility  for complying  with the  court's                                                              
ruling.                                                                                                                         
                                                                                                                                
     It  is my understanding  that the  Prince William  Sound                                                                   
     RCAC advocates  an ADEC sponsored conference  that would                                                                   
     help   establish  BAT  requirements.   I  support   such                                                                   
     requirements  and agree with  Prince William Sound  RCAC                                                                   
     that   any  downturn   in   BAT  requirements   is   not                                                                   
     acceptable. Finally, it occurred  to me that should this                                                                   
     bill  fail   the  committee  and  both  bodies   of  the                                                                   
     legislature,   that   the   real   motivation   of   the                                                                   
     legislators  to supports its  passing have little  to do                                                                   
     with  environmental  protection   and  almost  certainly                                                                   
     nothing to do with giving a helping hand to ADEC.                                                                          
                                                                                                                                
MR. JIM CARTER,  Executive Director, Cook Inlet  Regional Citizens                                                              
Advisory Council, supported SB 343.                                                                                             
                                                                                                                                
     This  legislation  is  intended  to  answer  the  recent                                                                   
     Supreme  Court decision  in  which it  said that  Alaska                                                                   
     statutes required ADEC to individualize  assessments for                                                                   
     the oil spill contingency plans  and to insure that each                                                                   
     plan incorporates  the best technologies  now available.                                                                   
     We understand that the bill's  purpose is not to do away                                                                   
     with  the requirement  of best  available technology  of                                                                   
     spill   contingency  plans,   but  to   give  ADEC   the                                                                   
     flexibility to prescribe what  technologies meet certain                                                                   
     standards. We  do not disagree with the  bill's purpose.                                                                   
     We do, however,  have the following concern.  We believe                                                                   
     that it  is essential  that the  bill recognize that  in                                                                   
     order to carry out its duty  to designate best available                                                                   
     technology,  DEC must  have the  tools to  keep up  with                                                                   
     this changing  field. The idea of a  periodic conference                                                                   
     in  cooperation  with industry  and  others  at which  a                                                                   
     consensus  would develop  on  best available  technology                                                                   
     was incorporated  into regulations  and in place  and to                                                                   
     date has not  been [indisc]. Such a conference  based on                                                                   
     five-year  time  frame  would  have  occurred  [indisc].                                                                   
     We're hopeful that the legislature  will see fit to fund                                                                   
     such a conference in FY 2003.                                                                                              
                                                                                                                                
MR.  DENNIS DOOLEY,  Anchorage  resident, said  he  comes to  this                                                              
topic with  30 years  history that  commenced  in 1973 when  SOHIO                                                              
financed his Masters' Degree or which  he studied the topic of the                                                              
limitations  of marine  transportation  on the  West  Coast. As  a                                                              
budget  analyst  under the  Egan  Administration,  he developed  a                                                              
paper,  which   illustrated  that  the  state's   anticipation  of                                                              
revenues from the  wellhead values were wildly  optimistic. Later,                                                              
in 1976,  working as a special  assistant to Walt  Parker, Highway                                                              
Commissioner, he  was directed to reevaluate the  circumstances on                                                              
the West  Coast. In  1977, working  for the Pipeline  Surveillance                                                              
Office,  he  was assigned  primary  responsibility  for  reviewing                                                              
Alyeska's  Oil Spill  Contingency Plan  for the  pipeline and  the                                                              
marine transportation  system. He  did a 1,100-page  assessment of                                                              
options and environmental  risks ranging from British  Columbia to                                                              
the Panama  Canal. He  listed other  personal qualifications,  but                                                              
said  his point  is  that  industry  from the  get-go  continually                                                              
claimed that the minimum standards  suggested over the intervening                                                              
period of  time would diminish  the opportunities  for development                                                              
and were too expensive. A key review  of the transportation system                                                              
in  1990 showed  the failure  of all  involved in  transportation,                                                              
including federal  agencies, state  oversight and the  industry to                                                              
actively  and diligently  pursue the best  design and  operational                                                              
standards  appropriate  for the  system.  He  has found  that  the                                                              
condition  today  has changed  very  much. He  commented,  "ADEC's                                                              
professional  laziness  was  enhanced by  political  pressure  and                                                              
insured that an  incident similar to Exxon Valdez  would happen at                                                              
some time." He  thought this legislation misleads  the public into                                                              
thinking the State of Alaska is performing its oversight task.                                                                  
                                                                                                                                
