Legislature(2001 - 2002)
03/04/2002 03:40 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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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