MR. GARY CARLSON,  Senior Vice President, Forest  Oil Corporation,                                                              
said  his corporation  leases a  tract  of 200,000  acres in  Cook                                                              
Inlet and  another 210,000 acres in  the Copper River area.  It is                                                              
one  of the  companies caught  in a  dilemma by  trying to  obtain                                                              
approval  of its  C-Plan  for a  major  project.  It has  invested                                                              
significant capital  to get to this point and has  plans to invest                                                              
up to $150 million in 2002. A majority  of the expenditures are to                                                              
place a Redoubt  Shoal field on  production. Passage of  SB 343 is                                                              
important  for   the  viability   of  this  project.   Forest  Oil                                                              
Corporation supports AOGA's testimony and that of DEC.                                                                          
                                                                                                                                
SENATOR  TAYLOR moved  to adopt  amendment 1  on page  4, line  1:                                                              
delete "technologies" and insert "any technology".                                                                              
                                                                                                                                
There were no objections and it was adopted.                                                                                    
                                                                                                                                
SENATOR TAYLOR moved to adopt amendment 2 on page 4, line 27:                                                                   
delete  "modified   or"  and  insert  "until  it"   following  "AS                                                              
46.04.030(f) or".                                                                                                               
                                                                                                                                
There were no objections and amendment 2 was adopted.                                                                           
                                                                                                                                
SENATOR TAYLOR  moved to  pass CSSB  343(RES) from committee  with                                                              
individual recommendations.  There were  no objections and  it was                                                              
so ordered.                                                                                                                     
                                                                                                                                
            SB 308-COASTAL ZONE MGMT PROGRAM/COUNCIL                                                                          
                                                                                                                                
CHAIRMAN TORGERSON announced SB 308 to be up for consideration.                                                                 
                                                                                                                                
SENATOR THERRIAULT,  sponsor of SB  308, said he started  out with                                                              
legislation  that  repealed  the  whole  coastal  zone  management                                                              
program and  eventually boiled it  down to four or  five different                                                              
issues. SB  308 contains  two of  those issues,  plus a  third one                                                              
that wasn't contemplated at that time.                                                                                          
                                                                                                                                
     Section 1 deals with a ban on  the adoption by reference                                                                   
     of  our  state  statutes  and   regulations  by  coastal                                                                   
     districts.  This is  actually the way  the coastal  zone                                                                   
     system is working  now and we are just trying  to define                                                                   
     that in statute.                                                                                                           
                                                                                                                                
     Section 2  is the new section  that was not  discussed a                                                                   
     number  of years  ago. It  talks about  phasing for  the                                                                   
     permitting  of Alaska  North  Slope gas  pipeline.  What                                                                   
     that  deals with  is the project  is so  large in  scope                                                                   
     that it's very difficult for  anybody actually proposing                                                                   
     the  gas pipeline  to  submit all  of  the paperwork  to                                                                   
     permit the  entire line. They  don't know exactly  which                                                                   
     streams  they're crossing, whether  they're going  to go                                                                   
     under or over. It would allow  state agencies to perform                                                                   
     that work in phases.                                                                                                       
                                                                                                                                
     Section 3 is conforming language  that conforms statutes                                                                   
     with  changes   made  in  section  4….  It   deals  with                                                                   
     modifications  to  the petition  process.  The  petition                                                                   
     process  is the  last  additional sort  of  bite of  the                                                                   
     apple  that the  person  who is  opposing  a permit  has                                                                   
     after you've  gone through the agency process.  You have                                                                   
     the ability to have numerous  reviews of the agencies as                                                                   
     they  are  making a  determination  to issue  a  permit.                                                                   
     After    that's    been   finalized,    a    consistency                                                                   
     determination  has been made,  there was yet  this final                                                                   
     petition process,  which I believe the  individuals with                                                                   
     the administration  will come  forward and indicate  has                                                                   
     been  used as a  delaying mechanism.  All the  petitions                                                                   
     that have been  granted have been either  after the time                                                                   
     line  has  nearly run  out,  they're either  removed  or                                                                   
     they're  found to  be without  substance and  dismissed.                                                                   
     So, I  believe there is an  agreement even by  the state                                                                   
     administration  that section 4  is needed to  streamline                                                                   
     the process and get to finality.                                                                                           
                                                                                                                                
SENATOR WILKEN moved to adopt the committee substitute to SB 308,                                                               
version C, dated 3/4/02. There were no objections and it was so                                                                 
ordered.                                                                                                                        
                                                                                                                                
                                                                                                                                
MR. WALT PARKER interrupted and asked to testify on SB 343.                                                                     
                                                                                                                                
CHAIRMAN TORGERSON  noted that the committee was  on another bill,                                                              
but allowed him to comment briefly.                                                                                             
                                                                                                                                
MR.  PARKER opposed  SB  343, because  he  didn't  think it  would                                                              
change anything.                                                                                                                
                                                                                                                                
                                                                                                                                
The hearing on SB 308 continued.                                                                                                
                                                                                                                                
MR. KEN DONAJKOWSKI, Manager of Permitting,  Phillips Alaska, Inc.                                                              
said:                                                                                                                           
                                                                                                                                
     Phillips  Alaska,  Inc., is  in support  of  eliminating                                                                   
     individual   petitions   under    the   Alaska   Coastal                                                                   
     Management  Program   process.  This  petition   process                                                                   
     significantly   delayed  a   total   of  5   consistency                                                                   
     determinations  on Phillips  projects in  the months  of                                                                   
     December and January just passed.  This petition process                                                                   
     enables an  individual to easily hamper  responsible oil                                                                   
     and gas development and the  Committee substitute for SB
     308 appropriately  removes this needless  component from                                                                   
     the ACMP process.                                                                                                          
                                                                                                                                
SENATOR ELTON  asked if  any of the  five petitions  significantly                                                              
change the terms under which Phillips had to operate.                                                                           
                                                                                                                                
MR.  DONAJKOWSKI replied  that apart  from delays,  there were  no                                                              
changes whatsoever to those projects.                                                                                           
                                                                                                                                
MR.   PATRICK   GALVIN,   Director,   Division   of   Governmental                                                              
Coordination, said they are responsible  for the implementation of                                                              
the Alaska Coastal Management Program. He explained:                                                                            
                                                                                                                                
     The  Alaska Coastal  Management Program  is the  state's                                                                   
     response  to the  federal Coastal  Zone Management  Act,                                                                   
     which gives the state the opportunity  to develop a plan                                                                   
     that  the  federal  government  would  comply  with  and                                                                   
     provide money for.  We have to make sure  the plan meets                                                                   
     certain federal standards and  in light of that when the                                                                   
     Alaska program  was put into  place, it was  designed to                                                                   
     be decentralized. It was providing  most of the power to                                                                   
     the  local governments  instead of  retaining it  within                                                                   
     the  state. In order  to insure  the federal  government                                                                   
     that  the state  retained some  control  over that,  the                                                                   
     petition  process  was  put  into  place  to  allow  the                                                                   
     Coastal  Policy  Council,  which  is  the  state's  body                                                                   
     overseeing  the program with  some authority that  local                                                                   
     plans were  being implemented.  During that time,  there                                                                   
     was  no review  of the  individual  projects. When  that                                                                   
     came  about in the  mid-80s it  wasn't anticipated  that                                                                   
     the  petition process  used  for the  protection of  the                                                                   
     state's interest  and making  sure the local  plans were                                                                   
     being implemented  would be  used on individual  project                                                                   
     reviews.  It  was. So,  in  1994, the  legislature  took                                                                   
     legislative  action   to  create  a  separate   petition                                                                   
     process for  project reviews  that said it wasn't  going                                                                   
     to be basically  a complete review of the  decision, but                                                                   
     would  be merely  a  check on  whether  the process  was                                                                   
     fair. It  was just a matter  of if a person  submitted a                                                                   
     comment  on a  consistency review  and  they felt  their                                                                   
     comments were not fairly considered,  they could ask the                                                                   
     Coastal Policy Council to review  that and if so, remand                                                                   
     it back to  the agency to do it again.  Since that time,                                                                   
     we've dealt with  a handful of petitions  to clarify how                                                                   
     the process worked and since  those regulations were put                                                                   
     into place  basically in the  spring of 1999,  we've had                                                                   
     up  until   this  week  18  petitions  that   have  been                                                                   
     submitted  by  individuals saying  that  their  comments                                                                   
     were  not  fairly  considered.  Of  those  18,  10  were                                                                   
     rejected outright by staff saying  that they didn't meet                                                                   
     the  requirements  to even  file  the petition.  Of  the                                                                   
     remaining eight,  three of them were withdrawn  before a                                                                   
     hearing and five  of them were dismissed  by the Coastal                                                                   
     Policy Council. So of the 18  that have been filed since                                                                   
     the  beginning  of  FY  2000, none  of  them  have  been                                                                   
     remanded  for consideration by  the state agency.  While                                                                   
     we've  come  to  recognize that  the  process  does  not                                                                   
     provide  an   adequate  experience  for   anybody,  it's                                                                   
     frustration  pretty  much across  the  board. Those  who                                                                   
     file  petitions  come  in  hoping  to  have  the  entire                                                                   
     decision looked at and they're  frustrated that all they                                                                   
     get is  a review of  the process  and it's a pretty  low                                                                   
     standard for  the state to be  able to overcome  and say                                                                   
     we  considered your  comment.  So at  this point,  while                                                                   
     desiring  an opportunity  and perhaps  coming up with  a                                                                   
     different  vehicle  for providing  individuals  with  an                                                                   
     opportunity to  participate in an appeal, we  don't have                                                                   
     time for  that and  we don't  oppose eliminating the  B1                                                                   
     petitions.                                                                                                                 
                                                                                                                                
     With  regard   to  the  phasing  issue,  a   real  quick                                                                   
     background on that one, the  phasing law that's in place                                                                   
     now was  also adopted in 1994.  It was in response  to a                                                                   
     court  decision that  found  that a  state  oil and  gas                                                                   
     lease needed to be redone because  it didn't look at the                                                                   
     impacts  associated with potential  development and  the                                                                   
     court said  that there  was no authority  in the  law to                                                                   
     restrict  the  consistency determination  to  the  lease                                                                   
     sale stage or phase of the project.  The legislation was                                                                   
     drafted  in order to  allow for the  phasing of  oil and                                                                   
     gas development  - so that we could have  the lease sale                                                                   
     phase  separate  from the  exploration  phase,  separate                                                                   
     from  the  development  phase  and  each  one  could  be                                                                   
     reviewed   separately.  Because   the  legislation   was                                                                   
     written  for that  purpose,  it doesn't  really fit  any                                                                   
     other  type of  project.  When we  were  looking at  the                                                                   
     issue of a North Slope Natural  Gas Pipeline project and                                                                   
     the scale of  this type of project, all we  recognize is                                                                   
     that  it was  going to  demand  such a  large amount  of                                                                   
     information  that one, the company  or the proponent  of                                                                   
     the  project  would likely  not  have the  resources  to                                                                   
     develop all  that information up front,  because frankly                                                                   
     under the Coastal Management  Program, until you can get                                                                   
     your  consistency  determination,   you  can't  get  any                                                                   
     permit for the project.                                                                                                    
                                                                                                                                
     Two,  even if  the  companies were  able  to muscle  the                                                                   
     resources  and to  generate  the amount  of  information                                                                   
     that would  be necessary to  review the entire  project,                                                                   
     the  state agencies  would not  be in a  position to  be                                                                   
     able to  review it and  comprehend the magnitude  of the                                                                   
     information and  give an adequate evaluation  of all the                                                                   
     issues they  normally would look  at in the  time frames                                                                   
     that would be provided.                                                                                                    
                                                                                                                                
     Three,  even if the  state agency  somehow came up  with                                                                   
     the resources,  the public wouldn't have the  ability to                                                                   
     be involved in  the process because of the  magnitude of                                                                   
     the information. Given that,  we recognize that it would                                                                   
     be beneficial  to be able to  phase this type  of review                                                                   
     and, as  I mentioned before,  the phasing statute  right                                                                   
     now is designed primarily for  the lease sale situation.                                                                   
     So,  it doesn't  fit very well  with a  project of  this                                                                   
     type.  Rather   than  looking  at  trying   to  generate                                                                   
     language for  a type of project  that might fit  the gas                                                                   
     line and  fit other appropriate projects,  we recognized                                                                   
     that the approach that's taken  in this bill is probably                                                                   
     the best approach - to say that  a natural gas pipe line                                                                   
     that goes  from the  North Slope to  market needs  to be                                                                   
     treated  special or  differently. It's  unique; it's  an                                                                   
     unprecedented nature. Therefore,  it should be phased in                                                                   
     a  way  that  would  be appropriate  for  that  type  of                                                                   
     project. What  we want to make  clear is that it  is the                                                                   
     unprecedented  size  of  this   project  that  makes  it                                                                   
     appropriate to look at phasing.  It's not just that it's                                                                   
     a  large  project.  We  are   concerned  that  just  the                                                                   
     language alone  right now gives  the implication  that a                                                                   
     large project  deserves to be faced. We  would recommend                                                                   
     that the legislature look at  including some legislative                                                                   
     findings as  to the unprecedented  nature and size  of a                                                                   
     natural gas  project in order to justify  this exception                                                                   
     to the phasing law so that it  isn't seen as a precedent                                                                   
     for just any large project being appropriately phased.                                                                     
                                                                                                                                
     Also,  it should be  noted that  the Coastal  Management                                                                   
     Program   is  a   very   important  program   to   local                                                                   
     governments in  particular and to members of  the public                                                                   
     and  we are concerned  that  the title of  this bill  is                                                                   
     quite  broad and we  would recommend  that the title  be                                                                   
     refined  to  recognize  the changes  that  are  actually                                                                   
     being  made to the  program such  that it doesn't  allow                                                                   
     for  any unexpected  additional changes  to the  program                                                                   
     that  the administration  or  local governments  may  be                                                                   
     much more opposed to. Thank you.                                                                                           
                                                                                                                                
5:10 p.m.                                                                                                                       
                                                                                                                                
CHAIRMAN  TORGERSON  said  he  wasn't   sure  there  needs  to  be                                                              
legislative findings on how big this project is.                                                                                
                                                                                                                                
SENATOR ELTON  agreed and  said the  specificity of this  language                                                              
would preclude anything  else. It would in fact,  take a change in                                                              
legislation if there was interest in phasing another project.                                                                   
                                                                                                                                
MR. JOHN SHIVELY, Alaska N.W. Natural  Gas Transportation Company,                                                              
supported SB 308 and thanked the  sponsor, Senator Therriault, for                                                              
including  the phasing  language in  section 2,  which is of  most                                                              
concern  to them.  He  thought Mr.  Galvin  explained the  problem                                                              
well.                                                                                                                           
                                                                                                                                
     This is  a very complicated project.  Ordinarily, before                                                                   
     you could  get a consistency determination,  you have to                                                                   
     have  every   single  permit  in  front   of  government                                                                   
     approved. We  don't believe that  makes sense and  so we                                                                   
     support this language and we  appreciate the opportunity                                                                   
     to testify and would be happy to answer questions.                                                                         
                                                                                                                                
SENATOR TAYLOR  moved to  pass CSSB  308(RES) from committee  with                                                              
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR THERRIAULT interrupted to explain that the changes in the                                                               
CS deal with the fiscal impact and there should be a zero fiscal                                                                
note.                                                                                                                           
                                                                                                                                
MR. GALVIN explained that the original version had some                                                                         
provisions that would have required additional staff time. This                                                                 
one eliminates those, resulting in a zero fiscal note.                                                                          
                                                                                                                                
CHAIRMAN TORGERSON asked him to prepare one.                                                                                    
                                                                                                                                
TAPE 02-08, SIDE A                                                                                                            
                                                                                                                                
There were no further objections and CSSB 308(RES) passed from                                                                  
committee.                                                                                                                      
                                                                                                                                
CHAIRMAN TORGERSON adjourned the meeting at 5:20 p.m.                                                                           

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